Consignia plans less severe cuts in Scotland

Allan Leighton, chairman of Consignia, signalled that the company’s Scottish operations – which employ 15,500 staff – would be less badly hit than other parts of the UK in the latest round of blood-letting at the embattled former Royal Mail.

A week after the company announced plans to make one in ten of its 170,000 workers redundant, to stem (pounds) 1m-a-day losses, Leighton said he felt losses in Scotland would not run at anywhere near 10%.

Following visits to plants in Glasgow yesterday, he said a smaller proportion of Scotland’s 1900 post offices would be closed than elsewhere by Consignia, which wants to slash its network of 9000 urban sub-post offices.

Leighton, a former chief executive of Asda supermarkets, gave a ringing commitment to the universal service obligation which requires Consignia to deliver mail across the UK at one price.

He said there was no reason why it should charge more

to deliver to Orkney than Edinburgh.

And he rubbished reports the company was seeking an increase in the number of exemptions from that requirement it was allowed, in respect of inaccessible areas.

Leighton, who was appointed chairman in March to help prepare the company for the introduction of partial competition in the postal market from next year, insisted Consignia had an important social function which it should not abandon.

While determined to make the operation more commercially effective Leighton said privatisation of the company was “not on my agenda”.

Given the parlous state of its finances Consignia probably could not be privatised. But Leighton insisted the company did not need to be privately- owned to compete with new entrants to the market.

However, employees will be offered shares in Consignia, which Leighton hopes would qualify each worker for a dividend worth (pounds) 600 to (pounds) 1000 in three years’ time.

After announcing a pre-tax loss of (pounds) 1.1bn for the year ended March and plans to revert to the name “Royal Mail”, last week, Consignia unveiled plans for a radical restructuring. This will entail the loss of 17,000 jobs, on top of 15,000 already announced.

No details were given of where the axe would fall, but union officials were worried 1500 posts would go in Scotland if cuts totalling 10% of the workforce were spread evenly across the UK.

Leighton said the company was still finalising its plans, but noted: “I don’t think there will be anywhere near 1500 (redundancies) in Scotland. The operations are very good.”

He declined to say if less than 1000 jobs would go, but reiterated his intention to avoid compulsory redundancies.

In a letter sent to all staff on Tuesday, Leighton wrote: “Where redundancies are necessary they will be both voluntary and gen-erous the people who will leave aren’t the ones that caused our problems.”

Talking to reporters Leighton said the problems grew over the last three years after management increased staff numbers, but expected growth in business volumes failed to materialise.

“We have far too many layers of management and will have to take some out,” he added.

Leighton thought a smaller proportion of Scottish urban sub-post offices would be affected by plans to slim down the com-pany’s network than elsewhere in the UK. Consignia is understood to be considering closing a third of its 9000 urban sub-post offices.

In Scotland, 1200 out of a total of 1900 post offices are in rural areas where Consignia has committed to keeping offices open with government help.