PM faces ambush over Royal Mail sell-off

Rebels to hijack Labour meeting as concessions fail to win them over

(PA)

The Prime Minister faces a backlash tomorrow against plans to part-privatise Royal Mail after a series of concessions to Labour critics failed to head off a growing rebellion.

The row over the sale of a minority stake in the troubled business is likely to boil over at a meeting of the party's policy-making body in Bristol this weekend. Mr Brown had hoped to use his appearance to boost Labour morale ahead of local and European elections in June.

But the gathering of MPs, local activists and union representatives will be overshadowed by the row over Royal Mail's future. It comes as it emerged that up to 11 ministerial aides have signed a motion opposing the part-privatisation. Parliamentary private secretaries (PPSs) tend not to sign early day motions (EDMs) under parliamentary convention. The EDM now has 132 Labour signatures.

The Communication Workers Union will hold a protest rally in Bristol tonight and will lobby the meeting, while union representatives are preparing to confront ministers over the proposals at the forum.

Tensions will be fuelled by the coincidence of the forum being chaired by Pat McFadden, the minister for Postal Affairs, with Billy Hayes, general secretary of the Communication Workers Union, acting as its deputy chairman.

The sale's opponents insist the party's settled policy is to keep the Royal Mail completely in public hands. A CWU spokeswoman said: "There are a lot of people in the Labour Party who feel very angry about the backdown."

Lord Mandelson, the Business Secretary, yesterday published the Postal Services Bill, confirming the Government is determined to press ahead with the sale of a one-third stake.

Ministers say the move is essential to help the business face private sector rivals. They are also committing the taxpayer to take on the Royal Mail's £8bn pension fund deficit.

Lord Mandelson pledged yesterday that the taxpayer would retain a majority stake in Royal Mail and complete control of the postal network. He also wrote into the legislation a commitment to maintain deliveries six days a week to every British address.

He said: "The Royal Mail will run out of money to sustain its current universal, six-day service unless its pension fund deficit is solved and its business transformed. The public deserves the best possible mail service and if we are asking the taxpayer to take on Royal Mail's huge pension deficit, it must deliver a full, improved letters service in return."

But the concessions failed to make any immediate impact on the Labour rebels. Geraldine Smith, the MP who has tabled a Commons motion attacking the move, said: "The rebellion is gaining strength."

Mr Hayes said the Government had still failed to produce a convincing argument. He said: "The British public does not want its postal service to be flogged off. It's also clear that there's no support among Labour MPs for this move."

Compass, the centre-left think-tank, published a report arguing that the Royal Mail was not less efficient than its European counterparts. Neal Lawson, the Compass chairman, said breaking up Royal Mail and paying money to private shareholders would "damage rather than assist" it.