Government bail on Royal Mail sale

The Government is postponing the sale of Royal Mail, allegedly because there's no time to pass the bill...

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Last Updated: 31 Aug 2010

Or at least, that’s Lord Mandelson’s explanation, and he’s sticking to it. In an interview in today’s FT, the Business Secretary said he was still keen to push the bill authorising the part-privatisation of Royal Mail through Parliament before the summer recess, but he was ‘being jostled by other bids for the remaining legislative days in the Commons’. In other words, the man who many think is now the most powerful in Government is claiming that he can’t find a spot for his own bill. The other big problem is that he can’t find a buyer willing to cough up the asking price – but he’s definitely not shelving it because it’s deeply unpopular with his own backbenchers, you understand…

Mandelson’s Royal Mail bill was in three parts: a reform of the regulatory system, a bail-out of its pension fund, and, most controversially, the sale of a minority stake to a ‘strategic partner’. However, in news that will come as no surprise whatsoever to anyone outside Whitehall, potential partners haven’t exactly been queuing up to take this stake off his hands. The Government’s only had one concrete offer, from private equity firm CVC Capital Partners (which has similar interests elsewhere in Europe), and even that was lower than hoped. Mandelson bemoaned the ‘unfavourable market conditions for an equity sale’ today – but with the world knee-deep in recession and credit hard to come by, what did he expect?

Now Mandy’s trying to suggest there’s just no time to debate the issue before the summer recess – which may or may not have something to do with the 140 Labour MPs who signed up to a Commons motion recently criticising the whole idea. Not surprisingly, the Tories aren’t buying this: David Cameron said Gordon Brown had ‘bottled it’, and he’s trying to call Labour’s bluff by offering up one of the two days reserved to debate Conservative motions before the recess. We’ll have to wait and see how Mandy manoeuvres his way out of that.

But although the debate may have been postponed, Mandelson insists that all three reforms will happen – and what’s more, they’ll happen together (‘We will not do one of these [reforms] without the others’, he told the FT). So presumably Royal Mail will now have to sit tight – still getting hammered by regulations, and still with a giant hole in its pension fund – until the Government finds a buyer and decides to brave the Commons. Which could take months.

And speaking of Mandelson, we thought we’d share this gem from the transcript of the FT’s interview (published on its website today):

FT: Do you want to start by paying tribute to Michael Jackson, Peter? Everyone else seems to be doing that.
PM: I’m not absolutely sure who Michael Jackson is. Is he the ... he’s called Jacko, isn’t he?
FT: I believe so, in the idiom, yeah.
PM: No, I don’t want to say anything about him, although I once nearly met him in Berlin.

Who says the Government's out of touch?


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Government bail on Royal Mail sale
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