Leighton confirms Consignia role as 11,000 jobs face axe

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Allan Leighton, the temporary chairman of Consignia, is expected to announce today that he will head the troubled group on a permanent basis as it announces yet another round of massive job cuts.

One of Mr Leighton's first duties in his new post will be to present the case for cutting 11,000 staff from the workforce.

Consignia, the renamed Post Office, will also reveal a plan for a radical upheaval in the Parcelforce business, which has been losing £15m a month.

The group is expected to set aside hundreds of millions of pounds in its accounts for severance payments to workers, most of whom are expected to leave voluntarily.

Parcelforce will bear the brunt of the cutbacks announced today, but jobs are also likely to go in administration and in the central management of the post office network.

Directors are planning up to 30,000 job losses out of its 200,000-strong workforce in an attempt to cut costs and make the group more profitable. Union leaders are expecting a separate tranche of redundancies at Royal Mail, which is facing fierce competition under the new commercial regime introduced by the industry's regulator PostComm.

Consignia reported a loss of £281m for the six months to 31 October and closed 500 post offices out of Britain's 18,000-strong network last year.

A Consignia spokeswoman said yesterday the group was losing £1.5m a day and the current "business model" would not sustain the present level of costs."That's why we have made clear that, as a minimum, we need to reduce our current cost base by 15 per cent, or £1.2bn."

The spokeswoman refused to discuss the details of any job losses, but said: "There is no option but to make radical changes within our business if we are to restore profitability, deliver positive cash flow, improve services and make this a better place to work."

The group is preparing its response to proposals by Postcomm to end the company's monopoly over mail costing less than £1. The regulator wants to allow competition for bulk mail. It is envisaged more of the market will be opened up in 2004, with the entire postal market deregulated in 2006.

Following protests from the management and union leaders, the regulator has extended a consultation period over the proposals. The company and employees' leaders have argued the speed and extent of the intended liberalisation would threaten Consignia's ability to provide a universal service throughout Britain.

The management recently avoided nationwide industrial action at the group after pledging it will do all it can to ensure the redundancies are voluntary. The group is attempting to ensure that those whose jobs are redundant – but who want to stay on – are found employment elsewhere in the company. Managers are hoping other cutbacks will be achieved through natural wastage.

Mr Leighton, the former chief executive of Asda, has been persuaded to take on the group chairmanship permanently by Patricia Hewitt, the Secretary of State for Trade and Industry. He had previously turned it down.

It is not clear what will happen to his other interests. After his decision to leave Asda he has become chairman of lastminute.com, Bhs and Cannons, the health and fitness group. He is deputy chairman of Leeds United and on the board at ScottishPower, the vacuum cleaner company Dyson and the satellite broadcaster BSkyB. He stood in as chief executive at the housebuilder Wilson Connolly until January, when he reverted to the chairmanship.

The DTI appointed him a non-executive director of Consignia in April 2001. It is known that Mr Leighton, 48, is unhappy with the Consignia name, but Whitehall sources pointed out that it cost £1.5m to change it. "Eyebrows will be raised if he decides to spend more money on changing it back. Money is a scarce commodity at the organisation."