Brown faces revolt over Royal Mail

The Government was on a collision course with Labour MPs today as ministers stood firm over controversial plans to part-privatise the Royal Mail despite opposition from a growing number of backbenchers.

Gordon Brown was facing the biggest backbench revolt since he became Prime Minister when it was revealed that 67 Labour MPs were backing moves to reject the plans to sell a minority stake in the postal group.

Business Secretary Lord Mandelson said today there was "no question" of privatising the Royal Mail - but he made clear the Government was pressing ahead with its plans.

Former ministers Malcolm Wicks, Frank Dobson and Michael Meacher are among those who have signed an early day motion (EDM) warning that selling a minority stake in the postal group would risk fracturing "one of Britain's greatest public services".

Lord Mandelson will meet Labour MPs later today to discuss their opposition as part of frantic behind-the-scenes moves on both sides of the argument.

The motion is tabled by Geraldine Smith (Morecambe and Lunesdale), who said: "Royal Mail is one of the country's oldest and most respected public bodies. In recent years it has been exposed to ever-increasing, unfair competition by the regulator. Part-privatisation is not the answer."

Ms Smith added that several "high-profile" Labour MPs were working behind the scenes to persuade ministers not to press ahead with the recommendations of an independent report by Richard Hooper last month.

She indicated that former deputy prime minister John Prescott may be among opponents of part-privatisation.

Asked if there was enough opposition on the Labour backbenches to prevent the scheme going ahead, Ms Smith told BBC Radio 4's Today programme: "Absolutely. When I have spoken to people, they have been more than willing to sign the EDM.

"There are a lot of high-profile people who have told me that they are going to try to persuade ministers behind the scenes - because let's remember, the Government haven't made up their mind on this yet.

"The only thing they have said is that they agree with Hooper. They haven't said they are going to implement the Hooper Report.

"And yes, I believe John Prescott may well be one of our supporters, but you will have to ask him."

John Grogan (Selby), one of the signatories of the motion, said: "In February 2007 the Government agreed a £1.2 billion loan to modernise the sorting offices. It is surprising that two years later only half of this money has been spent. £600 million of Government money remains available to fund modernisation - there is no need for private capital."

Billy Hayes, general secretary of the Communication Workers Union, said: "The Royal Mail is a successful and vital public service which does not need private capital to ensure modernisation.

"We strongly welcome this Early Day Motion which reflects the opinions of millions of ordinary people. The public is fed-up with privatisation and has suffered enough from flogging off public assets.

"The Labour Party has a clear commitment to a wholly publicly-owned Royal Mail. This EDM is further proof of the commitment of Labour MPs to a modern public postal service."

The biggest revolt faced by Mr Brown involved 43 Labour rebels who wanted to make it easier for unions to comply with the law on industrial action.

Jim McGovern, a ministerial aide in Lord Mandelson's Business Department, resigned last month in protest at the prospect of a foreign firm taking a stake in the Royal Mail.

Lord Mandelson told BBC TV's breakfast news: "We want to introduce a minority stake to team up with Royal Mail and bring much-needed investment and management expertise to enable the Royal Mail to become strong and viable."

Lord Mandelson told BBC Radio 4's Today programme: "It is very clear to me that the Royal Mail not only needs its system of regulation adjusting, it also needs its pension fund looked after, but it also needs modernisation, increased efficiency and it needs resources to do that.

"The Government can't be the sole financer of that investment. If we get that minority stakeholder, we will not only get resources for investment and modernisation, we will get much-needed management expertise and experience in turning round postal operators.

"But let me make it absolutely clear, the Royal Mail is staying in the public sector."

Shadow business secretary Alan Duncan said: "Once again it's becoming clearer that Labour Party splits and divisions are proving a roadblock to the vital reforms that will help ensure the future of Royal Mail.

"The Hooper review confirmed that we are in danger of losing the universal postal service unless there is urgent change, but Gordon Brown can't even get his own party to agree with his policies.

"Peter Mandelson's spin has completely failed to convince his own side. It's clear that he's going to rely heavily on our support if we're to secure a long-term postal service for Britain."