Royal Mail spends £5m on TVs and parties to raise staff morale

Royal Mail has given £5m to its workers in a morale-boosting campaign, most of which has been used to buy wide-screen TVs and other perks in the company's offices.

The scheme, First Line Fixed, was introduced by Royal Mail's chairman, Allan Leighton, last year. The money has been spent on a range of goods aimed at improving working conditions.

It has paid for sandwich makers, kettles and Christmas parties. It has also been spent on more extravagant goods, including several wide-screen TVs for some recreational rooms. One office is believed to have put in a request to buy a greyhound; managers turned this down.

The cash was distributed dependent on the size of the office. Around £58,000 is believed to have been given to the Nine Elms centre in south London. A Royal Mail spokesman declined to confirm the amount but said: "Nine Elms is certainly one of the biggest mail centres in the country."

The group, which in 2002 axed 16,600 jobs and is midway through a second wave of redundancies that will cut 15,000 positions, recently came under fire for its poor performance. A survey by consumer watchdog Postwatch estimated 14.4 million letters are lost each year. It believes 60 per cent of these go missing because postal workers put them through the wrong letterbox. Unions have blamed the poor performance on severe cutbacks in training.

However, the Royal Mail spokesman defended the First Line scheme and confirmed it would be repeated. "This was part of Allan Leighton's plans to make offices great places to work, and we listened to what individual staff wanted. By far the majority [of purchases] were to improve offices, and if wide-screen TVs improve morale, that's what it is for.

Although he declined to discuss figures, he confirmed the amount was likely to be "around the same". "The programme should be seen as something that has worked quite effectively."

Royal Mail reported a £611m loss last year, but the cost-cutting programme is expected to produce operating profits of £200m in 2004.