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Number 10 denies Royal Mail talks 'No political fix' on Royal Mail
(about 2 hours later)
Downing Street has rejected claims that it is considering an alternative to the part privatisation of Royal Mail, in order to avert a Labour revolt. Ministers are not considering a compromise deal on Royal Mail in order to avoid a damaging Labour revolt, minister Pat McFadden has said.
The Guardian reported aides to the PM were talking to Labour rebels about plans to turn Royal Mail into a not-for-profit company, like Network Rail. He said proposals to turn it into a not-for-profit company like Network Rail "underestimated" its challenges.
But a spokesman for Number 10 said the idea was not considered "workable". That would just be a "political fix" rather than a comprehensive plan to transform Royal Mail, he said.
Dozens of MPs have indicated that they will vote against the plan to sell off a large minority stake in Royal Mail. The government's plan is opposed by 148 Labour MPs and there have been claims it will have to rely on Tory votes.
The Guardian report follows a weekend of speculation about Gordon Brown's authority, with senior Labour figures, including Harriet Harman, being forced to rule themselves out of any leadership challenge. Post Office minister Mr McFadden told BBC Radio 4's Today programme the government's plan to sell off 30% of Royal Mail was the "most convincing plan that has been put forward so far".
'Step back' 'Difficult' choice
The Guardian reported on Tuesday that Mr Brown's aides had met with leaders of the potential Labour rebellion to consider a proposal by left-wing campaign group Compass. He said the not-for-profit proposal - put forward by the left wing campaign group Compass - was "driven by the politics of finding a solution around a political fix, rather than the transformation that's needed".
The group has suggested the Royal Mail should be remodelled as a not-for-profit enterprise similar to Network Rail and the BBC Trust. The proposal "underestimates the challenges faced by Royal Mail" - such as the rapidly declining volume of letters posted, he said.
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Mr McFadden said he was happy to talk through other ideas but the government's plan, which followed a 12-month review, offered a "comprehensive" solution to transform Royal Mail and deal with its pension deficit.
"I understand this is difficult for some colleagues. We did not set out to pick a fight with backbenchers or trade unions, but we have a responsibility," he said.
"Simply to kick it into the long grass would not be a responsible thing to do."
The government argues that Royal Mail's multi-billion pound pension deficit and the increasing popularity of e-mail means it cannot survive in its current form and needs outside investment.
But its critics, including the Communication Workers' Union, say the government's plan would "nationalise the pension fund and privatise the profit".
'Not workable'
So far 148 Labour MPs have signed a motion signalling they oppose the plan.
Following a week in which the government lost a Commons vote on the Gurkhas and had to water down its expenses proposals, there was much speculation about Gordon Brown's authority at the weekend.
Compass chairman Neal Lawson told the BBC the group's proposal was "to try and find a way out of this mess".
"At the moment they can't get it through Parliament with the support of Labour MPs," he said.
"I think they know there's a political problem, given last week, given what is likely to be unsatisfactory results in June."
The Guardian had reported aides to the prime minister were talking to Labour rebels about the Compass proposal.
Report denied
A Compass pamphlet published on Tuesday calls on all sides of the Labour party to "step back from the brink" and give support to the idea of keeping Royal Mail in the public sector.A Compass pamphlet published on Tuesday calls on all sides of the Labour party to "step back from the brink" and give support to the idea of keeping Royal Mail in the public sector.
The government has said its door is open to those with ideas on the future of the Royal Mail Downing Street spokesman But a Downing Street spokesman said: "The government has said its door is open to those with ideas on the future of the Royal Mail and Neal Lawson has taken advantage of the opportunity to present the proposal he is publishing this week to government officials.
The pamphlet's author Neal Lawson concedes that Royal Mail does need "a range of governance, investment and industrial relations reforms", but argues that "privatisation is the wrong answer".
If the prime minister agreed to turn it into a not-for-profit company, Mr Lawson argues, that "would heal wounds and suspicions in the party".
"The alternatives of defeat at the hands of Labour backbenchers, or privatisation, but only with the help of [the] Tory frontbench, are both too awful to contemplate," he adds.
Responding to the Guardian's claims, a Downing Street spokesman said: "The government has said its door is open to those with ideas on the future of the Royal Mail and Neal Lawson has taken advantage of the opportunity to present the proposal he is publishing this week to government officials.
"We do not believe his alternative is workable and it is not under consideration.""We do not believe his alternative is workable and it is not under consideration."
Downing Street has always maintained that the part-privatisation plan, although unpopular with many Labour MPs, is the only way to safeguard the service. At the weekend Labour's deputy leader Harriet Harman denied a report she would fight for the party leadership.
Earlier this year Business Secretary Lord Mandelson said that although he was sorry about the "political pain" caused by the plan, he would not "walk away" from it.
Another defeat
But BBC political correspondent Laura Kuenssberg said there was "no sign of any let up" in pressure from Labour's MPs to scrap part-privatisation.
So far 148 Labour MPs have signed a motion opposing Downing Street's plan.
Another parliamentary defeat for the prime minister would be seen as further damaging his authority, following last week's backbench rebellion over the rights of former ­Gurkha soldiers, and the rejection of his plan to reform MPs' expenses.
Labour's deputy leader Harriet Harman has already been forced to deny a report she would fight for the party leadership.
And Communities Secretary Hazel Blears wrote a newspaper article widely interpreted as criticising Mr Brown's communication skills - particularly his decision to upload a video to YouTube.And Communities Secretary Hazel Blears wrote a newspaper article widely interpreted as criticising Mr Brown's communication skills - particularly his decision to upload a video to YouTube.
Later she issued a statement: "Any suggestion that I intended what I wrote as criticism of him [Mr Brown] or his leadership is completely wrong. I fully support the collective decisions we take."Later she issued a statement: "Any suggestion that I intended what I wrote as criticism of him [Mr Brown] or his leadership is completely wrong. I fully support the collective decisions we take."