Consignia, the loss-making UK postal group, has received a �1.9bn cash boost from the government on the day it detailed plans to turn itself around.

The company will now have access to �1.8bn in dividends it has paid the government over several decades.

The government will also forego its dividend for the 2001-2 financial year - a concession worth a further �64m - Trade & Industry Secretary Patricia Hewitt told the House of Commons.

The financial boost came on the day Consignia reported annual losses of �1.1bn and said it was cutting a further 17,000 jobs in an attempt to revive its financial fortunes.

Second post scrapped

The 17,000 job losses will come over the next three years and are on top of the 15,000 job cuts announced earlier in the year.

Problems stretching back for up to a decade are reflected in these results

Allan Leighton, Consignia chairman

The struggling company also said it would drop its controversial Consignia name and rename itself Royal Mail Group plc.

Other moves include scrapping the second post - something the company said would save �350m a year - and the retirement of chief executive John Roberts.

Mr Roberts, a long-time servant of the company, will step down later this year once a successor has been announced, Consignia said.

Losing �1.2m a day

"Unresolved issues and problems stretching back for up to a decade are reflected in these results," said chairman Allan Leighton.

Many job losses have already been announced at Parcelforce

"This loss didn't spring up over just one year."

The company said that most of the �1.1bn loss was due to exceptional costs from its restructuring programme.

But Consignia still managed to lose �318m on its day-to-day operations, which it said was equivalent to a �1.2m loss every trading day, with "all core businesses losing money".

It said its three year restructuring programme was expected to cut costs by �1.4bn a year by April 2005.

Union anger

Consignia said it expected to offer those workers whose jobs are to go a choice between redeployment elsewhere in the business or a voluntary redundancy package.

The current position is untenable - the only viable option is to restructure, right across the company

Allan Leighton

But the Communication Workers Union (CWU) said it could not accept the level of job losses, saying "indiscriminate" shedding of staff could threaten the universal postal service.

And Peter Skyte of the Amicus union - which represents 15,000 Post Office managers - said the news was a "body blow" for the workforce.

In March, Consignia announced that 15,000 jobs would go, mainly in the loss-making Parcelforce division.

'Untenable' position

"We must stop haemorrhaging cash," Mr Leighton said.

Consignia

�8.4bn turnover 210,000 workers in UK 81m items of mail delivered each day 17,500 post offices Letters delivered to 27m addresses 28m people visit a Post Office branch every week

"The current position is untenable. The only viable option is to restructure, right across the company."

The dropping of the second postal delivery is seen by Consignia as a simple way of raising productivity.

It said the second post accounted for 20% of Royal Mail's costs, and 30% of time spent delivering letters, but delivered only 4% of UK mail.

"We can make large savings by eliminating this inefficiency," Mr Leighton said.

Extra finance

In a statement to the House of Commons, Ms Hewitt said the �1.8bn that Consignia had previously paid the government in dividends could now be used to help the restructuring programme.

"These reserves will be available to back the investment required in the mails business to implement the renewal programme, and to support the nationwide network of post offices."

Ms Hewitt said that the measures announced by Consignia meant the company was now "set on a course of renewal and recovery".

Her opposition counterpart, John Whittingdale, said Consignia's figures were "truly shocking".

He said a highly successful business had been turned into a financial disaster.

Shake-up at the top

The departure of chief executive John Roberts had been widely predicted.

Mr Leighton is now expected to take a more active role in the running of the postal service.

He currently spends two days a week at Consignia, and has combined his role at the company with 10 other directorships.

On Wednesday Mr Leighton resigned as a non-executive director of Scottish Power.

New name

The dropping of the Consignia name was widely welcomed.

Announcing that the company would be renamed Royal Mail Group, Mr Leighton said: "The new name reflects the greater concentration on our core commercial services and is particularly apt in this Golden Jubilee year."

The CWU's general secretary Billy Hayes said: "We want to put that folly behind us and get on with re-establishing a first class post office."

But Amicus' Peter Skyte warned that it would be "easier to cast off the name than to solve [Consignia's] current problems".