Page last updated at 17:54 GMT, Wednesday, 25 February 2009

Mandelson puts forward mail plans

Lord Mandelson
Lord Mandelson introduces the Royal Mail bill in the House of Lords

Business Secretary, Lord Mandelson has introduced the controversial bill which would part-privatise the Royal Mail, a day earlier than expected.

The plans to sell off 30% of Royal Mail were not debated and were given a First Reading in the House of Lords.

There were protests against the plans on Tuesday and 130 Labour MPs have signed a motion opposing them.

Labour peer Lord Clarke, a former postman, shouted "shame on you" as Lord Mandelson introduced the bill.

Details of the Postal Services Bill will not be published until Thursday but the government wants to sell a 30% stake of the Royal Mail, to help fund modernisation but insist overall its ownership will stay in public hands.

'Not content'

Meanwhile the government would take on responsibility for the pension scheme, the deficit of which is believed to be about 8bn, as part of the package.

But many Labour MPs are angry about the plans, arguing the party made a manifesto commitment to keep the Royal Mail in public hands.

The BBC's political editor, Nick Robinson, said that by introducing the bill in the House of Lords, the government had given themselves a couple of months to try to win the argument.

This is strictly political and nothing to do with efficiency
Joannie, London

Downing Street has denied reports the rebellion had spread to the cabinet. The prime minister's official spokesman said he "does not accept there's any difference of opinion in the cabinet on the substance and overall policy" on the Royal Mail.

Introducing the bill on Wednesday Lord Mandelson told peers the bill would "make provision for the restructuring of the Royal Mail Group and of the Royal Mail pension plan".

It would also "make new provision about the regulation of postal services", he said.

But he was heckled by Lord Clarke, who was deputy general secretary of the postal workers' union in the 1980s. He also shouted "not content" as Lord Speaker Baroness Hayman asked who was in favour of giving the bill a first reading.

Lord Mandelson told the BBC on Wednesday he was determined not to walk away from the plans, despite the "political pain" - adding that without new investment the Royal Mail was in danger of running out of money.

He argues that the taxpayer cannot be expected to fund potential liabilities in the region of 8bn without seeing an improvement in the performance of the company.

But opponents say there is no need to link the pension fund package with the part-privatisation.

The Communication Workers' Union accused the government of trying to "scare" MPs into voting the plan through, by publishing a letter from Royal Mail pension fund trustees warning that it faces disaster if the sale does not go through.

The bill was given its first reading - essentially a formality which allows it to be printed so peers and MPs can see the proposals in detail. It will be debated in full at its second reading - expected on 10 March.

It had been expected that the bill would be introduced on Thursday but the Department for Business, Enterprise and Regulatory Reform denied it had been moved forward and said it was usual procedure for Lord Mandelson to make a statement before peers the day before.

They said nothing had been altered in the timetable for the bill - as it would be published on the Parliamentary website on Thursday.

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