Cabinet uneasy on Royal Mail sell-off

Cabinet ministers are still deadlocked over plans to privatise the Royal Mail as a further Tory backbencher added his name to the eight who have already formally expressed opposition to the proposal.

The issue, the most important item on the Government's legislative blueprint for the 1994-95 session, will be considered again at a further meeting of the Cabinet's industry sub- committee.

Meanwhile Patrick Cormack, MP for Staffordshire South, yesterday added his name to those of Tory backbenchers who have already signed an early day motion opposing the Government's plan.

The sub-committee, chaired by David Hunt, Chancellor of the Duchy of Lancaster, met for the first time yesterday since the completion of the consultative period following the summer Green Paper which said that ministers' preferred option was sale of 51 per cent of the Royal Mail and Parcelforce.

The meeting was held after disclosure of a report by Richard Adams, the Post Office's corporate planning director, suggesting that plans to guarantee the privatised Royal Mail exclusive trading links with Post Office Counters could run foul of EU competition laws.

Michael Heseltine, the President of the Board of Trade, who defended the proposals at the Tory conference in Bournemouth, and Kenneth Clarke, who insists that privatisation is needed if the Royal Mail is to be given the greater borrowing freedom it is demanding, have formed a powerful coalition behind the plan.

But John Major is certain to want strong reassurances from business managers that the measure will go through the House, if it is to be included in the Queen's Speech.

Douglas Hurd, the Foreign Secretary, who was initially doubtful, has been converted to Mr Heseltine's view, although he is likely to take seriously any suggestion that it could be defeated by a backbench rebellion.