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Royal Mail?s plans to hand its 200,000 workers a stake in the business are to be pushed into the legislative long grass, with ministers unlikely to make any changes in the postal operator?s ownership structure for at least two years.
Alistair Darling, trade and industry secretary, plans to decide soon on whether to support in principle contentious proposals by Allan Leighton, Royal Mail chairman, for an employee share ownership scheme.
However, both he and Gordon Brown, the chancellor, are mindful that the issue is politically charged within the Labour party and could involve the use of public funds.
They are considering whether the scheme would be appropriate for the management of Royal Mail. But with affordability a central issue, and the government juggling a busy domestic agenda, a bill introducing any changes is unlikely before 2008, say Whitehall insiders.
A change in the ownership structure would require primary legislation. But officials said there was no room in the ?crowded? legislative programme for a bill in the current parliamentary session and little chance of inclusion in the next one.
Management and union leaders are divided over the plan. Mr Leighton has argued that the scheme is crucial to the state-owned postal operator?s business strategy and would give staff an incentive.
But the Communication Workers? Union is opposed, fearing it would be the first step towards privatisation.
Announcing details of a ?1.75bn government funding package to pay for modernisation, Mr Leighton on Thursday promised to press ahead with his proposals, suggesting that workers could be given the chance to own ?5,000 worth of shares.
The company, after receiving what it described as an overwhelmingly favourable response to the plan in a staff survey, said details could be announced in weeks.
Mr Leighton said that of more than 80,000 employees who had replied to his recent letter asking them whether they supported the scheme, only three opposed it.
Mr Darling faces a difficult decision and officials said discussions about the plan were ?at a very early stage?.
Labour made a pledge in last year?s election manifesto to keep the Royal Mail in public hands and the CWU has persuaded 199 of the party?s backbenchers to sign a House of Commons motion opposing any change.
The CWU has been holding a consultative ballot on the future of the Royal Mail and will announce the result at its annual conference in Bournemouth next week.