Regulator vows to view price-rise application with 'critical' eye
From THE GUARDIAN, April 12th, 2001
The Post Office faced an uphill struggle yesterday to convince the
new industry regulator and consumer watchdog of its case for raising
the cost of both first and second class letters by 1p, writes David
Gow. They would rise to 28p and 20p respectively from October 1.
First-class mail rose to 27p last April when the PO cut the cost of
second-class letters, after a five-year freeze, from 20p to 19p. PostComm, the regulator, said it would consider the PO's application
to increase prices from October 1 'carefully and critically',
pointing out that it would be allowed only if 'there is a
significant risk to the company's ability to finance its licensed
activities'. It added that the PO, now known as Consignia, must also prove that
no other course -such as improving efficiency -is appropriate. The industry regulator, which issued the PO's firstlicence in its
350-year history late last month, and the new consumer watchdog,
PostWatch, made plain that the proposed increases would be subjectto
stringent consultation. Peter Carr, PostWatch chairman, claimed that Consignia had been
arguing for a price freeze just 10 days before its licence was
granted and the increases in stamps and other products would cost
customers pounds 280m over 18 months – on top of pounds 240m
increases over three years in other parts of the PO business already
conceded. '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. 'First-class prices were increased last summer and then service
standards collapsed,' he said. 'Customers must not bail out
inefficiency and mismanage ment.' But Richard Dykes, Consignia's
managing director of mail services, said postage prices over the
past decade were below the average rate of increases for the country
as a whole. In the past five years first-class had gone down 8% in real terms
and second-class by 16%. Mr Carr said the case for raising prices to fund new investment was
'pretty thin', adding: 'What are they doing with all the money
they've had before?' Mr Dykes insisted, however, that some increases
were now crucial for investment to drive up mail reliability. Price rises would provide about a third of the finance needed to
upgrade mail centres, with the rest coming from increased
efficiency. He said that the British postal service was one of the best in value
and the least expensive in Europe with letter charges only a third
of those in Germany.
Copyright 2001 The Guardian.
Source: World Reporter (Trade Mark) – FT McCarthy.THE GUARDIAN, 12th April 2001
From THE GUARDIAN, April 12th, 2001
The Post Office faced an uphill struggle yesterday to convince the
new industry regulator and consumer watchdog of its case for raising
the cost of both first and second class letters by 1p, writes David
Gow. They would rise to 28p and 20p respectively from October 1.
First-class mail rose to 27p last April when the PO cut the cost of
second-class letters, after a five-year freeze, from 20p to 19p. PostComm, the regulator, said it would consider the PO's application
to increase prices from October 1 'carefully and critically',
pointing out that it would be allowed only if 'there is a
significant risk to the company's ability to finance its licensed
activities'. It added that the PO, now known as Consignia, must also prove that
no other course -such as improving efficiency -is appropriate. The industry regulator, which issued the PO's firstlicence in its
350-year history late last month, and the new consumer watchdog,
PostWatch, made plain that the proposed increases would be subjectto
stringent consultation. Peter Carr, PostWatch chairman, claimed that Consignia had been
arguing for a price freeze just 10 days before its licence was
granted and the increases in stamps and other products would cost
customers pounds 280m over 18 months – on top of pounds 240m
increases over three years in other parts of the PO business already
conceded. '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. 'First-class prices were increased last summer and then service
standards collapsed,' he said. 'Customers must not bail out
inefficiency and mismanage ment.' But Richard Dykes, Consignia's
managing director of mail services, said postage prices over the
past decade were below the average rate of increases for the country
as a whole. In the past five years first-class had gone down 8% in real terms
and second-class by 16%. Mr Carr said the case for raising prices to fund new investment was
'pretty thin', adding: 'What are they doing with all the money
they've had before?' Mr Dykes insisted, however, that some increases
were now crucial for investment to drive up mail reliability. Price rises would provide about a third of the finance needed to
upgrade mail centres, with the rest coming from increased
efficiency. He said that the British postal service was one of the best in value
and the least expensive in Europe with letter charges only a third
of those in Germany.
Copyright 2001 The Guardian.
Source: World Reporter (Trade Mark) – FT McCarthy.THE GUARDIAN, 12th April 2001
