Weighing up the options for the postal service

Post by **TrueBlueTerrier** » 05 May 2009, 06:41

http://www.guardian.co.uk/uk/2009/may/0 ... re-options" onclick="window.open(this.href);return false;

• Stay the same: The government says this is not an option with the Royal Mail losing 8% of its business a year and in need of new management expertise to modernise. Unions say the Royal Mail made a profit of £255m in the last nine months of 2008 while failing to raise prices. Were expectations of a profit margin to be cut and prices raised, critics argue the competitive rigour of the Royal Mail could be easier to gauge.

Downside: The government would have to keep shouldering the cost of the pensions deficit with no prospect of diminishing bills for future years.

Plus side: Backbenchers, unions, Liberal Democrats and campaigners would be euphoric.

• Part-privatisation: This is the government's current plan. The business secretary, Lord Mandelson, wants the government to take the pensions deficit hit (almost £10bn) in return for at least 30% of the Royal Mail being sold to a private investor, probably Dutch company TNT.

Downside: Unions and more than 100 Labour MPs oppose it, meaning the government may only get it through parliament with Tory support. Plus side: The government can show it is capable of taking tough decisions.

• Not-for-profit model: A compromise that would be along the lines of Network Rail.

Downside: Backbenchers may balk at references to Network Rail which has its enemies. The government may doubt whether private sector management can be simulated this way.

Plus side: Has the backing of union leaders; parliamentary showdown averted and backbench mood lifted by new spirit of government compromise.

• Full privatisation: Not an option for the current government but the Tories are thought to favour a 100% sell-off .

Downside: Opposed by Labour MPs, some ministers and unions.

Plus side: For the government – none. If the Tories were to push for a 100% sell-off in a June Commons vote, the confusion could see Labour rebels voting against the government.