Lord Mandelson: Royal Mail part-privatisation is 'only credible option'

The Government wants to sell off around 30 per cent of the Royal Mail to help modernise the flailing business.

Today the Business Secretary published the Postal Services Bill along with a policy statement setting out in more detail the Government's plans.

The Bill said the Royal Mail will be enshrined in legislation as a publicly-owned company. No Government will be able to change this status without further primary legislation in the future.

Post Office Ltd will be entirely owned by the Government, and this status will not be changed without further primary legislation in the future.

The universal service - letters collected and delivered anywhere in the UK, six days a week, for a single, affordable price - will be written into the legislation.

Postal regulator Postcomm will be abolished and its responsibilities switched to Ofcom, which regulates the communications industry.

He said: "Our policy will keep Royal Mail in the public sector and this legislation makes this clear. The Royal Mail will run out of money to sustain its current universal, six-day service unless its pension fund deficit is solved and its business transformed.

"Faced with this challenge, I am determined to protect the universal service and secure Royal Mail's future.

"The public deserves the best possible mail service, and if we are asking the taxpayer to take on Royal Mail's huge pension deficit, it must deliver a full, improved letters service in return.

"Royal Mail is lagging behind its international counterparts and this needs to change."

Clive Davenport, of the Federation of Small Businesses, said: "Small businesses cannot afford to see any more Post Office closures. "Figures from a poll of more than 5,000 FSB members show that 80 per cent of small firms are dependent on Post Office services.

"However, the current system is not operating efficiently, with nearly 20 per cent waiting in longer queues and a similar number travelling further now their local branch has been closed.

"The FSB is urging the Government to ensure we have a fully operational postal service to serve the needs of our 4.7 million small businesses."

Mr Hayes said: "This Bill is rightly being called controversial. There are no surprises and no new concessions at all in the draft Bill published this morning.

"There is still no convincing argument for privatisation. Any private stake in Royal Mail will take money out of the business for private profits and lead to a reduction in services and rise in consumer prices.

"Privatisation will also trigger thousands more jobs losses at a time when the Government should be leading on job retention.

"The British public does not want its postal service to be flogged off. It's also clear that there's no support among Labour MPs for this move, which is why Lord Mandelson introduced it in the House of Lords. We welcome investment and pension security but privatisation is not a necessary part of the equation."