UK regulator ponders 39p first class post

A LONG-AWAITED review by Postcomm, the postal services regulator, that could see Royal Mail authorised to raise the price of a first class stamp from 30p to as high as 39p is expected to be published this week.

The review will set out the terms on which Royal Mail is forced to face open competition when its 300-year-old monopoly ends in January.

Royal Mail’s finances are on a knife-edge. Not only does it face losing the profitable part of its business to competition but it has a massive pounds 4.25bn pension deficit.

Alan Leighton, chairman of Royal Mail, wants to raise the price of a stamp to 39p. This would allow him to plug the pension deficit and to maintain the universal service obligation. Postcomm favours restricting the rise to 34p.

There has been a fierce debate over the review, with Postcomm taking the view that Royal Mail should fund some of the pension shortfall through efficiency savings and that the Government, which owns Royal Mail, should continue to forgo any dividend.

Royal Mail is also demanding the ability to price its products flexibly to allow it to compete more effectively with Deutsche Post and TNT, its European rivals.