Postmen get cold feet on penny stamp rise
Postmen get cold feet on penny stamp rise
From The Daily Telegraph June 20th, 2001
Consignia backs off after regulator calls for supporting information
By Rosie Murray-West Section: City
CONSIGNIA, formerly known as the Post Office, yesterday suspended plans to increase the price of first and second class stamps by a penny each, after the postal regulator made it clear that it would not approve the increase. A Consignia spokesman said that the group had suspended its application for price increases, until discussions with the Government over the capital structure of the organisation had been completed. However, a spokesman for the postal regulator PostComm, which issued Consignia’s postal licence and decides on stamp price increases, said the application had been entirely withdrawn. “We have ceased work on it,” he said. “They came along with an application and we said we required information to back it up. Our criteria for a stamp price increase is that Consignia needs to demonstrate that the postal service will be adversely affected if the price increase is not made. “Up to the point where Consignia said it was going to suspend its application, we hadn’t been convinced and were minded not to allow them the increase on the information available.” It is understood that the proposed increases in the price of first and second class stamps to 20p and 28p respectively, would generate around pounds 150m a year for Consignia. The Consignia spokesman said yesterday that the organisation will lose around pounds 100m of revenue a year, when pounds 1.5 billion of reserves in gilt-edge securities held in Consignia’s name are transferred back to the Government. “We need to conclude our discussions with the Government on when they will be transferred,” the spokesman said. “It will happen, the only question is how and when. “Discussions with PostComm kept coming round to when we are going to lose the interest, so, until we know when that will be, PostComm cannot complete its consideration of our application.
“We still believe our case was justified,” the Consignia spokesman added. “We had withheld price increases for as long as we could, and the real cost of postage has in fact gone down. Like every other business, we have costs.” However, Peter Carr, chairman of Post Office watchdog Postwatch, described the entire application as a “fiasco”. “Consignia’s fickle behaviour has needlessly wasted both Postwatch and the Regulator’s time and resources,” he said.
“Consignia has confused customers by publicly announcing in April that it wanted to increase stamp prices and, two months later, saying it doesn’t. “To end the confusion and set the record straight, Consignia should further announce that it recognises that there will be no price increases for at least the next 18 months and it will not be submitting any more applications.” Consignia changed its name from the Post Office in January. “The Government has removed its monopoly on delivering mail at prices under pounds 1 and has appointed PostComm to hand out licences to companies to deliver the mail.
Currently, Consignia is the only universal mail carrier, but business services group Hays is known to have applied for three licences and it is understood that there have been other applications. With the licence, Consignia has been given a set of stringent targets which it must meet, or risk a fine of up to 10pc of its pounds 7.5 billion turnover.
