UK Royal Mail and Postcomm cross swords over price control

Royal Mail and Postcomm have again clashed over the regulator’s proposed price control, with job losses at the postal service under the media microscope.

Royal Mail is disputing Postcomm’s proposal that it can increase the price of first-class stamps from 30p to at most 34p by 2010.

Chief executive Adam Crozier, speaking on Monday’s ‘Today’ programme on BBC Radio 4, said the proposals were a backwards step.

“The proposals would take the company back to where it was three years ago, when we were losing GBP1.7bn,” he said.

Royal Mail is pushing for a bigger increase and has previously said that the control would lead to 40,000 job losses.

However, Postcomm last week published a report by business consultants LECG, which said that Royal Mail has been planning a reduction of 30,000 jobs between 2005 and 2011 and has allocated money to cover it.

The report covered Royal Mail’s strategy and was commissioned by Postcomm to help it work out the proposed price control.

LECG said that Royal Mail hoped to avoid making redundancies and to secure the workforce reduction through staff retiring and moving on.

“Royal Mail plans to reduce frontline FTEs [full-time employees] by some 30,000 over the period 2005/06 to 2010/11. Royal Mail states in its strategic plan that it plans to achieve any headcount reduction largely through natural attrition, avoiding redundancies and the potential for industrial action. However, we note that Royal Mail is forecasting operational redundancy costs of GBPxm [sic] over the period 2006/07 to 2010/11,” the LECG authored report said.

The figure in the last sentence is unknown because Royal Mail asked for it to be excised due to its commercial sensitivity.

The Communication Workers’ Union said that the speculation about job cuts was “extremely unsettling” for postal workers.

Royal Mail chairman Allan Leighton said on Saturday “there will be no compulsory redundancies”.