Postcomm Proposes Price Increase for Royal Mail

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Postcomm, Britain's mail industry regulator yesterday proposed raising the price of stamps.

Postcomm gave permission for a rise of 1 pence (1.5 cents) in the price of first class -- or premier service -- stamps, to 28 pence (43 cents) starting in April; stamps for the slower second class mail will rise to 20 pence (31 cents).

Postcomm said the latest stamp price increases would bring an extra 170 million pounds ($265 million) a year, but it recommended that stamp prices be frozen until March 2006.

It also published new performance proposals, including higher standards of delivery and compensation for late deliveries. Customers would be paid up to 14 pounds ($21) per item for late mail and up to 27 pounds ($42) for lost or damaged items.

Consignia, which owns Royal Mail, warned the new measures would choke the company and ruin any prospect of putting the struggling postal service on a secure footing.

"These are shocking proposals. The regulator is trying to put us in a straitjacket," chairman Allan Leighton said.

Consignia, which has been losing 1.2 million pounds ($1.8 million) a day, had asked for an increase in stamp prices as part of its three-year recovery plan, which also involves cutting thousands of jobs.

"Six months after making the request, we're being offered a heavy-handed set of price controls [in other areas] which strip out 460 million pounds ($717 million) of revenue -- more than canceling any benefit Royal Mail gets from a small rise in prices," Leighton said.

The regulator said it put the proposals forward for consultation over the next two months and would listen to Consignia's concerns, while Consignia said it would hold urgent talks with Postcomm.

Consignia will be stripped of its monopoly status from next year, when it will face competitors such as Business Post Group, Hays and Deutsche Post.

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