The crisis over MPs’ expenses is concealing the other major disaster facing the Government before the summer if it doesn’t change course. Yesterday’s report that Royal Mail had doubled its annual profits to £321m raises again rather sharply whether it is really wise or necessary to part-privatise it, or whether that merely represents Mandelson’s obstinately clinging on to an increasingly discredited New Labour ideology. Rather than welcoming Royal Mail’s growing success within the public sector, he chose to draw attention to the huge increase in the pension deficit from £2.9bn to £6.8bn. But what he failed to note was that this results entirely from the irresponsibility of successive Governments (Tory from 1990-97 and then New Labour from 1997-2003) in taking employer contribution holidays away from the pension fund. Mandelson is now losing every argument over Royal Mail, and it’s no longer a rational discussion over what is the best policy. It is Mandelson digging in regardless of the arguments to save face and what is left of a crumbling New Labour privatisation programme. But for that he needs the Parliamentary numbers, and he doesn’t have them, as our campaign has shown.

No less than 147 Labour MPs signed Geraldine Smith’s EDM condemning semi-privatisation of Royal Mail and proposing instead the mechanisms for modernisation within the public sector. We have carefully checked this list and spoken to most of the signatories and are convinced that the absolute bottom line that can be relied on to resist the Whips’ arm-twisting and to vote with the conscience is 79. In fact most of us believe that this is a substantial under-estimate and that the real figure is between 80-120. On being asked, several new pledges are emerging in addition to the 147. Moreover, at least 8 PPSs have made clear they will resign in ordder to vote against the Bill as it now stands.
But whatever the exact figures turn out to be, there is no question that the Government cannot put through this measure without relying on Tory support. That is embarrassing enough – a Tory measure which requires Tory votes to force it through – but Gordon Brown can be certain that whilst the Tories may indicate their willingness to support the measure, at some point (whether at second reading or afterwards) they will rat on it by demanding conditions that they know the Government cannot accept, since defeating and humiliating the Government on a major Bill within a year of the election is more important to them than part-privatisation of the Royal Mail – which they can anyway fully privatise if they get power.
It would frankly be suicidal for the Government to bring forward this Bill into the Commons if the June 4 elections were to produce an electoral meltdown which puts Labour in 4th place behind UKIP. The arguments for negotiations and compromise are overwhelming. There is simply no case for risking a potentially terminal collapse of PLP support when all 4 of Royal Mail’s core business areas are now in profit for the first time in two decades despite difficult trading conditions, compared with only 7 years ago when it was losing more than £1 a day. There is even less of a case for handing over Royal Mail to the Dutch TNT which has just announced a 50% fall in profits for the first three months of this year, is in lengthy dispute with the German Government over payment of the minimum wage, has instituted a substantial redundancy programme and wage cuts, is now demanding a veto on the appointment of chief executive even with only a 30% stake, and is anyway now reported to have serious commercial doubts over the deal.

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