The Financial Times Limited 2007/Freedom key to Royal Mail f

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Freedom key to Royal Mail future

By John Willman, Business Editor

Published: October 14 2007 22:28 | Last updated: October 14 2007 22:28

After one of the most bitter industrial disputes of recent years, unions will today vote on whether to accept a deal with Britain’s Royal Mail covering pay, pensions and modernisation.

But as hopes rise that further one-day national strikes can be avoided this week, the question is whether Royal Mail will win the freedom it needs to bring in far-reaching changes to its working practices, which are essential if it is to survive in a competitive postal market.

Since the 1980s, management at what was then called the Post Office have struggled to improve efficiency in an organisation whose sorting and delivery operations would be recognisable to a visitor from the 19th century. From early in the morning, bags of mail are hauled around the 1,400 delivery offices across the country and sorted by hand so that the post can be delivered to 29m addresses.

In other European countries machines speedily sort the post for delivery – making post offices 40 per cent more efficient than their British counterparts.

Eighteen months ago the government gave Royal Mail a £1.2bn ($2.4bn, €1.7bn) loan to invest in such equipment - modernisation that could lead to the loss of as many as 40,000 jobs.

In February it gave Allan Leighton, the postal operator’s chairman, the go-ahead for a â€