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March 17 - 23 2010

News

The Telegraph

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μCulture

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CULTURE P24

NEWS P5

Expenses latest Harry Cohen becomes fifth Labour MP to face police

Carbon complications Lorna Bradbury reviews ‘Solar’, Ian McEwan’s dark new satire

BUSINESS P29

EXPAT LIFE P26-28

World Cruising Jane Archer takes a look at this year’s hottest options

‘Queen’s banker’ jailed Former Cazenove partner found guilty of insider trading

LOTTO 10/03

LOTTO 13/03

6 1 13 23 29 34 23 25 28 33 44 49

Bonus Ball 37

Bonus Ball 46

There was one winner of Wednesday’s £2.3m prize and two winners of Saturday’s £4.6m jackpot

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The Telegraph

By Christopher Hope, Whitehall Editor ROYAL Mail’s claims that nine out of 10 letters and parcels are delivered the next day have been thrown into doubt after an investigation caught staff “systematically” trying to fix performance figures.

Postcomm, the postal regulator, found that countless workers — from postmen to area managers — were involved in a widespread operation to intercept mail sent out by an independent monitoring company.

Staff worked out how to identify “test” letters posted to monitor deliveries, and gave them priority treatment to ensure they arrived on time.

The scandal is thought to have been going on for at least eight years. Senior bosses, including Adam Crozier, the chief executive, have been paid tens of thousands of pounds in bonuses based on the company’s “service quality” figures, which include data on delivery times.

Although there was no evidence that senior executives were aware of what was going on, a report by Postcomm said that some managers “may have received bonus payments to which they were not entitled” since they were “based on recorded levels of quality of service which were incorrectly monitored and recorded”.

The report also condemns Royal Mail’s board for “significant corporate failings” in being ignorant of the problem, which came to light only after a whistle-blower contacted Postcomm. Several postal workers have been suspended and face disciplinary action.

The regulator’s findings are contained in a preliminary report, to which Royal Mail is entitled to respond before a final report in May.

However, Postcomm said that it was “minded” to find Royal Mail in breach of its operating licence, meaning the company could face a fine running into millions of pounds.

Lindsay Hoyle, a Labour member of the

93.5%

The proportion of firstclass mail supposed to be delivered within 24 hours

Commons business and innovation committee, said that Royal Mail customers were likely to “question whether the figures have been massaged or manipulated to ensure that the maximum bonuses are paid to the hierarchy of Royal Mail”.

Robert Hammond, of Consumer Focus, the postal watchdog, said that if Postcomm repeated its findings in its final report, “the only solution would be a complete overhaul of the way Royal Mail collects this data”.

During Mr Crozier’s seven years in charge of Royal Mail, it faced repeated criticism for poor service, with customers complaining of letters taking longer and longer to arrive.

The Postcomm report said that following deregulation, which exposed Royal Mail to competition, “significant pressure was put on operational teams to improve performance”.

The cheats targeted items of “test” mail sent by 22,000 anonymous volunteers, or panellists, recruited by Research International, an independent market research company. The panellists sent mail to each other and recorded how long it took for items to arrive.

But the Postcomm report said that postal workers could identify the test mail by feeling envelopes for a microchip they contained.

Managers at sorting offices then compiled computer spreadsheets of the addresses on the envelopes so that “key customers” could be given priority treatment, ensuring their mail arrived on time.

The problem first came to light in Motherwell, Scotland, but investigators found evidence of the same technique being used nationwide and as long ago as 2002.

The report said that attempts to manipulate the performance figures had become “entrenched” in some areas, and “culturally ingrained” in others. Staff from different parts of the country were found to have swapped notes on how to beat the system.

Postcomm found that Royal Mail “failed to comply” with its licence because its performance testing system was so badly “flawed”.

The “serious and long-running failings” identified by Postcomm remained “current” because Royal Mail had not yet sorted out the problem.

Despite the attempts to manipulate figures, Postcomm said that it had not found “any material difference to Royal Mail’s published quality of service figures” as a result of the staff’s behaviour.

A Royal Mail spokesman welcomed Postcomm’s recognition of the company’s “full and open co-operation with the investigation”.

Continued from page 1 Mr Darling is likely to want vital pre-election Budget. According to the Institute for Fiscal Studies, the Government’s deficitreduction plans suggest another £30 billion of “fiscal tightening” will be required by 2017-18, on top of cuts and tax rises already set out. That will have to be found either by cutting spending or raising taxes, it said.

Carl Emmerson, the institute’s deputy director, said: “I cannot see how the Government can promise not to affect front line services when you look at the scale of the cuts they have got to plan for. Liam Byrne is talking just about the first four years and after that there will undoubtedly have to be more pain and that is likely to be tax rises or even greater public sector cuts.”

In December Capital Economics, an economic research consultancy, predicted that taxes would need to rise by £20 billion through VAT, income tax and National Insurance.

The accountants Blick

Rothenberg said VAT would need to rise to 20 per cent.

If Mr Byrne’s tax claims are correct, the focus will switch to cuts in public spending. Mr Brown has repeatedly said that he would not do anything to jeopardise “front line” public services.

George Osborne, the shadow chancellor, said: “It sounds to me like the Chief Secretary is not really in command of his figures. We haven’t heard from Alistair Darling, who’s actually the person who’s setting out the Budget. And that’s the problem with this government — lots of hints, leaks, gaffes, but not a clear plan to deal with Britain’s debt.”

The possibility of Labour not putting up taxes further will pose a problem for the Tories, who will come under pressure to rule out an increase in VAT. Mr Brown has described VAT rises as the favoured option for a Conservative government.

The Treasury insisted that Mr Byrne’s words did not apply to the whole of the next Parliament, only to the period up to 2013-14.

By Rosa Prince Political Correspondent LORD ADONIS has become the first Cabinet Minister to speak out against the trade union behind the British Airways strike, accusing it of “threatening the future” of the airline.

To the fury of Unite, on Sunday the Secretary of State for Transport described the seven days of walkouts planned this month by thousands of cabin crew as “deplorable” and “totally unjustified”. The minister, a moderate Blairite, became the first senior member of the Labour government to break ranks and blame the union — one of the party’s biggest financial backers — for the industrial action.

He immediately faced an angry reaction from Unite, whose political director, Charlie Whelan, is a close ally and former spokesman of Gordon Brown.

Mr Whelan was recently identified as one of Downing Street’s “forces of hell” who briefed against anyone who dared oppose Mr Brown.

Union officials were said to be “livid” at Lord Adonis’s “uninformed” and “blundering” intervention. They contacted Downing Street to insist ministers should not blame them for the industrial action, which could affect 500,000 BA passengers.

The row highlights the close relationship between Labour and Unite — the union has donated £11million to the party in the past three years.

Mr Whelan has begun working closely with the Prime Minister and the Labour Party in the run-up to the election, providing phone banks for members to canvass for votes.

Until Sunday, ministers — including Mr Brown and Alistair Darling, the Chancellor — had been careful to call on both the union and BA to resolve the threat of strikes, the first of which is due to start on Saturday. Last week Mr Brown described the disruption as “unacceptable” but stopped short of blaming the union.

Strike warning, page 6