Thousands of small businesses were braced for continued disruption and cash flow problems yesterday as the main postal union began preparing for more walkouts.

As it finished a fourth day of national strikes the Communication Workers’ Union (CWU) started to plan a new wave of action for next week. Meanwhile, consumer groups and representatives of small businesses said that the worsening industrial relations between the CWU and Royal Mail could severely damage the economy and long-term public trust in the postal service. Family firms who relied on posted cheques to keep their businesses running and householders with bills to pay faced increasing problems, they said.

Postwatch, the independent customer watchdog, called on Adam Crozier, Royal Mail’s chief executive, and union leaders to resume private talks to resolve their differences. However, the public war of words in the dispute over pay, pensions and working practices intensified.

The obstacle to an agreement has narrowed to changing working practices and Royal Mail’s wish for more flexibility from the workforce.

Mr Crozier accused the union of “Spanish practices” by insisting that staff could finish early if their jobs were completed. “We simply want our people to work the hours they are already paid to work across the working week – something which has been taken for granted in almost every other UK company for decades,” he said. “The fact that the union leadership finds this so difficult starkly contradicts their public claim to support modernisation and change.”

But the union said that employees did work flexibly and that finishing early if a task was complete – the “job and finish” practice – had been guaranteed by Allan Leighton, the chairman, five years ago. The CWU said that Mr Crozier had not attended the recent talks and did not understand the issues. Dave Ward, deputy general secretary, said that he risked losing the good faith of a “dedicated, hard-working and flexible workforce”.

Andy Frewin, of Postwatch, reacted angrily to the continued dispute. “I think consumers must be looking at this war that is going on more in public than in private with increasing frustration,” he said. “It has got to stop. Consumers seem to be being put last in all of this. Adam Crozier has mentioned them a couple of times but we don’t need to know what the problems are, we just need it sorted out.”

Mr Frewin said that Christmas had already been affected by the strikes: “People will be starting to think twice about buying things on the internet.”

There are also signs that more people are turning to the internet to communicate and make payments.

British Gas said that 20,000 people moved to paperless billing last week. Robert Keitch, spokesman for the Direct Marketing Association, said that members were seeing postal work cancelled. “Royal Mail’s direct mail volumes are already just 88 per cent of what they were three years ago. It is a very big assumption that these people will come back again.”

Mr Frewin said that confidence was ebbing away and that “a great British institution” was disappearing.

The CWU’s industrial action over last weekend was the longest period of consecutive strike action for 20 years.

A spokesman for the Federation of Small Businesses, which is concerned for its members, said: “Our research shows that 94 per cent of our members use Royal Mail exclusively and 90 per cent send and receive mail every day. It is devastating for them.

“Many small firms rely on cheques coming through the post for their cash flow, and so then have to borrow from the bank. With the turmoil in the banking sector it is a very difficult time. These strikes could result in millions or even billions of pounds being lost.”

Royal Mail’s daily postbag is 80 million items. It said that by the end of Monday only 50 million to 60 million items were in the backlog because customers had taken its advice not to post anything unless they had no alternative. However, mail could mount up from today because the most recent national strike has ended. Royal Mail is due to set out its latest detailed proposals to the CWU in a letter that the union’s postal executive will consider.

Going postal: reasons behind the dispute

Why are there more postal strikes next week?

Talks between Royal Mail and the Communication Workers’ Union over pay, pensions and working practices broke down on Monday. They took place during two strikes, one each side of the weekend, producing five days’ disruption. Next week’s action will be selective.

How long has the dispute been going on?

Since March, when union leaders rejected a 2.5 per cent pay offer. Union members voted to reject that offer in June and two national strike days were held in July followed by three weeks of selective action.

Why did this week’s talks break down?

The two sides are thought to have come close to a deal on pay and pensions but could not agree on changes to working practices. Royal Mail has accused the union of restrictive “Spanish practices” and the union accused the postal group of plunging workers into uncertainty.

Are restrictive practices widespread?

The union says that workers want to be sure of the job they are doing and that they work flexibly when required. Royal Mail says that it is having trouble in getting workers to operate new machinery, that they want to finish early if a certain job is done and they will not do other similar work such as sorting a different postcode from the one they are given. However, Allan Leighton, the chairman, guaranteed that some early finishes would be preserved.

What happens now?

Royal Mail is due to set out its detailed proposals to the union today and the union’s postal executive will consider it. An immediate deal seems unlikely, but talks may resume.

Should the Government get involved?

Gordon Brown said that it was difficult for the Government to “stand idly by” but did not say what could be done. In previous disputes the Government, which is Royal Mail’s sole shareholder, has leant on Royal Mail to sort out the dispute. But it does not show any signs of doing so at the moment.

Could Royal Mail be broken up?

Royal Mail’s rivals want this as they believe that it would make the postal service more competitive. Royal Mail argues that if it is split up it would not be able to carry out the universal service – offering to send post anywhere in the country for the same price.

Is Royal Mail less efficient than its competitors?

It believes it is about 40 per cent less efficient largely because it does not have the automation that other big postal operators such as TNT and Deutsche Post have.

For how long will customers be affected?

Normal postal service is not expected to be possible until October 15. But then the CWU begins its selective action, which will run until there is an agreement.

Can people go elsewhere for postal services?

Customers can use courier services to ensure that mail is delivered but these are much more expensive than Royal Mail. The big commercial rivals, TNT and UK Mail, are caught up in the strike because they use Royal Mail for the last-mile delivery.

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