Can Leighton letter save Royal Mail?

THOUSANDS of letters are this weekend dropping through the letterboxes of postal workers. Letters from the boss. And they do not make comfortable reading. He is wounded by last week's devastatingly critical Despatches documentary on Channel 4 and lacerated by Press criticism of declining standards.

Now Royal Mail chairman Allan Leighton has written to all 200,000 staff in a desperate attempt to keep his modernisation programme on track. He has to keep his huge workforce behind him as he attempts to drive through what he describes as 'probably the biggest transition in British industry for 20 years'.

Acknowledging that Press coverage has been 'pretty critical' and that the Despatches programme made 'awful viewing', Leighton's letter admits: 'We can't have individuals in the company who cause us and our customers harm. This is clearly unacceptable and we will have to deal with it.'

But if employees thought weeding out a few 'bad apples' was all Leighton was after, the letter makes it clear that the pain will be spread much wider.

Poor service levels in some areas are giving rise for concern. The single delivery system is taking time to bed down when it is introduced. And in some offices 'there are bigger concerns'.

But Leighton wants change 'right now', particularly if he is to realise his ambition to make Royal Mail a viable commercial operation by this time next year, when he plans to quit.

It is not open to Royal Mail to buy its way out of trouble by mechanising the mail service. Much has to be done by hand. And often by the hand of poorly paid, poorly educated people, some of whom are hard-pressed to speak adequate English.

But while the company has been prepared to wield the big stick to gain improvements - Royal Mail faced down wildcat strikes last year - it also offers a carrot. Wages could be better and there could be bonuses if productivity improves.

The key to that is the move to a single delivery system - supposedly guaranteed by midday, though there have been real teething problems in some regions with mail not arriving until the evening. Of the 1,500 sorting offices in the country, 1,000 are now operating single delivery.

The introduction of the system to two-thirds of the network has, though, allowed Royal Mail to shed workers. It is understood that while the second delivery scooped up only about 5%of letters, it accounted for about 20% of costs.

Leighton's letter admits it could take up to eight weeks for single delivery to 'bed down' when it is introduced and there are issues over equipment and transport still to be resolved.

But this is a winner-take-all struggle. The postal service has already been opened up to private competition on business post. And unless Royal Mail can make customers happier, it faces the prospect of more rivals being allowed to use its network - at discount postage prices.

Crucially, a staggering 70% of all mail is sent by only 100 Royal Mail customers and if private competitors were able to target these hugely lucrative accounts, the business would be facing possible extinction.

Yet the company has baulked at the notion of reducing the scope of Royal Mail's operations by abandoning universal delivery, which would not only destroy its ethos and be hugely unpopular, but would reduce potential economies of scale. Royal Mail also shies away from charging those in rural areas the true cost of delivering letters.

There is scope for differential charges by levying higher prices for larger, rather than heavier, items. This, it is claimed, will mean 90% of customers paying less than at present.

But as recent Press and TV coverage has shown, getting things right behind the scenes is only part of the problem. Like the railways, everyone in the country thinks they could run the show better.

What lies behind this criticism is the fact that Royal Mail is the last major bastion of unreconstructed union power in British industry. After the wildcat strikes were faced down last year, returning workers were persuaded to accept the single delivery system.

Royal Mail is now within a whisker of becoming a viable business and privatisation, with a universal postal system guaranteed for years to come, is within its grasp. With it would come higher wages and a stake in profits for the workforce. That in turn would allow the company to weed out the bad apples so evident in Channel 4's expose.