Job fears over call for mail shake-up

Royal Mail staff face widespread job loss-es if the state-owned industry is to maintain its current universal service, an independent review is expected to recommend.

The long-awaited assessment of Royal Mail's services has been submitted to ministers by Richard Hooper, who chaired the review.

The report is expected to recommend "radical surgery" and modernisation of Royal Mail's operations to deal with a pension's black hole that stands at about £7 billion.

This would almost certainly lead to sweeping job cuts supporting fears from many that the Post Office faces a bleak future.

Whitehall sources have said that the deficit, which stood at £3.4 billion in 2006, would make it far more difficult, if not impossible, for ministers to consider the most radical solution on offer – privatisation of the network.

"'Who would want to buy a company with a £7 billion liability in the best of times – never mind in the present climate?" said an insider. "It is out of the question."

Many parts of the West are still reeling from the extensive Post Office cuts that have been made as bosses implemented the Network Change Programme which involves the closure of about 2,500 post offices, including about 140 in the West.

Earlier this year, Wiltshire lost all 22 of the offices proposed for closure or an as yet undefined "outreach" service. Dorset also suffered 22 losses.

Gloucestershire saw 26 Post Offices axed while the Bristol, Bath and Somerset area lost 62 branches.

And just last week, postal workers in Bridgwater overwhelmingly voted to take industrial action and are striking for two unconfirmed days over the festive period.

Workers say they want to protect and improve their working conditions to benefit the service they provide.

In an interim report in May, Mr Hooper warned that the gap between the assets in its pension fund and what Royal Mail will have to pay out in pensions was growing fast. But with fund values falling victim to collapsing share prices and turmoil on the financial markets the gap has grown even faster than was feared just six months ago, meaning Royal Mail has to spend more of its dwindling profits on servicing its retirement obligations.

At present, there are 440,000 members of the Royal Mail pension scheme, the vast majority of whom are locked into generous final salary arrangements.

Earlier this year the final salary scheme was closed to new employees.

The Hooper review is expected to recommend the closure of many regional sorting offices as part of cost-cutting plans.

The company delivered 80 million letters a day in the 12 months to the end of March compared with 83 million the year before. The letters and parcels business, regulated by Postcomm, now makes a steady loss, having been in profit three years ago.

Ministers insist that whatever reforms they decide upon they will maintain the commitment to a 'universal public service.' This means at least one collection from all postboxes and at least one delivery to all addresses in the country on six days a week for letters and five days a week for parcels.