Campbell sets out stall by backing Royal Mail sell-off

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Sir Menzies Campbell nailed his colours to the cause of modernisation when he used his first speech to Liberal Democrat activists to back plans for the part-privatisation of the Royal Mail.

The new Liberal Democrat leader threw his weight behind the policy to sell off a minority stake in the Royal Mail, sparking claims that he was moving the party to the right.

The policy, which is designed to fund a £2bn redevelopment of the Post Office network, was thrown out by the party's rank and file in September. Sir Menzies will face the first test of his leadership today when delegates vote on the plans.

The proposed sell-off is highly contentious and is seen as a test of the struggle between Liberal traditionalists and the economic liberalism of the party's "Orange Book" grouping, who provided support for Sir Menzies' leadership bid.

Sir Menzies insisted the policy was "thoughtful" and "forward thinking". He said: "This is a liberal reform, not a Thatcherite privatisation ... I believe this motion captures our ability to tackle difficult issues head on, developing innovative liberal solutions to challenges which the other two parties refuse to face."

Sir Menzies told activists last night that the Liberal Democrats "must have the best ideas". He said: "Our party has always been the most intellectually innovative. We need fresh ideas and new thinking."

However, Lord Greaves, the leading traditionalist opponent of the measure, said: "If this goes through, it moves us to the right of David Cameron."

Liberal Democrat Party officials have insisted that the proposal, which envisages keeping 51 per cent of Royal Mail in public hands, was a compromise, watering down the earlier proposals to sell off two thirds of the business.

In a second proposal, David Laws, the party's Work and Pensions spokesman, will today outline plans for cuts in benefits for single parents as part of plans to reduce child poverty and boost pensions.

Mr Laws will call for reform of rules which allow single parents to stay on benefit until their youngest child turns 16.

Mr Laws, the editor of the Orange Book and a leader of the party's young economic liberals, will outline the plans for benefit reform in a speech later today.

He said: "To deliver social justice we will need economic dynamism and economic discipline.

"We need to show how we can create wealth as well as redistribute it, and make tough choices and not just the easy ones."

Earlier, Sir Menzies moved to reassure the party's traditional left, insisting that he was a "centre-left politician".

The new party leader, who will make his first major set piece speech to the party faithful tomorrow, told the BBC in an interview on the Breakfast programme that he would be happy retaining the party's commitment to imposing a 50 per cent top rate of tax on people earning more than £100,000 if it was justified by social objectives. Sir Menzies has previously hinted that he would drop the idea.

He said: "If it is necessary in order to deal with socially desirable objectives like dealing with poverty then I am happy to defend 50p. But we should look at all alternatives before we can do that.

"I have no difficulty with the principle that those who have done best of all in Britain should pay a little bit more.

"Why shouldn't High Court judges who earn over £160,000 a year pay a little bit more than those who earn a lot less?"

The conference will also debate far-reaching proposals to increase the number of black and ethnic minority candidates standing for the party.

A motion calls on the party to work towards "proportional representation"of black and ethnic minority figures "at all levels of representative government in the United Kingdom".

It commits the party to consider the ethnicity of candidates when choosing people to stand in key target seats and set up an ethnic "task force" to "find, train and develop black and minority ethnic candidates".

Delegates are also expected to back a strongly worded motion attacking the Government's education Bill. The motion will brand the Government's reforms as a "chaotic admissions free for all where children from disadvantaged homes will lose out".