Royal Mail facing more job cuts, admits minister

Further job losses are likely as part of the modernisation of Royal Mail, Business Minister Pat McFadden said today.

Both Royal Mail's management and the unions recognised that fewer people would work for the state-owned company in future, he said.

Union dissatisfaction over the Royal Mail's modernisation programme, pay and job cuts last year led to wildcat strikes followed by a series of official walkouts.

At Commons question time, Mr McFadden said: "During the dispute before Christmas we kept in touch with both sides, encouraging an agreement on modernisation of Royal Mail.

"These talks are continuing and I believe that in the context of falling mail volumes and the greater use of new technology both Royal Mail and representatives of the workforce understand that there are likely to be fewer people working for Royal Mail in the future than there are today."

Labour's John Robertson (Glasgow NW) said he was "disappointed" that Mr McFadden was not taking a more active role in talks between the Royal Mail and the unions.

Mr McFadden said the Government had put a "considerable" amount of money into the Royal Mail.

But the company's multi-billion pound pension deficit was an issue for the Royal Mail to tackle, he said.

The Government was forced to ditch legislation that would have seen the state bail out the pension deficit as part of a package involving the part-privatisation of Royal Mail.

In the face of opposition from Labour MPs and the Communication Workers Union, Business Secretary Lord Mandelson dropped the legislation, claiming that market conditions meant it was not the right time to find a buyer for a share of Royal Mail.

Mr McFadden said the Government had made clear the pension bailout was part of that package and "not something that items can be picked out one by one".

Shadow business minister Jonathan Djanogly said: "Royal Mail requires urgent structural reform if it and its employers are going to move forward.

"However the unions and Labour backbenchers have forced a weak Government to pull the Postal Services Bill.

"So what, other than Conservative government, is going to deliver any action for reform?"

Mr McFadden told him: "We did not proceed with the Postal Services Bill because the market conditions did not allow us to get the best value for money for the taxpayer."

The Tories would privatise the Royal Mail, Mr McFadden said, adding: "That is not our proposal, it wasn't our proposal in the past."

The Royal Mail last month reported an increase in its half-yearly operating profit by £7 million to £184 million despite a continuing decline in the number of letters posted.

Profits were up by 4 per cent in the six months to September, when deliveries in some parts of the country, including London, were hit by unofficial strikes.

The daily postbag averaged 72 million, down by three million from the previous year and 12 million fewer than in 2006.

About 5,000 jobs were cut in the period, bringing the total to 60,000 since 2002 through voluntary redundancy or natural turnover, leaving a workforce of 171,400.