Post Office wants to raise stamp price by 1p

Post Office wants to raise stamp price by 1p
From The Independent April 12th, 2001

Saeed Shah THE POST Office was attacked yesterday for demanding an inflation-
busting rise in the price of first and second class stamps, just two weeks
after it was put under a new licence regime intended to boost competition in
postal services. The move left the newly appointed industry regulator, Postcomm,
looking embarrassed. The watchdog had said it did not expect prices to rise
for two years. The increase, of up to 5 per cent, also sparked outrage from consumer
groups. Royal Mail yesterday said it wanted the price of a first class stamp
increased from 27p to 28p and second class mail from 19p to 20p, from October.
First class stamps went up by 1p last year, though the price of second class
mail had not increased for six years. Peter Carr, the chairman of Postwatch, said: “Service levels to
customers are at their lowest for years. Customers cannot be expected to
continue to pay more and more for a deteriorating service.” Postwatch said the move would add pounds 280m to Britain’s postal bill
over the first 18 months. It would come on top of price increases already
granted to Royal Mail for other services, such as parcel delivery, that
Postwatch estimated would cost customers between pounds 150m and pounds 300m
over the next two years. Postwatch said prices should be reduced by 4 per cent over the next
couple of years. It said Royal Mail was yet to meet its own delivery targets,
with more than 10 per cent of first class letters failing to arrive the next
day. Royal Mail said the rise was necessary. Richard Dykes, the group
managing director for mail services said: “We have kept prices stable for a
long time while key areas of business expenditure, such as fuel, have risen
significantly.” Mr Dykes added that Royal Mail was also faced by wage increases. The
Post Office has some of the worst industrial relations in British business,
with 63,000 days lost last year through unofficial strikes. Chris Webb, a spokesman for Postcomm, said: “We produced what we
thought was a tough but fair licence. Maybe the Post Office thinks it’s a bit
too tough.” Mr Webb said Postcomm had expected prices in core postal services to
be held for two years but the watchdog was obliged to look at changes
requested by Royal Mail. It is thought to be highly unlikely that Postcomm
would be able to give Royal Mail a decision in time for an October price rise. The Post Office said the price hike would provide a third of the money
it need to upgrade mail centres and invest in further automation. The other
two thirds would come from measures to increase efficiency, it said. At the end of March, in what was described as the biggest shake-up to
the Post Office in 350 years, powers to license it were given to the new
regulator. Postcomm has powers to eventually award licences to other
operators, which will lead to the end of Royal Mail’s monopoly. Copyright: Independent Newspapers(UK) LimitedINDEPENDENT, 12th April 2001