Plans to sell off Royal Mail on the backburner in slump

THE government is likely to put on hold its plans to sell off part of the Royal Mail, because it has run out of parliamentary time and market conditions are not right, business secretary Peter Mandelson said yesterday.

He pointed to the depressed state of financial markets as a reason not to sell a stake in the state-run postal services operator now.

The government has proposed selling part of the Royal Mail under a package of measures aimed at making the company more efficient and closing a pension fund deficit that some estimate could be as much as £10bn.

Legislation to allow a sale of up to 30 per cent of the operator has run into opposition from Labour party backbenchers, creating a problem for Prmie Minister Gordon Brown just after he put down an attempted revolt against his leadership of the party. Many left wingers in the party oppose part-privatisation of a key public service.

Private equity group CVC Partners has offered just under £2bn for the Royal Mail stake, but the government is thought to see that as not high enough.

Mandelson said there were encouraging signs of recovery in the economy, and reiterated his commitment to privatisation at some point.