Post company Consignia's has announced 15,000 redundancies in a bid to halt losses running at over £1.5 million a day.

Most of the job losses will come at the loss-making Parcelforce Worldwide business as managers implement a radical restructuring to save up to £1.2 billion.

Amid reports that the company is also set to close more than 3000 urban post offices, Consignia chairman Allan Leighton said the latest announcements were "just the start".

Downing Street has already been drawn into the row and its response is likely to enrage the postal workers union which is considering a cut in its funding to Labour.

The prime minister's official spokesman confirmed the government had "no intention to intervene" and pointed to the fact that that Parcelforce was losing £15 million a month. The wider issue of speeding up the opening of markets to competition was "a matter for the regulator".

Consignia is already piloting plans to drop the second daily delivery and replace it with a single delivery to businesses between 7.00am and 9.00am while urban households should receive mail between 9.00am and 1.00pm and rural areas would receive post by late lunchtime.

Parcelforce will cut back on its services, halting three day plus delivery options and transferring its universal parcel service to the Royal Mail. And fifty Parcelforce depots from Glasgow to Exeter will be shut down.

"Parcelforce Worldwide has been out of step with the marketplace and its business model does not work. Most of our costs and losses are tied up in keeping an infrastructure for non time-guaranteed services which customers are moving away from and which we cannot make profitable," Leighton said.

Other cuts will come in the company's transport infrastructure, with the current 40,000 vehicle fleet being cut by 2500.

Four of the 16 current mail distribution centres will close in the next year, though a new Midlands hub will be built to take on work from the three existing Midlands sites by the end of 2003/04.

The Parcelforce restructuring will generate estimated savings of £370 million, while the changes to the transport network will save a further £90 million.

"These programmes, together with other savings to our management, operations and support services, mean that around 15,000 jobs will go over the next three years including anticipated natural turnover of around 2000 people," Leighton said.

"We have more work to do and more announcements regarding other parts of Consignia will be made as we agree detailed plans."

Strike threat

The Communication Workers Union has blamed underfunding for the job losses, and has pledged to resist any attempt to force through redundancies.

Pointing to growth in the mail delivery market and a failure to raise the price of deliveries in line with inflation since 1998, the union rejected suggestions that the Post Office was in decline.

Billy Hayes, general secretary of the CWU said jobs could be saved if a price rise was agreed today.

"The government can no longer have the postal service on the cheap. Any attempt by the Post Office or the government to force through redundancies will be resisted by strike action," he said.

Tougher competition

The announcement comes as the company faces the prospect of increased competition as the postal services market is liberalised by the regulator, Postcomm.

Postcomm has proposed that beginning in April this year competition should be introduced for bulk mailings containing a minimum of 4000 items, with the aim of full liberalisation by March 2006.

The regulator says that its plans will both promote competition and maintain services throughout Britain, given that "universal service is a commercial imperative as well as a social necessity".

But Consignia has warned that up to £2 billion of its revenue would be up for grabs under the Postcomm proposals, a cost it says is unaffordable.

Mounting losses and the prospect of increasing competition have left the company with little choice but to act - but with the future of the Post Office remaining a politically sensitive matter, ministers have come under pressure over the latest moves.