Britain scraps Royal Mail sell-off plans: Mandelson
LONDON: The British government has ditched plans to part-privatise the state-owned postal operator Royal Mail due to "market conditions," Business Secretary Peter Mandelson said Wednesday.
"Market conditions have made it impossible to conclude the process to identify a partner for the Royal Mail on terms we can be confident would secure value for the taxpayer," Mandelson told Britain's upper house of parliament, the House of Lords.
The announcement marked a major U-turn for Prime Minister Gordon Brown's Labour government -- but Mandelson vowed to re-visit the issue once volatile economic conditions returned to normal.
"There is no prospect in current circumstances of achieving the objectives of the Postal Services Bill. When market conditions change we will return to the issue," he told the House of Lords.
In December, the government revealed that it had received interest from Dutch company TNT over the proposed partial privatisation of up to 30 percent of the company.
"We have thoroughly tested the market to see who is interested in partnership, but economic circumstances, I need hardly point out, are extremely difficult," Mandelson added on Wednesday.
"I have always been clear that we would only do a deal with the private sector if it represented value for money for the taxpayer.
"Our market testing has shown now is not the time to sell a minority stake in Royal Mail."
Ministers had argued that private sector investment was urgently required to secure the future of the Royal Mail, which is facing a pension deficit of up to eight billion pounds (nine billion euros, 13 billion dollars).
In December, TNT proposed a "strategic partnership" in which it would hold a "substantial minority shareholding" in Royal Mail.
But the plans hit the buffers when TNT balked at the valuation put on Royal Mail.
Prime Minister Gordon Brown told Sky News the decision was taken "partly because of the recession in Britain, but it is also because we had international investors interested at one point, but we have got a recession in the rest of Europe as well."
The proposals also faced strong opposition from the Communications Workers Union (CWU), which threatened to vote to break its historic ties with the governing Labour Party over the issue.
Brown was facing the prospect of a rebellion at the second reading of a bill on the proposed changes after 150 of Labour's backbench lawmakers signed a parliamentary motion opposing the sell-off.
Mandelson said last year that an independent review of the service had found that the status quo was "untenable" because Britons were sending fewer and fewer letters as they turned to new technology such as e-mail.