Loss-making Royal Mail plans to delay deliveries until after lunch

The traditional morning postal delivery could be delayed until mid-afternoon under cost-cutting plans being considered by the Royal Mail.

Managers who need to save £1.2bn to bring the loss-making service within budget have proposed introducing a two-tier service for business and residential customers.

The scheme would ensure that businesses in towns and cities would continue to benefit from the current 10am deadline for all letters and packages to be delivered in urban areas. But homes would be subject to an extended "delivery window", which would see mail arriving at around lunchtime or as late as 3pm.

Consignia, the state-owned company that replaced the Post Office and which owns the Royal Mail, said trials of the delivery times could begin in parts of the South and West of England by March. The system is one of a series of reforms being considered for the postal service as executives struggle to balance the books amid growing discontent from the 143,000 postal workers.

The Communication Workers Union announced a strike ballot among its workforce after pay talks broke down last week. Employees were warned last year that 20,000 jobs could go in the shake-up.

Managers at Consignia insisted yesterday that the new delivery times were only proposals, before adding that, if they went ahead, they would make little difference to the majority of Britons.

A spokesman said: "We are looking at a number of proposals and we do have to make changes to save money. Lifestyles have changed from 30 years ago when the current delivery system was brought in.

"Most people are out of the house nowadays by 8am, so it does not really matter to them whether their post arrives at 9am or 3pm. It is also the case that this is just one of a number of options."

The company confirmed that it was preparing to run trials of a new delivery system after completing consultations with "focus groups" and the mail services watchdog, Postwatch. If considered a success, a new system could be in place nationally by 2004.

Among those with concerns about the two-tier delivery system is the Federation of Small Businesses, which represents the estimated one million businesses based at home.

The Communication Workers Union, which is in a dispute with Consignia over its demand for a 5 per cent pay rise, said it would consider the change, but only if it was what customers wanted. A spokes-man said: "The current system does not seem to be working either for staff or customers. If we move to a two-tier system then that will mean longer hours for postal workers.

"If that can be introduced with a fair compromise, for example a four-day week for those affected, then it is something we will consider. But it must meet with the agreement of both staff and customers."

The Royal Mail delivers 90 per cent of first-class mail the next day, although the company admits times vary, and in rural areas customers may not receive their mail before 1pm. It has a target to deliver 92.1 per cent of first-class mail by the next day.

Among the other changes being considered are the introduction of mail collection centres in railway stations to allow commuters to receive their letters on their way to work, and evening deliveries.

A result from the union strike ballot is due early next month, with industrial action possible by March.