The Royal Mail faced losing its exclusive right to deliver letters after union leaders threw out a fresh pay and productivity package.
As the Communication Workers' Union rejected a peace formula endorsed by its own senior negotiators, the Government released more details on their proposals to introduce the toughest union laws since 1979 .
Under plans being considered for the Conservative election manifesto, public sector workers could be required to sign contracts forcing them to take disputes to arbitration. The system would amount to a "no-strike" regime and has been rejected by Tony Blair after strong protests from unions.
Ian Lang, President of the Board of Trade, made clear that among the targets for legislation would be the Royal Mail and London Underground.
"I think there is really no need at this stage of the 20th century for the nation to be brought to a halt by one narrow self-serving interest in a monopoly public service," he said.
Senior ministerial sources indicated there were likely to be announcements at the Tory Party conference at Bourne-mouth in October.
In an unexpected defiance of their leadership, the 24-strong postal executive of the CWU overwhelming rejected a formula thrashed out in 60 hours of talks at conciliation service Acas.
The union's top officials had shaken hands with Royal Mail representatives on the deal and predicted that the CWU would recommend it in a ballot of their 130,000 members. The executive, however, threw it out, maintaining their rejection in principle of "team-working" and insisting that 30 per cent of the mail should be set aside for the second delivery in order to protect jobs.
The union suspended a 48-hour stoppage due to begin today, but another day-long strike is scheduled for next Tuesday and the executive is expected to set dates for further action when it meets next Monday.
Both union leaders and Royal Mail management now expect the Government to carry out its threat to suspend the Royal Mail's monoply on delivering letters for less than pounds 1. Mr Lang was said to be keeping the situation "under close review".Reuse content