Caroline Fitzner

Is privatising the Royal Mail viable?

Is privatising the Royal Mail viable?
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Over the summer, as the postal crisis mounted, the government argued that adverse market conditions deterred potential investors. Regardless of the ongoing industrial dispute, the government maintain that Lord Mandelson’s bill will not be reintroduced unless conditions improved. According to the Guardian, Ken Clarke, the shadow business secretary, believes that there is still demand in the public sector to buy the Royal Mail, providing the CWU accepts modernisation and ends the strikes.

‘Ken Clarke, the shadow business secretary, has held talks on the sale of Royal Mail with potential bidders, and the party believes there is still a desire in the private sector to take over the company. The Conservatives' resolve has hardened over the last few days as union leaders and management remain deadlocked.’

This would suggest that the bill remains shelved because of feared backbench rebellion rather than the continued absence of private interest, an argument the Tories have deployed against Brown and Mandelson in recent weeks.

But how to force the CWU into submission? For the Conservatives, the solution is straightforward: reintroduce the bill to put pressure on the union by attracting potential investors to re-finance the Royal Mail.

As talks degenerate and the Royal Mail’s financial crisis deepens, government intervention in the cause of privatisation is the sensible response. On a separate note, success in such a venture would restore the government’s reformist credentials. However, in view of concerted union and backbench opposition so far, it is doubtful whether the government has the strength to force the bill through parliament. Privatisation might have to wait for a Conservative majority, armed with a popular mandate.