Royal Mail privatisation remains on course

The Government will have breathed a sigh of relief after Labour and Conservative peers rejected an amendment from Lord Clarke of Hampstead to kill the Royal Mail privatisation bill. The amendment was defeated by 228 votes to 25 in the end, a resounding government majority of 203.

The bill has been tabled by Lord Mandelson, the Business Secretary, and paves the way for as much as 49 per cent of Royal Mail to be sold off.

The Government is looking to raise at least £3bn for an initial 30 per cent stake from front-runners Dutch postal company TNT or private equity group CVC Capital, with the taxpayer guaranteeing its £6bn pension fund deficit.

The bill is expected to pass through the Lords in late May and then be presented to the Commons in June, in what promises to be a controversial passage.

Many MPs, the majority of them Labour, have signed a Commons motion stating that Royal Mail should remain public, although Lord Mandelson has said "our goal is to put a publicly-owned Royal Mail on a clear and swift path to modernisation and, in so doing, to secure the future of the universal postal service."

He faces pressure from a number of sides, however, with the Conservative party - without whom the bill is unlikely to succeed - issuing a warning that it will withdraw its support for the plans if concessions are made to the Labour rebels.

WHAT THEY ARE SAYING
Anthony Hilton, Evening Standard: "The neat trick the Government plans to pull is to switch Royal Mail [pension fund] from funded to pay as you go. This means that the entire existing Royal Mail ­pension fund will be surplus to requirements, and its £24bn of assets will therefore count as a windfall for the Exchequer. This is a time of course when any such windfall will be more than usually welcome."

Jean Eaglesham, FT: "The prospect of TNT, the Dutch postal operator, or another foreign bidder gaining this level of power over modernisation plans - seen as code for future job losses - is certain to exacerbate union and backbench anger over the plans. Lord Mandelson, the business secretary, yesterday confirmed that Mr Brown has rejected a rebel proposal for a compromise deal to convert Royal Mail into a Network Rail-style company limited by guarantee."