2 Jul 2009

Partial sale of Royal Mail shelved

2:51 pm on 2 July 2009

The British government has shelved a partial sale of the Royal Mail.

Business Secretary Lord Mandelson announced in the House of Lords on Wednesday that the sale would not proceed in the "current circumstances".

He said the state of the economy made it "impossible" to complete a deal on favourable terms.

A partial sale, opposed by many Labour MPs, had been due to go before Parliament before the summer break.

As a result, Labour has been accused of another U-turn. The Tories said the government was in a state of "paralysed indecision".

Shelving of the plan follows a partial U-turn on ID cards and a Commons defeat on part of its bill to clean up Parliament on Tuesday.

Lord Mandelson said the government remained convinced that selling off part of the Royal Mail was the best way forward and the issue would be revisited when market conditions changed.

Setback for govt

The BBC reports this is a huge setback for the government. It was a key litmus test for public sector reform for Gordon Brown's administration.

There has been growing speculation that a partial sale, which is a cause of discord within the Labour Party, would not go ahead before the next election.

More than 140 Labour backbenchers have signed a Commons motion critical of the plan. There had been rumours for weeks that the scheme could be shelved.