Postal delivery firm Consignia has backtracked on an experimental plan to charge households and small businesses to receive letters early in the day.

Consignia chairman Allan Leighton said he had ordered the firm's managers to rethink the pilot scheme after hearing the details himself for the first time on a news programme.

Regional pilot schemes would go ahead from Monday using three price bands instead of a single flat rate of �14 a week, which has now become the top rate being charged in the trials, he said.

But Mr Leighton has defended the need for a shake-up of postal charges, saying the service risks going bust.

Anger

Consignia wants to abolish the second post in favour of one delivery a day, and the experimental charges are part of efforts to develop a more streamlined system.

The business is in a terrible state....it could go bust

Consignia chairman

At present, Mr Leighton said, the second post accounts for only 4% of letters delivered but 20% of the postal service's costs.

The proposals have angered small businesses.

Under the pilot schemes, businesses and individuals that want to receive post before nine o'clock in the morning will have to pay a weekly fee of either �5, �10 or �14 if they get fewer than 20 letters a day.

"I think that �14 is a lot of money for small businesses," Mr Leighton told the BBC's Breakfast with Frost Programme on Sunday.

Consignia's aim is find the cheapest viable way to deliver small numbers of letters to businesses and households, he said.

"We will find the lowest cost route to do it, but what we can't do...is continue to lose money on everything that we do," said Mr Leighton.

Trial basis

The changes being piloted mean businesses receiving more than 20 letters a day will get their post delivered between 0700 BST and 0900 BST.

Households will get it between 0900 BST and midday.

The weekly charges aim to save �350m at Consignia, which is losing between �1.2m and �1.5m a day.

"The big thing here, which everybody's got to face into, is the business is in a terrible state....it could go bust," said Mr Leighton.

The pilot areas where the charges will be introduced include:

• Crawley, West Sussex
• Bow, east London
• Edinburgh Dell
• Sheringham, Norfolk
• east Manchester
• Llanelli, Wales
• Newbury, Berks
• Newhaven, East Sussex
• Loughborough, Leicestershire
• Halifax, West Yorkshire
• Plymouth, Devon
• Ballymena, Northern Ireland
• Thirsk, north Yorkshire
• St Helens, Merseyside.

Job losses

Mr Leighton has unveiled a three-year shake-up at Consignia and is pledged to improve both the quality of management and staff morale.

A total of 17,000 jobs are to go and Consignia's name will change to Royal Mail Group at the end of the year.

The postal delivery service rebranded itself as Consignia a year ago to gear up for the loss of its monopoly of UK postal delivery services.

But the new name failed to catch on and in May it was announced there would be a return to the Royal Mail Group.