Mail: 'last throw of the dice'

Ministers have raised the stakes in their battle with rebel Labour MPs over their plans to sell 30 per cent of the Royal Mail by warning that a Tory Government would bring in full privatisation.

The Government claimed its plan to retain a 70 per cent stake in the Royal Mail will secure the future of the business and head off demands for total privatisation. It has told trade union and Labour opponents that failure to address the Royal Mail's financial crisis will leave the field clear for the Tories to sell it off in its entirety.

Pat McFadden, the minister responsible for the Royal Mail, said: "Were we not to proceed with this package because the Labour Party finds it too difficult, there would be both a political and policy consequence." Writing in the Labour modernisers' journal Progress today, he said the public would see the Government lacking "the resolve to face up to big decisions".

Insisting ministers were not trying to "pick a fight", Mr McFadden warned: "If this issue is not addressed now, it will surely have to be in the near future. We will keep the Post Office network public. We will secure the pensions of the staff. We will secure the universal service. What would others do?"

Ministers will tell rebel MPs in private talks that an incoming Tory government would have to address the Royal Mail urgently if Labour ducks the issue now because its finances would be in crisis.

Lord Mandelson, the Business Secretary, said yesterday on the BBC's Andrew Marr programme that his proposals were "the last throw of the dice" for the present Government.