Opposition to Royal Mail plan grows

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Opposition from Labour backbenchers was growing, with more than 70 MPs backing moves to reject plans to sell a minority stake in the postal group, threatening Gordon Brown with his biggest Commons revolt.

The Communication Workers Union will step up pressure by staging a protest in Westminster calling on Labour to keep the Royal Mail wholly publicly owned.

General secretary Billy Hayes said plans backed by Business Secretary Lord Mandelson to sell a minority stake in Royal Mail posed a "serious threat" to the UK's postal service, adding: "Labour MPs understand the importance of keeping Royal Mail in the public sector.

"There is no need to privatise and sell stakes in key public sector businesses to get government assets, particularly Royal Mail, to perform. Labour can safely steer the country through this recession without falling into the trap of socially damaging neo-liberal economic action."

Lord Mandelson stressed there was "no question" of privatising the Royal Mail - but he made clear the Government was pressing ahead with its plans.

Appearing before the Commons Business and Enterprise Committee before meeting with the Labour rebels, Lord Mandelson expressed "regret" at the way the postal market had been opened up to competition in 2006.

He said he was prepared to consider making "adjustments" when responsibility for regulation passed from Postcom to the communications industry watchdog, Ofcom, under the Government's planned changes.

"I am not an unqualified admirer of all aspects of the regulation and liberalisation of this market," he told the committee. I have got my own views on that and I think that in the course of transferring responsibility from Postcom to Ofcom, I think it would be desirable to take a look and possibly to make some adjustments in that.

"I happen to believe that if you are going to open a market, if you are going to liberalise it and open it to greater competition, then the existing player has to be in a position to take on that competition. I regret that the modernisation, the increased productivity and efficiency of the Royal Mail has not gone ahead as speedily as we would have liked which would have better equipped it to take on that competition in a liberalised market."