Minister's aide quits over Royal Mail sale

Mandelson faces internal revolt as parliamentary secretary quits in protest

Labour opposition to the part-privatisation of the Royal Mail is growing, with half of the party's MPs said to be against the sale and tensions emerging in Cabinet over the policy.

The strength of hostility was underlined yesterday when the ministerial aide to Pat McFadden, the minister for Postal Affairs, quit in protest.

Jim McGovern resigned as Mr McFadden's parliamentary private secretary, saying he could not support a policy likely to end in a foreign firm buying a large part of the Royal Mail.

Lord Mandelson, the Business Secretary, has won cabinet support for the sale, which he says is essential to guarantee daily deliveries to all homes. He insists the Royal Mail will remain "publicly owned" after the sale of 25 to 33 per cent of the business, but some cabinet members – including Alan Johnson, the Health Secretary and a former postman – are understood to have warned him of the difficulty of selling the policy to backbenchers.

Whitehall sources said Mr Johnson had "participated in a conversation on the presentation rather than the principle" of the scheme. Mr Johnson led a campaign in 1994, when head of the Union of Communications Workers, to force John Major's government to drop Post Office privatisation plans.

Labour rebels claimed they had the private support of senior ministers for a guerrilla campaign to start next month against the proposed sale.

One said: "We reckon half of our MPs are angry about privatising any part of the Royal Mail. The Government has tried to defuse a row by smuggling the announcement out before Christmas. Well, it won't work."

Harry Cohen, the member for Leyton and Wanstead, said: "It cannot be right to sell off a jewel like the Royal Mail. It looks like it's heading for full privatisation. There will be resistance and it will build up."

Ministers could be left in the embarrassing position next year of relying on Conservative support to get the part-privatisation on to the statute book.

But one cabinet member last night insisted that there was no prospect of the Government backing off. He told The Independent: "We will patiently explain the situation to people – they have to realise how serious it is."

Lord Mandelson said the Royal Mail needed to modernise in the face of threats to its profitability; people were sending fewer letters, turning to email and text messages instead, and private competitors were winning contracts for urgent business correspondence.

The postal giant TNT has already expressed interest in the Royal Mail.

Announcing his resignation, Mr McGovern said: "For me, it simply beggars belief that we would employ the services of a company from abroad to tell the Royal Mail in this country where they are going wrong."

Alan Duncan, the shadow Business Secretary, said: "Labour is split from top to bottom on this, and Mandelson's spin has failed to convince people on his own side." Brendan Barber, the TUC general secretary, said the Government had to talk to staff unions before going any further: "These proposals will raise fears they are a step on the way to full privatisation."