Consignia stirs backbench anger

The government’s problems with its backbenchers deepened yesterday as Labour MPs voiced anger at the prospect of job losses at Consignia and met a taxpayers’ bail-out for Railtrack shareholders with surly resignation.

Patricia Hewitt, trade and industry secretary, received a hostile reception when she told the Commons that plans to axe 15,000 Consignia jobs were “the first of several necessary steps” to renewing Britain’s postal service.

This could require another government bail-out of up to Pounds 400m to support the cost of generous redundancies needed to avert the threat of a national postal strike.

Ms Hewitt said Consignia would be allowed to skip dividends of Pounds 64m due to be paid to the government this year, and she would reconsider future payments in the light of the restructuring costs. But negotiations are expected with the Treasury over the return of dividends paid in previous years.

The prospect of a government showdown with union leaders intensified when Allan Leighton, the newly appointed chairman of Consignia, refused to rule out compulsory redundancies.

MPs called for a halt to moves by Postcomm, the regulator, to speed up the opening of the sector to competition, and expressed alarm at the impact of job losses and sub-post office closures on the poorest urban communities.

Stephen Byers, transport secretary, received a slightly easier ride when he justified his decision to use Pounds 300m of public money to help fund a successor to Railtrack on the grounds it was a “self-financing” move to get the company out of administration quickly.

The problems came against rising backbench dissent over Iraq, Tony Blair’s relations with rightwing leaders such as George W. Bush and Silvio Berlusconi, and private sector involvement in public services.

Margaret Beckett, rural affairs secretary, told the Financial Times that the government should heed backbenchers’ concerns because “most MPs are pretty sensible most of the time”.

Ms Hewitt said the Consignia job losses would be a blow to workers but marked a turning point for the loss-making company. The decision was unavoidable and must be “the first step towards renewal”.

John Cryer, MP for Hornchurch, said job losses would hit “the poorest and most vulnerable communities”. He called for investment in postal services and said Postcomm and the European Commission should be told to “get lost and stick their plans”.

News of the job losses angered unions. The Communication Workers Union threatened industrial action if any job losses were compulsory. Billy Hayes, general-secretary, said: “Any attempt by the Post Office or the government to force through the changes will be met with strike action.” He urged the government to go further than forgo this year’s dividend and use all of the Pounds 2bn paid in previous years to help soften the blow of proposed job cuts.

The union said it would work with management to solve the sector’s problems. However, it believed the problem was under-investment.

Ms Hewitt said the job losses were “extremely regrettable” and must have “come as a blow to many workers”.

She fuelled speculation of a possible boardroom shake-up. “He (Mr Leighton) will be responsible for getting a grip on the situation: to stem the losses, reform the company’s industrial relations and to develop a new vision and strategy for the future