Activists humiliate leadership over plans to privatise postal services

Plans to split ownership of the Royal Mail between staff, small investors and the City were condemned as policies worked out on the "back of a fag packet".

Lord Greaves, an environment spokesman, said the party was electorally "jumping off Blackpool pier". On Monday delegates threw out proposals by the party's Treasury spokesman to back a cap on European spending. Delegates voted to force the party's high command to rethink the Post Office plans, despite being warned that it would make the Liberal Democrats look "ridiculous". Norman Lamb, the trade and industry spokesman, urged delegates to back the plans. "Just think how ridiculous we would look if we go back to think about this for another year," he said. "Time is not on our side. Full liberalisation takes place in just over three months' time. As a spokesman I need to be able to go out and say what the Liberal Democrats believe in."

Under the plans, a third of the shares in the Royal Mail would be held in trust for staff, with another third sold to small shareholders. The remaining third would be sold on the open market. Mr Lamb said the plans would release funds to open 500 post offices. Lorely Burt, MP for Solihull, said: "We have a choice here which is bigger than one motion at conference and the choice is this: either we shy away from a tough decision and stay safe in our own comfort zone and reject this motion ... or we have the courage to back innovative thinking and show we are a party with bold vision, a party of government."

But Lord Greaves told delegates the plans would damage the party's chances at the polls. He said: "I'm an expert on fighting elections and the policy processes of this party. I know it's not good enough just to be bold and courageous and take decisions. Those decisions have got to be right and they have got to be decisions that are not going to cause us to fall off an electoral cliff." Jayne Marks, a delegate from Guildford, attacked the proposals as "muddled". She said: "I just don't think the numbers add up."

Linda Jack, from Bedford, condemned the plans as "stupid and irrational". She said: "I am proud to be a Liberal Democrat because I believe in liberal democratic values. I believe in protecting the vulnerable and in ensuring that services are there for all. I thought we had some clear blue water between us and the other two Tory parties."

Alastair Carmichael, MP for Orkney and Shetland, warned that the plans did too little to protect rural postal services. He said: "Make no mistake about it, the universal service is not something that will be produced by a free market."