Unrest threatens private link-up of RM

[Geezer]

Unrest threatens private link-up

By Brian Groom, Business and Employment Editor

http://www.ft.com/cms/s/0/8cf85bf6-c4f1 ... ab49a.html

Published: October 30 2009 02:00 | Last updated: October 30 2009 02:00

Further postal strikes would worsen Royal Mail's financial plight, accelerate the switch to e-mail and undermine its ability to maintain the universal postal service, according to the architect of the government's stalled part-privatisation plan.

Poor industrial relations were also "clearly an obstacle to finding a strategic partner", Richard Hooper told the Financial Times. His independent report last December called for one or more private companies to help to transform the state-owned operator, coupled with tackling its pension deficit and reforming regulation.

The government shelved plans to sell a 30 per cent stake in July. The Conservatives want to pursue privatisation if they win next spring's general election, but there are fears that bidders will be put off if Royal Mail's industrial problems remain unresolved.

Mr Hooper said Royal Mail was facing a "toxic combination" of a recession, loss of business to e-mail and strikes - "which we know from experience just increases people's migration away from the postal service to electronic methods".

"Any decline in the financial wellbeing of the company reduces the ability to maintain the universal postal service unless the taxpayer is willing to pour in billions more pounds," he said.

Mr Hooper's report described Royal Mail's ability to deliver to all 28m business and residential addresses in the UK as "part of our economic and social glue". The strikes could cost the company tens of millions of pounds, increasing fears that at some point deliveries may be cut from six days a week to five.

Analysts say eventually rural areas could get only three or four deliveries a week. Mr Hooper said that would "start to erode the whole point of it. Small and medium-sized businesses don't just happen in London, they happen in rural areas and remote areas and they are absolutely dependent on the universal postal service".

In spite of yesterday's harsh rhetoric, Royal Mail and the Communication Workers Union have twice in the past two weeks come close to a deal, based on postponing strikes and further changes in working practices until after Christmas while a new deal on modernisation and job security is negotiated.

On Tuesday night, substantial progress had been made after two days of talks at the Trades Union Congress in London.

However, Royal Mail claimed the CWU was unable to carry its own postal executive committee, which it said was split, with militant London members at odds with the rest of the country.

At 10.15am on Wednesday the CWU returned with a fresh proposal, which Royal Mail said included new demands such as guaranteed overtime for postal workers to clear the backlog and a halt to hiring of temporary staff. Dave Ward, the union's chief negotiator, left at noon for the CWU's Wimbledon headquarters - while Royal Mail managers waited at the TUC - but there was no further contact until the union confirmed at about 6pm that the strikes would go ahead.

Mr Ward said claims that it had made fresh demands were "complete nonsense". He said he had tabled a proposed deal he thought would end the dispute - including further talks involving Acas, the conciliation service - but Royal Mail had not responded by 6pm, so the union had no alternative but to let members know the strikes would go ahead.

Pressures are intensifying to find a solution. The longer it goes on, the harder it will be for the CWU to maintain unity. For Royal Mail, already struggling with a 10 per cent decline in mail volumes, losses will deepen.