Mandelson's warning
The last post: The Business Secretary says Royal Mail strike is a 'suicidal act'
Could a national strike spell the end of the Royal Mail?
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Emergency talks will take place with postal workers today to avert a national strike that would halt deliveries of 75 million letters and parcels daily, cost tens of millions of pounds and accelerate the loss of corporate business that imperils the Royal Mail's long-term future.
Unless a deal can be done in the next 24 hours, the Communication Workers Union (CWU) plans to call out all its 121,000 postal members at sorting and delivery offices in an escalating dispute over modernisation.
A stoppage – which would halt deliveries to 28 million homes and pile pressure on retailers in the run-up to Christmas – could take place seven days later. There was speculation yesterday it could be called for 22 October.
In the latest of a series of local strikes following stoppages in Bristol, Essex, Birmingham, Leeds and Edinburgh, all post will be halted in London today.
A business group, the Centre for Economic and Business Research, warned that a national strike lasting five days would cost the country £1.5bn. The Government warned it posed an even sterner test – to the very future of the postal service.
The Business Secretary Lord Mandelson, who was forced to abandon part-privatisation of Royal Mail in July, said: "It would be a suicidal act – turning more hard-pressed consumers and businesses away from using mail. The Government has backed Royal Mail financially with billions of pounds so that the company can modernise, but these strikes will impede that essential process... they are not the way to safeguard the future of our postal services."
Royal Mail's finances are haemorrhaging due to the rise of the internet and increased competition, which has seen its grip on the postal system loosened by rivals such as UK Mail and Dutch-owned TNT. Some of Britain's biggest retailers, Tesco, John Lewis, Amazon and Play.com, have already announced they are considering switching to competitors in the run-up to Christmas. The Department store chain House of Fraser dropped Royal Mail last week.
Last week, CWU announced that three-quarters of its members who voted were in favour of taking strike action in a row over pay, jobs, conditions and alleged bullying and harassment. Yesterday a "peace offer" from the CWU appeared to leave the two sides further apart than ever. The union offered to halt the action if Royal Mail agreed changes to working conditions for the next three years and provided a new "benefits package" for staff carrying out modernisation.
Dave Ward, the CWU's deputy general secretary, said: "Postal workers do not want to take strike action but neither are they prepared to put up with continuing attacks from a management which is failing. We have written to Royal Mail making it clear that the CWU is ready to issue notice for a national strike as voted for by three-quarters of postal workers. We have offered what we believe is a genuine alternative to reach a lasting agreement."
In an open letter last night, Royal Mail's managing director, Mark Higson, told Mr Ward: "What you describe as the 'CWU peace offer' does seem to be the opposite – it reads like a list of fresh demands against Royal Mail. This is hardly consistent with your description of it as a way of resolving this dispute peacefully."
At the heart of the dispute are changes designed to improve the efficiency of Royal Mail's 141,000 delivery workers, 20,000 of whom are not in the CWU. Under a deal two years ago, the union agreed to a rolling programme of changes but some have been unpopular, with staff also experiencing a pay freeze. They are being asked to work harder and in different roles, for example, delivery drivers helping out with sorting if they finish earlier than the end of their shift. Royal Mail is asking delivery postman to deliver to extra streets during the summer and to work to revised delivery routes generated by computers.
Both sides agree modernisation is necessary to secure the future of Royal Mail, founded by Charles I in 1635.
Although operating profits doubled to £321m in the year to April, this financial year it is forecasting a 10 per cent drop in post due to the recession and the rise of electronic communication, at a cost of £700m. Its pensions deficit has doubled to £6.8bn, and competition is crumbling its customer base.
Plans to sell off part of the network with the aim of driving up efficiency was halted in July, ostensibly because of the difficulty in obtaining a good price in the recession. However political commentators blamed opposition from 140 Labour backbenchers at a turbulent time for the Prime Minister.
Gordon Brown's spokesman said: "Obviously it is a difficult situation and what Pat McFadden [the Postal Affairs minister] is trying to do is keep in touch with the appropriate unions – he met the CWU yesterday – and the management of the business."
Asking for the conciliation service ACAS to be called in, Robert Hammond, post expert at Consumer Focus, said: "It's hugely disappointing to watch a great UK institution tear itself apart. A prolonged strike over Christmas could cripple the service. The bottom line is that there are no winners in this dispute. Royal Mail customers are already finding alternative ways of communicating and many will not return once the dispute is over."
The state of Royal Mail today...
Royal Mail Group is the business – 100 per cent owned by the state – which runs the Post Office network, the letter delivery service Royal Mail and the delivery/courier company Parcelforce.
Delivery
Daily collections are made from 113,000 post boxes, 14,300 post office branches and 87,000 businesses. Letters and parcels pass through 70 mail centres, eight regional distribution centres (for customer-sorted mail) and 3,000 delivery offices. There are 141,000 postal workers. To deliver the mail, they drive 30,000 red vehicles and ride 33,000 bicycles.
Performance
The industry regulator Postcomm stipulates that Royal Mail must deliver 93 per cent of first-class letters by the next day and 98.5 per cent of second-class letters within three days. In the first quarter of 2009-10, Royal Mail beat these targets, hitting 94.5 per cent and 98.9 per cent for first and second-class post respectively. 99.61 per cent of mail was delivered correctly, above the target of 99.5 per cent. There were 1,321,320 complaints about Royal Mail last year about lost, damaged or delayed post, with £13m in compensation paid.
Finances
In 2008-09, Royal Mail Group made an operating profit of £321m, twice the previous year's total of £162m. Its letters division moved from a £3m loss in 2007-08 to a £58m profit, despite a 5 per cent fall in the amount of mail delivered. Overall, the group's revenue increased by 2 per cent to £9.56bn. However, the business faces three big problems: increased competition from rivals; a pensions deficit which has doubled to £6.8bn; and a forecast 10 per cent drop in revenue this year. The increase in email use is expected to cut mail delivery revenues by £700m.
All of the group's business areas are open to competition. Rival operators collect letters and parcels from companies, sort them and take them to Royal Mail for delivery over the last mile. Royal Mail currently has a 60 per cent share of the business post collection.
... and the anatomy of the dispute
2007 Pay and Modernisation agreement
Royal Mail and the Communications Workers' Union both agree on the need for improvement to the postal service. The dispute, however, centres on the ongoing implementation of the Pay and Modernisation Agreement. Royal Mail says it has done nothing to break the spirit of the agreement, but the union maintains it has walked away from talks.
Jobs
Royal Mail argues that only one middle manager has faced compulsory redundancy in the past few years. The union maintains that the company is forcing people out by closing offices, making them commute long distances and by pressuring staff to work part time.
Pay
Royal Mail employees have been subject to a pay freeze since March. The CWU argues that its members deserve a better deal for enduring the modernisation programme and in light of group profits of £321m this year. Royal Mail says its letters division, where most work, recorded only wafer-thin profits of £58m last year.
Job security
Despite agreeing to job cuts, the CWU wants a greater degree of job security for its remaining members. The union argues Royal Mail will pressure members to go part time and force its members out by closing sites. Royal Mail says it expects those on 40-hour-week contracts to work their hours.
Pensions
Both sides agree the Royal Mail's pension deficit could soon top £10bn. The union argues Royal Mail is responsible, especially after the company took a contributions holiday between 1990 and 2003. The union says the Government should now underwrite the pension scheme, but Royal Mail claims a government offer was rejected by the union.
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Comments
This seems to be a repeat of the industrial actions of the 70's and 80's. They all lost and so will the Royal mail workers.
All private postal contractors have been allowed to bid for commercial work, but NONE have been given a remit to serve the public or domestic users, or been saddled with the Universal Postal Tariff which leaves the cost of sending a non priority letters under A5 size, and no more than 5mm think and a max weight of 100g, Then it only coast 30p to get an item from the Isle Of Wight to the Shetland Isle.
usually in 2-3 days- visit a competitors site it's cost £5.95 to send the same letter at the same or slower speed. - small wonder Royal Mail isn't profitable. If the mail is sold off then your charges will increase 10 times for the same service- it the meantime employees of Royal Mail will be forced on to part time casual contracts only giving guaranteed 15- 20 hours work a week at less than minimum wage while the company finds cheaper casual labour to replace your postman.
If this is the service you want then condemn the strike. If you want a reliable, cost effective service then support it and complain to Royal Mail Management and Civil Servants who allowed the unfair mail competition which lost the lucrative business to unfair competition in the first place.
Goodbye to the Royal Mail and your Unions, CWU a joke.
All letters will be "legal" when pin numbers come on line.
Parcels will be delivered by anyone who has a car.
So Mandy! What about your expenses warehouse? Is this not a suicidal act?
However Crosier and his mates have destroyed the service in five years, disillusioned the workforce, replaced a great many full time staff with untrained casuals, and ignored the public on the receiving end to chase the 100 big companies that really pay for the work.
Allowing TNT or anyone else to steal the big companies was a stupid step, and it is clear these companies will not deliver door to door from Lands End to John O' Groats daily!
Modernise by all means, but do it with a bit of intelligence!
You can bet a pound to a penny that Mandelson and his cronies have already worked out how to clean up here hence the lack of any material action to actually do anything to save the post office and every push to privatise it at every turn...
Once again we the British people are being stitched up like a kipper, the only people that will win here is Mandelson and his buddies, it seems obvious that New Labour are going to loot what they can before being thrown into political oblivion.
The last postal strike gave strength to the myriad of delivery companies that operate in the UK,Overseas companies like TNT thrive on postal strikes.
Postal workers need to look at the history of the post office to see just how they shoot themselves in the foot every time they strike,and a postman's feet are important.
Whilst the management may not be the best people around they are still in charge.
They do need however to remember that the Post office is a team effort and all the players need to be involved or at least talked and listened to.
Just because someone is content to just deliver mail does not mean that they do not understand the business or indeed have better ideas than management on how to modernise the system and move forward.
There is no one so deaf as those that wont listen
As I started before other students, I was given a post man's round to do. When I finished it (and Xmas cards meant most houses had something) and came back and asked what I should do next, I was told to go and have breakfast. Twice.
They have been living in cloud cuckoo land for ages (that was back in 1970). The place was run by the foreman. No sign of management. It is not mendable. Best to let it die.
A pity as our postman is good, and a local Post Office (different business) is a boon too.
But at least we know that no government (this is not party political) can run a business. Pity we leave them the MoD to play with.
It is painfull if you are a postman,or not "e-mailed up".No more popping out for a stamp and a natter.
Do it all from home,where you can be kept an eye on.
All revoloutions have casualties.
So the Prince of Darkness thinks it will be "Suicidal"?
More like cutting his chances of becoming a shareholder in what will become a new company.
We were all sold the idea that increased competition in the market would improve services... its a European thing forced upon us... that’s why in the early 90's lots of new delivery/parcel companies appeared.
Have we not learned anything yet??
Increased competition does not improve services, it degrades them. Competition (especially on price) means businesses have to make cost cuts in order to survive and that’s exactly what the Royal Mail has been doing by investing in equipment which costs less.. breaks down and cuts jobs. Those in the private sector also have to make sure that shareholders make money so more cuts are needed. Long term, the prices will increase, not come down because of a health competative market... its all a lie.
The UK government should have protected and invested in the Royal Mail by ensuring key services which had been provided by the Royal Mail for decades were protected. The problem was that due to EU laws, the government cannot show favour to a specific business in a competitive market.
Did increased competition improve the services of banks... no, it just cost every person in this country thousands of pounds each because in order to survive, thye had to become extreamly ruthless and take huge risks... does increased competition improve supermarkets... well it drives down prices but then all our farmers and food producers can't make a profit and go out of business costing us all a fortune. Does increased competition improve our car manufacturing base... no because in a down turn this government allows these companies to be bought out and run down by foreign owners resulting in job losses for thousands of people.
First we were loosing our manufacturing base (companies sold on the cheap to foreign owners who then took the work/jobs and equipment back to their own countries)... now our service industries, first its was the telephone support/advice lines moved to India, now our postage system is up for grabs on the cheap, no doubt to a foreign investor.
There's a clear trend going on... this labour government has privatised and sold off British assets like no other. These assets generated income for the government. Now, we have so few assets that the government is desperate to sell what little we have to get us out of the hole we are in, the Royal Mail is just part of this.
Good luck to the trade unions... they see it coming... they saw it coming when the coal mines were shut in the 80's (and we started importing coal from Poland) despite the fact that there's still coal to be mined and the death of Royal Mail is not far away.
This labour government and its shoddy, lying, con-artists they call MP's and their civil servants are an absolute disgrace and have brought this country to its knees. Don't forget to include the architect of this, good old Tony Blair who jumped ship just before the iceberg hit. But don't woory, seems he will be heading the EU in a few years.
corporeal_v001 in his comment above mentioned the industrial actions of the 701's and 80's and that they (the workers and unions) all lost. Wrong, the country lost because it was the workers and unions which saw what was comming... the end of the mining industry, the end of teh car industry, the end of the mail industry... and you can't blame the unions or the workers for trying to protect their jobs and the businesses they work for... because if you wait for the government to help by the time they do anything you will be on the dole.
If you live in a village, the far tips of Britain or an island... you should be worried. No private company will deliver to you... there's no money to be made and thats the fundamental problem. The royal mail, just like our railways are public services. The keyword is services (not businesses). They exist to provide a service... but all the government is interested in is making a profit and until that fundamental idea is grapsed, our service industries will continue to be degraded or lost completely.
As for Peter Mandleson and Gordon Brown... probably the most untrustworthy people on the planet who make promises and break them. What happened to 'the end of boom and bust' or the vote on the lisbon treaty.
God help us all.
Increased competition does improves the level of services because they have to compete to retain their customers and inefficient businesses are eventually removed by their more sucessful competitors. This is why BT and British Gas cannot dictate the terms their customers have to abide by because these customers will switch to a competitor. Prices are also reduced because a more efficient company can produce their products at a reduced cost and if another company undercuts them they will lose their customers if they also don't reduce their prices.
Many of Royal Mail's key services are still protected. No company can set up rival post boxes or create a rival postage system.
All state own companies that were sold off were sold because they were too expensive to run and were inefficient. EU law played no part in this (France has several large number of state owned companies).
The banks needed to be bailed out because they decided to do what was most profitable, not matter how risky it was. Any company that makes hundred of millions per year is not being pressured by competition.
For every farmer that goes out of business a more sucessful farmer buys their land and makes if more profitable. This does not cost the tax payer anything.
Oh no foreigners are buying failing British companies and firing surplus employees so that these companies can stop failing, how terrible. Are you zenophobic or is it also wrong when British companies by other British companies and fire unncessary employees?
Every company in Europe and the US is outsourcing their labour intensive industries to India and third world countries because it will greatly reduce their costs, which means that their good cost us less money to buy.
Why would we import coal from Poland when we're still mining our own coal (not all mines were shut)?
No we won because the Unions lost. The coal industry was dirty and was destroying the planet and the car industry failed because the Unions demanded higher wages and better working conditions, even though they were in a very competitive industry with strong competition from abroad. The death of Union is good for businesses and good for the public (closed shop agreements and mass strikes were not in the interests of the public).
Finally you seem to be blaming all of this on the Labour Government, even though it was the Conservatives who did many of the things you complain about. Care to explain this error.
I will answer you comments one by one.
My miss-information... is based on published evidence and personal experience. How can you really say that services from say British Gas has improved when price increases beyond that of the actual cost of raw gas has not reduced as wholesale prices reduce... the excuse now for high prices is because they are 'going green'.... what?s the next excuse... its just profiteering not competitive pricing.
My local post office used to do pensions, tv licences etc... I know a lot of this has gone online by why doesn't the post office go online too? Its a big organisation with post office premises and post boxes. Huge assets which should mean that it can easily compete with other private postal/parcel firms.
How come a state owned company is too expensive to run, yet can make a profit when in private hands... why can't a government employ people so a state company makes profits like a private company but put the profits back into providing a service rather than paying shareholders for doing nothing? Explain that because there is no reason why it can't be done.
France has several large state owned companies because despite being part of the EU, it only uses EU law when it suits France. Hence why there are so many strikes in France. The people stand up to the government and the government acts on the will of the people (how it should be). Its the other way round here in the UK.
So... a profitable company be it a bank doesn't take risks etc because of competition... it takes risks because its the most profitable... and why... because the competition on the stock market forces them to take risks in order to satisfy shareholders greed.
Re: Farmers and farming... ask any farmer and almost all rely on EU or UK government subsidies to exist. Most farm their land and get grants to farm for wildlife (which is good for wildlife) but it?s what farmers rely on to survive. Rely on what they get from supermarkets and they would be out of business... that?s why so few young people are attracted to farming because the returns are so poor.
It?s not Xenophobic to want to protect British jobs and British companies. It used to be called patriotic but we are not allowed to be that in these modern enlightened times!! I do not have a problem with British companies getting together to improve services and streamline... I do have a problem with selling British companies and assets on the cheap to foreign investors who then ship everything out of the UK... e.g. Rover.
Out sourcing to India and China...it may be cheaper but the service/product is also cheaper... outsourcing to these areas save the company money... it does not improve service. Lets hope they don't outsource your job to India... you might just have a different perspective then.
The mines still open and working only stayed open and working because ex-coal miners got together and purchased on the cheap from the UK government. They then continued to mine and found markets and coal which the government at the time said did not exist. Instead we imported coal from Poland and other countries.
The unions lost because of the all powerful idiots running the country. Now governments are talking about building green clean coal powered power stations... which are less dirty (apparently) but we do not have enough mines to supply the coal despite there being coal out there. I cannot believe the stupidity of thinking that the unions, the voice of the workers working at the coal face should be ignored. We have done this on may occasions and as a result lost key industries. Agreed the strikes do nothing to help the public but when big business and government just do not listen what else is the man on the street meant to do.
Believe me... the conservatives started this mass sale of British assets and the greed culture... to be honest I see very little difference between Oxford/Cambridge graduate Labour MP's and Oxford/Cambridge graduate Conservative MPs'. They are all the same to be honest.
...........and it's no good the postal workers sticking their heads in the sand pretending that the same does not apply to them. A strike at this stage would just send the message that the Royal Mail is all washed up as a business and private enterprise can do the job better, more cheaply and certainly more efficiantly.
Unless the postal workers drop their Luddite attitudes they will find that commercial firms have swallowed up their jobs and they will no longer have anything left to strike for.
If they are really anxious to stop the bickering, go to a third - neutral - party, one who can p-ublicly declare the true state!
clever system..
paperless post is the way to go if you want your customers to quickly get their correspondence electronically....we dont use the email as most the things we send bounce back or the account is full etc...you know the score...
regards
chris
Let’s not beat about the bush, Royal Mail bosses should get their backsides in gear and sort something out with the Communication Workers Union before a disastrous national postal strike takes effect. But of course, they won’t. Why? Because both the Prime Minister, and his boss, Lord Mandelson, want the strike to go ahead. The Government knows that industrial action by postal staff so near to Christmas will lack public support, thereby minimising objections to selling off Royal Mail, but anyone who thinks we’d be better off with a private postal company is, frankly, bonkers. A private company will increase prices and reduce delivery. Here’s an example; if I asked you to deliver a letter to my mate in Glasgow and offered you 39 pence for your trouble, what would you say? Exactly! But that’s what Royal Mail does, and a private company won’t. We should remind the Lord Of The Stings that Royal Mail is operated with money that the Government collects in the form of taxes, which means that WE own Royal Mail and without a referendum on the process, WE don’t want it sold off.
We call the nations spirit today---A spirit that will unite all of the people together to help UK to get through the recession.
We show disappointment at the postal strike, which will cost the economy 1.5 billion pounds and will damage UK economic competitive advantage in the world; Which will deepen the financial deficit of Britain; which will add the burden to the tax players.
For Royal mail, it should face with the high competition of the market. The strike will give all of the business opportunity to domestic and international competitors to take more market share. It will damage Royal mail’s market advantage in the long run.
We remind royal mail to think about their customers and market, other organisations, other people and nation concept. The strike will lead all of the policy maker’s and media and taxpayer’s effort to come to nothing.
There’s no natural disaster such as earthquake, flood here but human made disaster is coming at this special recession period. Who pay for the strike, taxpayers and the whole of UK?
We are against the royal mail strike and we are against strike from any special organisation because of its particular interest during this hard time. We also suggest participants will not follow union with self interest.
It is really the time to let the policy makers to try to reduce finance deficit and concentrate on the reform of the industry; it is really the time to let the tax players to work smoothly. It is internationally laughable indeed. It is the time we call all the people join together to against strike.
Don't the postal workers realise that it's not just them that are suffering in this time of recession and 'modernisation' - it's most of the working nation - we are all being hit hard.
I've been made redundant three times in the last ten years as companies I have worked on have downsized, so down blame the management of Royal Mail - blame the real culprit who seems to be getting off scot free - the internet - probably responsible for more job losses than any other single development since the beginning of the industrial revolution. So, don't hang yourselves and end up out of a job - get back to work and use your skill to keep it together. Anything else is downright stupidity.
My husband works long hours and they have not had a pay rise in 5 years. They are told like it or join the dole. We all are having to cut back etc.
I know a postman who starts at 6.00am and finishes at 2.00pm. What a job all afternoon off !!
I wish we could have another mail service where we could use their outlets and letter boxes.
I know if we did I wouldn't use Royal Mail.
My friends and myself included are sick or mail not arriving the prices and mail arrived opened.
When you complain all you get is "Do you know how many items pass through Royal Mail".
Looks like they can't handle the job. Please someone start up another business !!!
Why are the postman moaning they picked the job