Royal Mail bosses threaten to declare insolvency as staff warn of fresh strikes over pay

Talks to resolve a long-running dispute between Royal Mail and striking workers over pay are conditions are on the brink of collapse.

The company’s board is reportedly threatening to put the firm into administration if a deal cannot be agreed.

The Guardian reports that a move to declare the postal service insolvent is regarded by the board as a last resort, but is understood to have been raised with the Communication Workers Union (CWU) already.

A Royal Mail spokesperson told the paper: “We are aware of the speculation. If we have anything to add to our previous financial statements, we have an obligation to do so.”

Discussions over pay are said to be “precarious” and in their “last throes”, with the next 48 hours key to settling the ongoing dispute. A source told the BBC that administration is “a real possibility” if the strike action continues and “it is not a negotiating ploy”.

It comes as the CWU warned of a fresh wave of strikes next month unless Royal Mail improves its offer on pay, conditions and job security by Friday (31 March).

Workers are not just in a dispute over pay, as Royal Mail is also trying to make changes to the way postal staff do their jobs including changes to start times and sick pay.

Communication Workers Union executives met this week to discuss a pay deal after action of more than 115,000 postal workers has meant the company is on course to make operating losses of £350m to £400m this year, according to owner International Distributions Services (IDS).

A CWU spokesman said: “It is clear Royal Mail Group is in a serious financial situation. This is as a direct result of mismanagement and recklessness at the most senior level. Those individuals who have led the company into this crisis have no right to lead us out of it.

“There is no positive future for Royal Mail without workforce support. Talks must succeed this week or the CWU will call further strike action.”

IDS, which also runs Parcelforce, has previously warned the group could be broken up due to financial losses. The government would have to approve a move into administration which could mean Royal Mail, including Parcelforce, is declared insolvent.

A Royal Mail spokesman said: “After months of talks, and numerous improvements to our offer, we are deeply concerned we have yet to reach an agreement. We remain committed to getting the right deal, which secures the future of Royal Mail and its workforce. It is not sustainable to lose over £1 million a day.”