Threat of postal strike looms

Royal Mail bosses today launched last-ditch talks to prevent a strike they warn will cripple services and could send the cost of postage soaring.

They are meeting union chiefs in a final attempt at a deal the day before strike ballot papers are issued to 160,000 Post Office staff.

Royal Mail and the Communication Workers Union have failed to agree a pay offer worth up to 14.5 per cent over 18 months, linked to major reforms in working practices aimed at improving productivity and cutting losses running at £750,000 a day.

Both sides are meeting today at conciliation service Acas at the request of Post Office bosses. They will offer talks on the detail of the deal, but not on the total amount of cash available to fund pay rises.

Today Royal Mail chief executive Adam Crozier said strikes would be "commercial suicide" for a business which had been making progress stemming its losses. "We are in danger of throwing it all away," he said. Post Office chiefs fear the strike will see business customers turning to private mail companies.

"If we allow the competition to come in then our business will go marching out the door," said Mr Crozier. "This is the worst possible time to have a strike."

He said the pay offer on the table was "the best offer this company has made in over 10 years. We simply cannot afford to pay more. We are not particularly hopeful that they will be successful [with the talks] but we will have to try".

Even if the crisis talks result in a national pay deal, there is still a risk of post chaos hitting London - as workers in the capital are taking part in a separate vote on new London allowances.

"There is nothing to say the result will be the same in the two ballots," said Mr Crozier. "There has been the possibility of unrest in London for quite some time.

"On almost all our quality of service measures London is below the rest of the country and its productivity. There is a lot of work to do in London."

Privately, senior managers believe half the CWU executive - which recommended the pay and conditions deal at its annual conference in June - would be happy to settle, but the other half are determined to have a walkout. One manager said: "Some of them would want industrial action even if you tripled it. It's not about the offer."

Royal Mail is already fighting proposals by the Government's postal regulator to open the market up rapidly to external competition instead of phasing it in.

The Post Office predicts the proposals would cost it more than £600 million a year. Mr Crozier warned the losses would make it unable to fund a pay deal that will cost £340 million, as well as £100 million in extra pension contributions.

"Clearly with competition we would be making less money and therefore our ability to afford pay rises is less," he said.