Postal union suspends strikes to start detailed talks

The latest round of industrial action by postal workers has been suspended after talks between their union and Royal Mail. The company and the Communication Workers Union last night issued a statement saying they had agreed to detailed negotiations over the issues which led to the strikes.

The talks will be held at the TUC, with both sides committed to reaching a deal by September 4. Royal Mail has agreed not to take unilateral action to impose changes during the talks and the CWU said it was suspending industrial action, including the strike due to start at 7pm last night.

Postal workers voted in favour of industrial action in June after rejecting a pay offer of 2.5%, plus bonuses and local productivity savings. The union has sought a pay offer in line with inflation and is concerned that changes in working practices, as part of a modernisation programme, would cost 40,000 jobs.

The state-owned company said it could not afford a higher pay offer and that modernisation was essential as it grappled with competition.

The latest development came as the industry regulator, Postcomm, said it would allow Royal Mail to increase the price of a second class stamp from 24p to 29p in exchange for price cuts elsewhere.

Royal Mail has not decided if it will take advantage of the Postcomm decision but the price regime governing price rises for first class stamps to 2010 will not be affected. Royal Mail says it loses money on first and second class mail.

The regulator rejected Royal Mail's application to raise access charges - the price rivals pay it to deliver letters for them. It also rejected a request by TNT and UK Mail for lower access prices, saying that on the available evidence prices appeared to be at a fair level.

Postcomm's chairman, Nigel Stapleton, said the regulator was helping Royal Mail to tackle its deteriorating financial position but it was up to the company "to address urgently its very high cost base". Royal Mail rejected Postcomm suggestions that "we have not capitalised on growth opportunities in the postal market".

The postal services watchdog Postwatch said it would ask Postcomm to justify its decision to allow Royal Mail greater pricing flexibility a year after price controls were agreed.

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