Ms Hewitt described the changes announced by Consignia as a 'blow to many hard-working employees and their families'.

However, she said it was a necessary first step that would lead to the reform of postal services - including that of Parcelforce.

Parcelforce has amassed losses of up to £400 million in its ten-year existence. These losses, added the Trade and Industry Secretary, have 'drained investment' from the rest of the Post Office. Therefore the firm needs to be restructured and restored to profitability. The Trade and Industry Secretary outlined these changes below:

Integration of the universal parcels service

The integration of the universal parcels service into the Royal Mail itself. Under the universal service obligation, the company is responsible for delivering parcels up to 20kg to every part of the country.

By giving this responsibility to the Royal Mail the company will create a more efficient service, safeguarding the 30 million parcels sent by the general public every year. This means people will still be able to send parcels from their local post office, just as they do now.

Reshaping of the remaining Parcelforce business

A radical reshaping of the remaining Parcelforce business, which will in future concentrate on high-value, time-guaranteed express services.

Changes to the mail distribution system

The existing network of road, rail and air has developed on a piecemeal basis. Ms Hewitt said that it has been causing delays, imposing excessive costs and reducing the quality of service to customers.

The necessary rationalisation will increase the volume of mail carried by rail. Although the practice of sorting mail on trains will be phased out, bulk mail will now be carried by rail during the day. The total number of road journeys undertaken by Royal Mail will be reduced, as will the number of vehicles used.

Reducing layers of management

The company is stripping out layers of management and jobs in its operations and support services that are no longer needed as a result of the other changes. Consignia expects that these changes will mean the loss of 13,000 jobs over the next three years, with a further 2,000 jobs going through natural wastage.

Ms Hewitt added:

"The company has also made it clear there will be further unavoidable job losses over the next three years, and I will of course continue to inform the House as the restructuring of the company is taken forward."

"I can also announce today, as a contribution to supporting the company as it restructures, that the government will forgo a dividend for this financial year - releasing an additional £64 million for the company."

Ms Hewitt welcomed the fact that the company would offer as many of those employees affected as possible the option of continued employment with a different part of the business or a voluntary redundancy package.

In conclusion the Secretary of State said:

"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."