Page last updated at 14:20 GMT, Thursday, 11 June 2009 15:20 UK

Mail privatisation 'to go ahead'

Post box in central London
Plans to sell off part of Royal Mail are opposed by many Labour MPs

The government is insisting it will press ahead with the part-privatisation of Royal Mail, despite fresh demands by Labour MPs to drop the idea.

A Commons motion has been tabled urging ministers to rethink the proposals and keep the business in public hands.

But Business Secretary Lord Mandelson maintains the change has to take place, so the industry can survive.

Tory spokesman Ken Clarke said pushing the plan through was the "acid test" of a "lame duck" government's authority.

The plans are opposed by up to 140 Labour backbenchers and there has been speculation that they will be dropped after Prime Minister Gordon Brown survived a plot to force him out of office earlier this week.

Mr Brown's critics believe he may struggle to survive a large scale backbench rebellion on the issue.

Labour MPs, led by Lindsay Hoyle, have tabled a Commons motion urging ministers to rethink the proposals, and ensure the business remains wholly in the public sector.

'Acid test'

The motion says there are fresh doubts over whether the involvement of a private partner would improve the service, and that 75% of the public did not want it.

But Mr Clarke reminded MPs of Lord Mandelson's warning that any delay to the part-privatisation plan would merely serve to threaten the postal network's sustainability.

We remain committed to the legislation, which will be brought forward
Business Minister Pat McFadden

"This is the acid test of whether this lame-duck government is capable of delivering on difficult decisions," added the shadow business secretary.

No date has been set for the second reading of the Postal Services Bill, which cleared the Lords three weeks ago.

Mr Clarke demanded to know why the Bill was being delayed if not for reasons of "internal dissension" in the cabinet.

Business Minister Pat McFadden denied any date had ever been given for the Bill's second reading in the Commons and insisted: "We remain committed to the legislation, which will be brought forward."

'Legislative ether'

The Bill's second Commons reading had been expected two days ago but that time had come and gone without the legislation appearing.

Mr McFadden said the government was committed to reform of the Royal Mail because of the commercial challenges it faced.

Liberal Democrat business spokesman John Thurso complained that the legislation seemed to have "disappeared into the legislative ether".

He urged ministers to at least bring forward the part of the Bill dealing with regulatory provisions, if they did not want to bring forward the rest.

Mr McFadden agreed that regulatory change was needed and said this was at the heart of the Bill.

When Commons leader Harriet Harman later announced the business for the next fortnight, there was no mention of the Postal Services Bill on the schedule.

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