Royal Mail plan 'will go ahead'

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Lord Mandelson said he 'is not for turning' on Royal Mail part-privatisation

Business Secretary Lord Mandelson has said the UK Government will go ahead with controversial plans to part-privatise the Royal Mail.

And he attacked union officials, saying they were scaring off potential bidders, in a BBC Scotland interview.

The Royal Mail's huge pension deficit and the rise of e-mail mean the service will never be profitable in its current form, ministers have argued.

But there is expected to be Labour backbench rebellion over the reforms.

A bill being voted on in the Commons would bring in a range of reforms, such as an invitation to private firms to form partnerships with Royal Mail - including taking up to a 30% stake in its parcels and letters business.

I am definitely not for turning on the legislation Lord Mandelson Business secretary

The UK Government said the legislation would keep a commitment to public ownership - but more that 130 Labour MPs are expected to vote against the plans, after joining with unions to say the move would undermine the universal delivery service and threaten thousands of jobs.

But Lord Mandelson told BBC Scotland's Politics Show: "I am definitely not for turning on the legislation.

"We need the legislation to go through, not least because, unless we are successful in transforming the business, we won't be able to deliver salvation to the pension fund, which has a huge and growing deficit.

"If people think we can just change the regulatory framework for the Royal Mail, bail out the pension fund to the tune of billions (of pounds of) taxpayers money and then sit back and not see through the transformation of the businesses, then they have another thought coming."

Lord Mandelson said the financial crisis was putting off potential bidders for the Royal Mail - but he also lay blame at the door of the Communication Workers Union, (CWU), which has said the modernisation plans would cost 40,000 jobs.

'Bad signal'

He said the union had a "fixation of no change, no modernisation, everything private is bad, everything public is good and never the two should be mixed".

"We reject that sort of dogma - but it is creating political uncertainty that is putting off would-be bidders," said the business secretary.

Lord Mandelson went on to back the prime minister, telling BBC Scotland: "Politicians can either have, or ideally both, a bit of razzmatazz and serious substance and content - I think Gordon Brown emphasises, and has a great deal of, the substance and content."

He added: "We'll leave the razzmatazz to David Cameron, because that's all he has to offer."

And he business secretary went on to say he regretted the £517,000-a-year pension package given to Gordon Pell, the former Royal Bank of Scotland deputy chief executive.

He was the last survivor from the board which presided over the bank's ill-fated expansion, including its takeover of Dutch bank ABN Amro in 2007.

Lord Mandelson said: "I regret it because I think it gives a really bad signal."