Page last updated at 10:38 GMT, Wednesday, 1 April 2009 11:38 UK

Halt to mail sell-off called for

Royal Mail sign
Ministers say Royal Mail needs urgent modernisation

The government must halt plans to sell-off part of the Royal Mail until it explains what the deal involves, a cross-party committee of MPs has said.

The Commons business and enterprise committee said there was a "worrying lack of transparency" to the deal.

Chairman Peter Luff conceded Royal Mail's vast pension deficit had to be tackled, but said it did not follow that a "part sale" was necessary.

But Business Secretary Lord Mandelson said government plans showed "vision".

Ministers argue a "strategic partnership" with a private sector company - which would take a stake of about 30% in Royal Mail - is the best way of modernising the service, which currently has a multibillion-pound pension deficit.

'Very sceptical'

But Mr Luff said: "We don't know how much this sale will raise. We don't know the use to which the money will be put.

"We're very sceptical about the need for this sale and we believe the government needs to provide answers to these questions before the House of Commons can possibly consider the bill."

He added: "We do not believe a 30% stake is the endgame. We believe there will be a commercial agreement signed between the government and whoever that person is, which will take the stake beyond 30% in the future.

"Possibly my biggest single concern is we do not know what's going to be in the most important document of all - the contract between the private sector strategic partner - the equity partner - and the government."

Lord Mandelson, who has championed the sell off, said the government hoped to complete the deal "later this year or early in 2010" and that "the process to find a partner is already under way".

'Viable future'

He added: "We always take select committee reports seriously. But it's a pity the committee did not take the opportunity to show a sense of vision of the opportunities and future for Royal Mail but has instead taken a lowest common denominator approach.

"This of course bridges the differing positions in the committee but does nothing to secure a viable future for Royal Mail."

It has been revealed that ministers from Lord Mandelson's Whitehall department have held four separate meetings with a leading private sector bidder - Dutch giant TNT.

More than 140 Labour MPs have declared their opposition to the bill, which allows the part-privatisation to go ahead.

But, with Conservatives and Liberal Democrats generally in support of the plans, the chances of a major government defeat are remote.

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