Royal Mail jobs to go as loss grows

The daily postbag has fallen from 80 million five years ago to 62 million, a decline of 20 per cent, with further reductions of five per cent a year predicted.

Chief executive Moya Greene said the average person was spending £18 a year on postage, highlighting the rise in texts, which now make up 50 per cent of personal messaging, and emails.

Around 65,000 full and part-time workers have left the business since 2002, including 5,500 in the past year, while 12 mail centres have closed and a further 16 are set to shut.

The letters and parcels business is now losing £2m a week, with losses for the 2010/11 financial year totalling £120m – the worst for seven years – compared with a £20m profit in the previous year.

The Royal Mail Group made an operating profit of £39m, down from £180m, with profits at the Post Office arm of the business declining from £33m to £21m as a result of lower revenues.

The General Logistic Systems business, which delivers parcels across Europe, saw its profits rise by 5.3 per cent to £118m in the past year.

Yesterday Ms Greene said the Royal Mail was in the middle of “very important” change, predicting further mail centre closures and job losses.

“With the decline in our volumes, we are going to be a smaller company in the future than we are today,” she said, although she declined to put a figure on how many postal workers would be made redundant.

“The next two years will be challenging. We need to reduce our costs faster than the decline in revenues from our core letter business.

“The pace of change in our mail centres will continue. We expect that around half of the mail centres could close by 2016/17.”

There are currently 59 mail centres, with two set to close in London, which has sparked the threat of a strike by members of the Communication Workers Union.

Ms Greene launched a new attack on the regulatory regime the Royal Mail has to operate under, saying the organisation lost 2.5p on every letter it delivered for a competitor, such as TNT and UK Mail, totalling £160m of losses in the past year alone.

The regulatory regime was a “stranglehold” said Ms Greene, calling for the Government to introduce a less “punitive” system. Royal Mail also revealed yesterday that its pension deficit had fallen from £8bn to £4.5bn following the Government decision to change the inflation measure from the Retail Price Index to the Consumer Price Index, as well as an increase in asset values.

But the organisation said its pension deficit was a “disproportionate burden”, with cash payments of £771m made last year.

Around £400m has been invested in modernisation, while the jobs of more than 100,000 workers were changing, said Ms Greene.

“We have to develop new products and services to meet the needs of our customers and generate additional revenues to offset the decline in earnings from our letters business.”

Ms Greene said progress had to be made in areas including lifting the “crushing” pensions liability and changing the regulatory regime before the Royal Mail was privatised.

The Postal Services Bill has been passed, but the privatisation is not expected before next year.

The Communication Workers Union said the results reflected the “damage” introducing competition had done to UK postal services and called for Royal Mail’s books to be opened to independent assessment.

The workforce was at breaking point, it said.