Today must be the first step towards renewal

Patricia Hewitt

Ms Hewitt told MPs the redundancies were "unavoidable" and blamed lack of investment by the previous Conservative government for the postal service's problems.

She also backed proposals to ditch the name Consignia, which has proved unpopular with workers and customers.

The Conservatives said the job losses were a "humiliation" for the government.

'Difficult'

The BBC has learned that about 40,000 jobs will go over the next three years as part of a �1.2bn restructuring.

The government has failed to give Consignia the full commercial freedom it needed

John Whittingdale, shadow trade secretary

The majority of the job losses announced on Monday will go in Consignia's loss making Parcelforce division and in transport.

But Ms Hewitt told MPs Consignia's new chairman Alan Leighton would be "examining every part of the business to see what needs to be done to improve services".

"Future job losses will depend upon the work that has to be done within the business," she added.

Taking responsibility

Ms Hewitt said she recognised that the job losses would come as "a blow" to workers and their families but said it marked a "turning point" for the loss-making firm.

Ms Hewitt warned of more job cuts to come

Consignia is losing more than �1.5m a day and its Parcelforce arm had not made a profit in 10 years, she said.

Labour had given the firm the commercial freedom it needed to reverse the decline and the changes it had announced were a sign of the management taking on the responsibilities that went with that, she said.

She said the decision had not been taken lightly but "it is one that is unavoidable if we are to create a high-quality postal service, offering good and secure jobs".

"Today must be the first step towards renewal - creating a postal service that justifies the pride, and lives up to the expectations, of the millions of people in Britain who depend upon it every day," she added.

Consignia's Chief Executive, John Roberts said the figure of 40,000 job cuts "does not come from us."

He told the Commons public accounts committee he expected about 30,000 jobs to be lost in total.

He said that the first wave of job cuts was not connected to plans to liberalise the postal services market.

'Golden future'

Shadow trade secretary John Whittingdale said the redundancies were a "humiliation for the government".

He said Ms Hewitt had offered no explanation as to what had gone wrong with the postal service in the two years since her predecessor Stephen Byers promised it a "golden future".

He said: "Is it not the case that the government has failed to give Consignia the full commercial freedom it needed and, as a result, it has been unable to to take the action necessary to modernise, due to the constant interference from ministers.

"While at the same time its competitors in Germany and Holland, who have been given that freedom. have gone on to become global players."

'Knee-jerk'

Earlier, Amicus union's Peter Skyte said any compulsory redundancies would be "vigorously opposed".

But he played down the chances of industrial action over the cuts.

We assume that the Post Office will confirm that the senior managers who made this blunder are amongst those who are now losing their jobs

Vincent Cable, Lib Dem trade spokesman

Labour MP Martin O'Neill suggested that because of the large staff turnover at Consignia, the chance of widespread compulsory redundancy might be decreased.

Liberal Democrat trade spokesman, Dr Vince Cable, said news of the job losses only confirmed the depth of the problems at Consignia.

"We assume that the Post Office will confirm that the senior managers who made this blunder are amongst those who are now losing their jobs."

MPs unhappy

Earlier this month 163 MPs - many of them Labour - signed a Commons' Early Day Motion expressing concern at the future direction of the post office.

In particular they criticised the postal regulator Postcomm's proposals for wider competition within the sector.

They said the plans could "threaten the provision of a universal postal service".

The MPs urged the government to reject the Postcomm proposals and "support the management and workforce of Consignia in a balanced transition to new working arrangements".

"That will allow Consignia to compete in a market opened up in line with the European directives while maintaining the universal postal service based on a UK-wide tariff for all households."