Royal Mail boss could be ‘let go quietly’ within months after delivery group strikes deal with unions

Royal Mail’s beleaguered boss could be gone within months after the delivery group struck a deal with workers to end a long-running dispute that has paralysed the business.

Simon Thompson has been trying to push through plans to modernise the firm in the face of fierce opposition from the Communication Workers Union (CWU), which represents around 115,000 posties.

The dispute saw workers walk out on strike for 18 days last year and has caused chaos for the company’s finances with Royal Mail warning it was losing over £1million per day.

The 507-year-old firm also said it would have to call in administrators if the situation did not improve. 

© Provided by This Is Money
Pressure: Royal Mail boss Simon Thompson (pictured) has been trying to push through plans to modernise the firm in the face of fierce opposition from the Communication Workers Union 

A breakthrough in the dispute, which has been ongoing for nearly a year, was secured over the weekend when the two sides announced they have reached an agreement ‘in principle’.

The news helped lift shares in Royal Mail parent IDS by 6.6 per cent, or 15.2p, to 246.8p. 

CWU bosses met yesterday and will gather again today to discuss the proposals before deciding whether to put them to a vote by union members, the Mail understands. 

But a source close to the matter said Thompson’s name would not be on the deal tentatively agreed between the two sides.

They added there was a ‘mutual understanding’ between both the company and the CWU that the embattled chief executive’s reputation ‘no longer carries much weight or currency’.

The source also expected Thompson to be ‘let go quietly in the coming months’ but did not speculate on who could replace him at the top of the business. 

He came under fire from MPs last month when the Commons business committee accused him of ‘either an unacceptable level of incompetence or an unacceptable level of cluelessness’ in his running of the business.

The committee also said Thompson ‘intentionally or inadvertently’ misled MPs and called on watchdog Ofcom to investigate – prompting a further broadside from the regulator who said the company’s postal service had fallen ‘well short of where it should be’.

Victoria Scholar, head of investment at Interactive Investor, said: ‘The agreement marks an end to the period of heightened uncertainty for the group. 

‘If the agreement marks an end to the recent strike action, this will be a major win for the company as it looks to shift its workers dispute to the rear-view mirror.’

But analysts at broker Liberum were more sceptical, noting it was ‘not guaranteed’ the CWU’s members would approve the deal if it was put to a vote.