Year: 2005

Royal Mail failed to meet its delivery targets for more than 75percent of homes and businesses in Scotland last year, making the country’s postal service the worst in the UK.

The company -which has just announced record profits of Pounds 537m and given Adam Crozier, its Scottish chief executive, a bonus of Pounds 2.2m -managed to meet first-class delivery targets in only three out of 13 postcode areas.

The worst served area was Glasgow, where only 88.8% of letters and packages reached their destination on time. Edinburgh, Inverness and Falkirk fared slightly better at just under 91percent.

Across Scotland, 90.5percent of first-class letters were delivered the next working day, compared with a minimum target of 92.5percent and national averages in England, Wales and Northern Ireland of 91.5percent, 91.9percent and 90.7percent respectively.

There is a distinct spring in the step of virtually everyone at the Royal Mail these days, a newfound corporate confidence that issues from the office of chairman Allan Leighton and beyond.

Chief executive Adam Crozier has good reason to cheer; the pounds 3m pay and incentives package he got last week was the headline figure of a long-term incentive plan that would have looked difficult to hit three years ago.

His fellow executives did rather well too, and even the post staff each got pounds 1,000, a bonus that served to counteract some of the resentment Crozier and his colleagues may have provoked.

For once Royal Mail was in the headlines for all the right reasons – an operating profit of pounds 537m, a significant reduction in the number of days lost to industrial action, and progress made towards meeting its targets on deliveries and customer satisfaction.

A controversial plan to privatise Royal Mail has won crucial backing from new Trade & Industry Secretary Alan Johnson.

The plan, which echoes the partners concept of the John Lewis stores, was revealed by Financial Mail last December. It will start early next year when Royal Mail will raise Pounds 2.5 billion to give workers a 51 per cent stake in the business and to invest.

A source close to the talks between Royal Mail and the Department of Trade & Industry said: ‘Johnson is very keen on the privatisation idea.’

Senior sources at Royal Mail say private soundings suggest the plan has the support of 85 per cent of staff. This will be crucial when the Communication Workers Union, which opposes privatisation, tries to derail the process.

Department store John Lewis may well be the off-the- shelf ‘privatisation, but not as we know it’ solution that Allan Leighton has in mind.

The partnership, set up by John Spedan Lewis in 1929, is a private company whose shares are held in a trust for the benefit of its employees, or ‘partners’ as they are known. Like workers in the Royal Mail, they receive a share of profits – in the case of JLP, every year. This year they got 14 per cent of their salaries, a total cost to the company of pounds 106 million out of profits of pounds 216m.

The trust is controlled by the trustees – the chairman, deputy chairman and partners elected by the partnership council, a group of directly elected employees who hold the chairman to account twice a year.

Postal unions are vowing to block any moves to privatise or sell off part of the Royal Mail. The deputy general-secretary of the Communication Workers Union, Dave Ward, made clear the union would fight any plan to privatise or part-privatise the state-owned group.

Ward said that as Labour’s manifesto stated there were no privatisation plans, the union would raise the question of Tony Blair’s trustworthiness if the Government altered its position. ‘We will oppose this completely. If they press ahead with this it will become one of the big political issues of this term.’

His comments came after a week in which plans for an employee buy-out, with shares held in trust for workers, had been widely reported.