ROYAL MAIL is to begin a fresh round of cost-cutting that unions fear may trigger 40,000 job losses and a huge switch from full-time to part-time work, The Times has learnt.

The move comes as senior government sources have also disclosed that Royal Mail has yet to make a formal detailed request for financial help, despite calling publicly for £2 billion. Barry Gardiner, the minister responsible for Royal Mail, is believed to be surprised that no business plan has yet been produced.

The postal group, whose markets were opened to competition this month, is trying to cut costs by £370 million before April. It has also begun wider-ranging talks with unions about cutting jobs by automating more functions and increasing the proportion of staff who are part-time. At present 20 per cent of Royal Mail workers are part-time, but it is believed that this could double.

The plans could spark industrial unrest with the Communication Workers Union (CWU), especially because the two sides have just begun pay talks in which the union is seeking a 25 per cent rise. It wants to bring postal pay in line with the national average.

A spokesman for Royal Mail confirmed that it was looking at job cuts and more use of part-time staff, but would not comment on the size of the plans. He said that automation would cut the need for labour and that competition meant that Royal Mail’s workload would be less. “It is too soon to speculate on the size of Royal Mail, but it is no secret that we intend to be more efficient and flexible than our competitors,” he said.

Billy Hayes, the CWU general secretary, accused Royal Mail of using competition as an excuse: “Competition should not be an opportunity for the business to drive down pay and conditions and cut our jobs.”

Dave Ward, deputy general secretary, said that the attempt to cut £370 million off costs by April was “panic management” and it may be resisted by the union.

Last summer Allan Leighton, the Royal Mail chairman, told Alan Johnson, the Trade and Industry Secretary, that 40,000 jobs were at risk because of tough pricing proposals. However, the mail regulator has moderated the pricing plans since then.

Royal Mail is struggling with a £4.5 billion pension deficit and a need to invest £2 billion in automation to bring it in line with more mechanised rivals. It is also concerned about declining volumes of mail.

Royal Mail must decide by the start of March whether to accept the regulator’s pricing proposals. It has said that funding from the Government is crucial to its plans and that it can decide only when it knows the size of that funding. That it has not put in a detailed proposal may mean that any funding is delayed well beyond that date.

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