Earlier this week, Royal Mail chairman Allan Leighton told MPs that he wants to give staff a 20% stake in the business.
However, according to a report in The Times, legal advice from the House of Commons Library said that any disposal of shares that is not into a joint venture would require new primary legislation.
The advice was given to Labour MP John Grogan, who is supported by 171 MPs in his call for an early day motion demanding that Royal Mail remains a fully public organisation with no share offers to employees.
The share plan is currently being considered by Trade and Industry Secretary Alan Johnson. However, the Treasury is understood to be concerned over the cost of administering the scheme.
Grogan is adamant that the share offer should be opposed because it is likely to lead to full privatisation of Royal Mail. "It would be a cost to the business and would not bring in additional funds," he was quoted saying in The Times.
Leighton appeared before a Trade and Industry Select Committee this Tuesday. He said that he was optimistic about getting government support for issuing shares to Royal Mail's 180,000 employees through a specially created trust.
Royal Mail is worried about its future funding, which it says will be challenged by its 拢4bn pension scheme deficit and the need to invest 拢2.2bn in modernisation, and is seeking to improve its balance sheet.
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