Major Pushes Envelope Too Far In Move to Privatize British Post

Public loudly declares it will not support Thatcher-style move

PRIME Minister John Major has suffered a humiliating setback over Thatcher-style industrial privatization, the defining theme of the Conservative government's 15 years in power.

A rebel group of Conservative House of Commons backbenchers has stymied government plans to move the British Post Office out of the public sector by selling a controlling interest to private investors.

But Mr. Major's opponents have a good reason: The Post Office really delivers, with Britons regularly receiving mail twice a day - occasionally three times. It even turns a hefty profit.

Margaret Thatcher herself, whose torch privatizers say they bear, resisted pressure to privatize the trusted Royal Mail. She argued that voters would not tolerate a sell-off.

The development is widely seen as a stinging setback for a prime minister already beset by scandals within his government and unpopularity among voters.

It has also enraged right-wing Conservatives who regard privatization as the flagship policy of their party and say Major would be showing weakness to back down over the Post Office.

Since 1979 the Conservatives have privatized British Airways, British Telecom, British Steel, the national airport authority, and most of the electricity, gas, and water industries. They are also set to sell off most of British Rail.

Over the Post Office, however, Major finds himself the victim of a mix of public sentiment and parliamentary arithmetic. His Commons majority is down to 14 seats and the rebel group of about 20 members of Parliament (MPs) have the voting strength to defeat his government on the issue, and are evidently willing to do so.

Nicholas Winterton, a leader of the rebels, said Wednesday that he had told Michael Heseltine, the president of the board of trade, who hoped to steer a Post Office bill through the Commons, that the measure was ``a privatization too far.''

He and other Conservative MPs who oppose the Post Office sell-off had received a flood of mail from constituents expressing concerns that putting the country's letter- and parcel-delivery services in private ownership would lead to lower standards to the public.

Sir Keith Speed, a senior backbencher, said Post Office privatization was ``wildly unpopular'' in the countryside.

Other rebel MPs said selling off publicly-owned utilities had meant higher prices to consumers, and there was no guarantee the same thing would not happen to the Post Office.

At the Conservative's annual conference last month, Mr. Heseltine called the Post Office privatization program ``our outstanding achievement.'' But yesterday he admitted to the Cabinet that it was impossible to proceed with the measure as planned.

This angered right-wing Conservative MPs, who insisted Major take the rebels' challenge head-on. Edward Leigh, a former government minister, said: ``If we bottle out of this, the Labour Party will accuse us of drift and having run out of steam.''

THE Post Office is one of Britain's biggest industries. It delivers 60 million letters and 750,000 parcels a day and last year made a profit of 4.5 billion pounds ($2.8 billion).

Senior Post Office managers have been pressing the government to give them freedom to invest Post Office profits and achieve greater expansion, instead of returning revenue to the Treasury as happens now.

Bill Cockburn, its chief executive, wants to privatize. He says his organization faces fierce competition from private postal services in Britain and from official post offices on the Continent.

Mr. Cockburn insists that without the freedom to utilize its own profits, the British Post Office will stagnate. But the union of postal workers is campaigning against privatization, claiming it would mean job losses, fewer deliveries, and shutting down as many as 20,000 post offices.

The proposal Heseltine tried to get government MPs to accept would have given private investors 51 percent ownership. When he encountered backbench resistance, he suggested that 40 percent of shares should be sold to the public, with another 40 percent retained by the government, and the rest held in a trust fund on behalf of postal workers.

The rebellious backbenchers told Heseltine to forget both ideas.

This appeared to make it impossible for Major to include privatization in his shopping list of future legislation later this month, in which his government's future legislation will be listed.

It also looked like obliging the government either to leave the Post Office as it is, or to find a way of keeping it in the public sector while lifting restraints on the way it uses its profits.

But since the Treasury applies tight controls on public sector spending, Heseltine's advisers say they have told him that it would be extremely difficult to persuade it to modify its rules.

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