Lord Mandelson says “market conditions” mean no Royal Mail privatisation

July 1, 2009 at 9:50 pm 2 comments


by Tony Grew

The First Secretary of State has told the House of Lords that the proposed part-privatisation of the Royal Mail has been postponed.

Asked by Lord Hunt of Wirral about his plans for the service, Lord Mandelson, First Secretary of State, Secretary of State for Business, Innovation and Skills and Lord President of the Council, said market conditions have made it impossible to identify a partner for the Royal Mail “on terms that we can be confident would secure value for the taxpayer.”

He said that the Postal Services Bill’s objectives have “no prospect” of being achieved but that a change in market conditions would leave the door open for the part-privatisation to go ahead.

“We remain convinced that Hooper’s combined package offers the best chance of securing the universal postal service while protecting Royal Mail pensions,” he told peers.

Tory spokesman Lord Hunt of Wirral complained that the Lords “learnt of a major change in government policy not here in Parliament but through the media.

“By shoving this critical Postal Services Bill into cold storage to suit their short-term political ends, despite the Conservative Party still standing ready to help see it on to the statute book, does the Secretary of State not realise that he and his colleagues are putting the trustees of the Royal Mail pension plan in an impossible position given the revaluation that took place on 31 March last?” he asked.

“What does he intend to do to restore confidence and certainty to everyone involved with the Royal Mail and its pension plan?”

Lord Mandelson said he had always “been clear that we would do a deal with the private sector only if it represented value for money for the taxpayer” and that the pensions shortfall “remains a matter for the company and the pension trustees.”

“The pensions deficit is a huge and growing burden on the Royal Mail,” he told the House of Lords.

“Annual payments to pensioners in the plan currently run at around £1 billion.

“However, government have to be fair to taxpayers.

“They cannot expect them to take responsibility for the deficit if the other challenges facing Royal Mail are not also addressed.”

Lord Mandelson told peers there will be no adverse impact on post office but the need for modernisation in the Royal Mail “has not gone away.”

“We have heard from both management and the union that they are up for change; they have to put that rhetoric into action and it is time to see it being delivered,” he said.

“In the coming months, we will look for full delivery of the changes to Royal Mail’s operations and working practices envisaged in the 2007 pay and modernisation agreement between the company and the unions.

“Endless industrial relations problems must stop in the Royal Mail, and we will look for evidence that there really is an appetite for modernisation in the company.”


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