Royal Mail sell-off plan shelved

Plans to part-privatise the Royal Mail have been sidelined after business minister Lord Mandelson said there was “no prospect” of a sale in the current climate. The climbdown came after it became apparent that the government was not going to get what it wanted for its stake, with asset prices depressed due to the lack of available credit. Lord Mandelson said the government would return to the sale at a later stage, but with the future uncertain it may have to face up to the failure of its plan instead.

A number of bidders, including Germany’s Deutsche Post and Posten AB, the Swedish operator, were said to have dropped out of the process after the price rose too high. However those that were left, like private equity group CVC Capital Partners and TNT, eventually balked at the government’s valuation.

Critics of the sell-off – including rail unions and a number of Labour MPs, who had tabled a motion against the sale – will applaud the decision by the government, which had argued that a part-sale of the Royal Mail was vital to its continuing survival. The group has a £8bn pension shortfall which it is struggling to fund, and now looks likely to be bailed out with taxpayer money. However those opposed to the sale said that the benefits would be outweighed by job cuts and loss of services.

There were some voices critical of the government’s decision, claiming that it was only made to increase the government’s popularity in the long run-up to the next election.

WHAT THEY ARE SAYING:Ken Clarke, the shadow business secretary, in the Times: "This Government is in a state of paralysed indecision on every difficult issue. Peter Mandelson said recently that the Government was committed to the policy of part-privatisation and that the Royal Mail was in a crisis. He has frequently said that the status quo is not an option. He is now leaving the Royal Mail to slide into more rapid decline."

Andrew Porter in the Daily Telegraph: "David Cameron, the Conservative leader, offered to support the plans when they came to the Commons. That meant Mr Brown, with many Labour MPs set to rebel, could still have forced the controversial package of measures through. But the political humiliation of having to rely on Tory support was too much for Mr Brown." ·