Leighton's fight to the death at Royal Mail

[TrueBlueTerrier]

http://observer.guardian.co.uk/business ... 89,00.html

With more strikes imminent, the future of very British institution is under threat, write Nick Mathiason and Jo Revill

Sunday August 5, 2007
The Observer

As fireside chats go it was unconventional. But then Allan Leighton, chairman of the Royal Mail and one of Britain's best connected businessmen, likes to style himself as a man of the people with a dash of Mr Motivator thrown in.

Urging his 167,000 workforce not to embark on Britain's first national post strike in more than a decade, the 54-year-old told them: 'You know me. I don't do bullshit.' The intention was to warn his employees, famously prone to wildcat action, against launching a series of strikes. It failed.

Leighton built his career on motivating thousands of disgruntled supermarket employees he called 'colleagues'. Together they turned Asda from a backwater into a powerhouse supermarket.

But life has not gone so smoothly since. Leighton chaired a number of companies that have faced problems. But none like Royal Mail. Strike action received overwhelming backing throughout the network three weeks ago. It began 10 days ago. Last week, the Communication Workers Union extended action by another two weeks, paralysing businesses and inconveniencing the public. Talks between the parties have just started at Acas, the arbitration service.

At stake is Leighton's personal reputation; but more important is the future of an institution that is part of the fabric of British society.

As it teeters under the weight of a £6bn pension shortfall and haemorrhages lucrative business customers - last month Amazon, the internet business, pulled its parcel contract - questions are now being asked whether the Royal Mail will, in future, be capable of fulfilling its obligation to guarantee deliveries to every household in Britain. Then there is the future of the post office network itself. Next year the government wants Royal Mail group to close 2,500 underperforming post offices in a move that will spark furious protests from communities and could seriously damage the government.

Before that, Leighton and his chief executive, Adam Crozier, the former Football Association boss, have to resolve a dispute that shows every sign of escalating into a war of attrition.

For the CWU though, this dispute is not just about a below-inflation 2.5 per cent pay deal plus a possible £800 bonus for hitting performance targets. Dave Ward, a former postman marshalling the dispute as deputy general secretary of the CWU, says it is about the philosophical direction of an organisation where he has worked since he left school in Tooting, south London, 35 years ago.

Ward has seen the business used as a cash cow by repeated governments who have raided Royal Mail profits to pay for other priorities. Starved of investment, it briefly plunged into the red a few years ago, but now it is making money. Ward wants back money sucked out of the business to pay for modernisation and to enable workers on an average wage of £323 a week to get more.

The message is falling on deaf ears. Leighton and Crozier say that employees at rival post firms who use modern automation systems are paid 25 per cent less and are 40 per cent more productive. The workforce take this statement as an insult. Morale is low. When the Royal Mail asks for voluntary redundancy, bosses are trampled in the rush.

Faith and trust have broken down. Ward believes Leighton and Crozier accepted government-imposed competition rules that will condemn the service to commercial suicide. He wants so-called access agreements to private companies using the postal service to be rewritten. Both sides are digging in as the government buries its head in the sand, concerned not to step into the row and be seen as protectionist.

Pat McFadden, enterprise minister at the Department for Business, Enterprise and Regulatory Reform - formerly the DTI - says: 'It is really for the company and the union to resolve this dispute. We are in touch with both sides but it is for them to sit down together and reach a resolution. We are not setting any kind of timetable.'

Adam Crozier, 43, is the calculating, smart operator to Leighton's 'bish, bash bosh' diplomacy. While Leighton does the bold big picture, it is Crozier who is the power behind the Royal Mail.

Their big idea was to give postal workers a stake in the company by turning the group into a John Lewis-style partnership. If the workers had shares in the business they would receive yearly bonuses based on profit. Industrial relations would be improved at a stroke. There was one problem: the government, the Royal Mail's only shareholder, didn't buy the idea.

More blows followed. The postal regulator has rejected his request for zonal pricing, which would have seen letters posted to and from London charged at different rates to the rest of the country. And Europe is insisting the Royal Mail pays VAT, in a move that could destroy its finances. Royal Mail has postponed the publication of its accounts, due in May. The suspicion is that there is embarrassment at the scale of bonuses Leighton and Crozier will scoop.

The strange thing is that the combatants in the current dispute appear to respect each other. Crozier knows the union believes it has a viable plan for the future- it is just that he thinks the government has no intention of adopting it.

The CWU is pinning its hopes on a government manifesto commitment to review the impact of competition in the postal service in this parliament. If the review said that competition harmed service standards to business and the public, pressure would build to return the service to its old protected status. But that is unlikely. The future looks to be a maelstrom of more industrial unrest over pay, massive job cuts and changing work practices.

For the CWU, job cuts mean questions over its own future. Fewer jobs mean fewer members. Like a cornered animal the CWU is becoming more aggressive. And worryingly for the government, it is not alone. Unions representing the civil and health service this weekend said they were preparing to co-ordinate industrial action with the CWU as they reject below-inflation pay deals in the public sector of 2 per cent. The Prime Minister's glossy sheen of recent weeks might soon fade as a series of Old Labour-style disputes threaten to break out.

[coppertop]

Very good indeed well worth reading , let's hope with more ia combined with the other union's we might get some decent attention

[wranglered]

This is a very good article - I have highlighted all the failures of Leighton in it - I have also disputed the claim we think they have a viable business plan - it is on the union noticeboard tomorrow.

[johno47]

At last someone who gets the facts right...UNITY IS STRENGTH.

[pipecockskank]

Good summery of the position, fair and balanced, but :cfo a smart operator .

[F0zziebear]

Finally a journalist who understands the industry

[smokerjim]

Good to see it spreading out from the Mirror as well - their support is most welcome, but the wider the media coverage is, the greater the pressure on :lfo & :cfo

[johnnyp]

Very Good article

[mylegshurt]

and so for forth.great article.im not that comp litterate but cant somebody email this to the national news papers ,please.

[J]

Fantastic article.

we need more like this. I mean, in my area, the public are very sympathetic to our cause. Whats it like in the other parts of the country???

Again, I cannot release details of where I am coz of ongoing conducts. Sorry folks!!!

[DirtyHarry]

Excellent article , the longer this dispute goes on , the more of these kind of press reports we'll see.

[pistol]

NUFF SAID!!

[blackadder]

very good article, hope every one here reads it

[vigilante]

It has laid down exactly the situation between CWU and RM.
a fair article, i wish all the rags could be this fair!!

[robmacca]

A great story that was presented well

I think the unrest across the public sector has nothing to do with old Labour, it has more to do with workers finally saying "enough is enough" and finally getting their act together and realising that working together produces a louder voice.