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Hopes for saving PO jobs could be in bag

PUBLISHED: 17:02 04 October 2001 | UPDATED: 10:37 03 March 2010

POSTAL group Consignia is to make cuts of more than £1 billion under drastic action to try and contain costs.

Around one in 10 staff in some areas of the business will go over the next 18-months and unions fear there will be thousands of redundancies.

POSTAL group Consignia is to make cuts of more than £1 billion under drastic action to try and contain costs.

Around one in 10 staff in some areas of the business will go over the next 18-months and unions fear there will be thousands of redundancies.

Consignia said it had to make the savings to ensure it remained profitable in the face of rapidly increasing competition and pressure to improve efficiency.

Jon Richardson, Suffolk secretary of the National Federation off Sub-postmasters, said rural and town post offices had already felt the squeeze of cutbacks and Post Office Ltd had experienced some management changes.

But despite recent pressures he did not expect major job losses across East Anglia due to the few existing counters in the region.

"We have remained relatively unscathed and there is very little left to cut, but there is still a degree of uncertainty, as well as fears over the universal banking system. The only thing we have not had is a pay rise," he said.

The savings, equivalent to cutting 15% from Consignia's cost-base, will be made by March 2003.

Consignia revealed it was considering scrapping or delaying some major projects and was looking to make savings in other areas, including deliveries, parcels and by outsourcing some internal business service work.

A Consignia, spokesman stressed that no decisions on job cuts had yet been taken.

The Communication Workers' Union deputy general secretary, John Keggie, said: "The Department of Trade and Industry must ask how a business that was profitable for 20 years before commercial freedom was granted is now in such a financial mess.

"Blaming efficiency levels and the workforce is not on. After all this is the same workforce that made the Post Office a profitable and successful organisation for over two decades."

The union called for a review of the running of Consignia, which has said the savings will be used for investment and said there was no intention to reduce the workforce by 15% as the union claimed.

A spokesman for the firm said warning signs were already clear from last year's annual results showing that the organisation made an operating loss before exceptional items of £3 million.

Even though Consignia ended last year in the black, its results were £88 million below the target it had agreed with the Government.

An internal briefing paper sent to managers said Consignia was facing a "financial crisis" with costs running ahead of income.

Consignia was an £8 billion business which was moving into loss and unless "drastic action" was taken the memo said achieving the staff cuts would not be easy and would dwarf anything the organisation has attempted before now.

Peter Carr, chairman of Postal watchdog group Postwatch, said: "Competition has hardly started to establish itself. Consignia's management should take a hard look at its past investment decisions - here and abroad - before offering excuses."

Mr Carr said any job cuts must not lead to reductions in service levels.

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