By Tash Shifrin
A committee of MPs has condemned the government’s Postal Services Bill, which would allow part-privatisation of Royal Mail.
A committee of MPs has condemned the government’s Postal Services Bill, which would allow part-privatisation of Royal Mail.The Commons business and enterprise select committee said it was ‘entirely unacceptable’ to ask Parliament to approve
the controversial sell-off without crucial information and while ministers appeared ‘to have no business plan’.
The government had not indicated how much money Royal Mail needed for investment or explained how private capital would be used, the MPs said.
Business Secretary Lord Mandelson announced plans to sell a 30% equity stake in Royal Mail in December, following a review of the company’s future by Richard Hooper, former deputy director of Ofcom.
Hooper’s recommendations included the government taking on responsibility for the Royal Mail’s multibillion-pound pension deficit and changes to the regulatory structure, as well as the involvement of a ‘strategic partner’ from the private sector.
The government followed Hooper in insisting that his recommendations must be adopted as a package, putting this into legislative form in the Bill introduced in the House of Lords.
Postal affairs minister Pat McFadden told Public Finance: ‘The full package of measures we are proposing is needed to safeguard the future of Royal Mail and the one-price-goes-anywhere, six-day-a-week, universal postal service.’
But the MPs – who supported the pensions and regulatory proposals in the Bill – said the government had not made the case that these reforms must be linked with the sale of equity to a private sector partner.
In a report published on April 1, the MPs said they were not persuaded that allowing such a partnership was ‘necessary or desirable’.
The committee also warned: ‘The definition of “publicly owned” in the Bill would apply even where the private sector held a 49.9 % stake.’
Either the government had not fully thought through potential share sales, or it had done so and was ‘refusing to reveal its hand’, the MPs concluded. The proposed 30% private stake ‘does not look like an endgame to us’.
The MPs also called for ‘more information about the practical consequences’ of the proposed separation of Royal Mail from the Post Office, which runs local post offices.
