LONDON - The coalition government said it wanted to part-privatise Royal Mail risking a clash with unions.
"We will seek to ensure an injection of private capital into Royal Mail, including opportunities for employee ownership," the programme for government released by the Conservative-Liberal Democrat coalition said on Thursday.
The Post Office, which has a network of branches offering retail services throughout Britain, will remain publicly owned, the government said in its coalition agreement.
The plan was announced as Royal Mail Group reported a 26 percent rise in operating profit to 404 million pounds in the year to March, saying the performance was due to modernisation and greater efficiency.
The new government has launched a drive to cut a 2010-11 budget deficit forecast at 163 billion pounds. Bringing in a private investor to Royal Mail would ease the strain of finding the investment the firm needs to modernise.
Prime Minister David Cameron's government is reviving an idea shelved by the former Labour government, ousted following the May 6 election. Then Business Secretary Peter Mandelson suspended plans to sell up to 30 percent of Royal Mail last year, citing adverse market conditions.
Royal Mail's business has come under pressure from new competitors and growing use of e-mail. It also faces a pension fund deficit put at up to 10 billion pounds.
Mandelson's proposal ran into strong opposition from unions and Labour politicians.
"This is old politics wrapped in new language. The British public has consistently rejected the privatisation of Royal Mail. The move to regurgitate failed policies will be deeply unpopular," said Billy Hayes, general secretary of the Communication Workers Union which represents postal workers.
A spokeswoman for Royal Mail declined comment.
Postal workers backed a three-year deal on jobs, pay and modernisation in April, ending a dispute that led to two waves of strikes last year.
The coalition of centre-right Conservatives and centre-left Lib Dems did not say what percentage of Royal Mail it was looking to privatise.
In their election manifesto, the Lib Dems said 49 percent of Royal Mail would be sold to create funds for investment.
"The ownership of the other 51 percent will be divided between an employee trust and the government," it said.
It was unclear whether this proposal will be adopted by the coalition in which the Conservatives are the senior partner.
Private equity group CVC Partners was reported last year to have offered just under 2 billion pounds for a 30 percent stake in Royal Mail and Dutch company TNT also expressed an interest.
Royal Mail said on Thursday three quarters of a 2 billion pound investment plan to transform its operations had been spent. "Continuing to invest in our business will be essential to keep up the pace of modernisation," it said.
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