First-class stamp in line for a price cut
THE price of a first-class stamp may fall for the first time under plans being considered by the industry regulator.
PostComm, the independent regulator whose task is to provide customers with a better deal by bringing the former Post Office under greater competitive pressure, is looking at a range of price-control options, including a forced cut in the price of both first-class and second-class stamps.
The cost of first-class stamps may now fall below 27p, with second-class stamps dropping below the present 19p from their early 1999 peak of 20p.
The potential reduction deals a fresh blow to the troubled postal group Consignia, coming 24 hours after the company disclosed record losses of Pounds 281 million for the six months to the end of September.
The group is already trying to cut costs by Pounds 1.2 billion and has told the trade unions that it wants to make all Parcelforce's employees self-employed within five years or close the business.
Up to 15,000 jobs are under threat, and the company is also considering phasing out second deliveries and introducing charges for early-morning mail deliveries.
Consignia, which has also consistently failed to meet its targets for the next-day delivery of first-class mail, lobbied the regulator this year for an increase in the cost of a first-class stamp, but later withdrew its application.
The company promised yesterday that it would look at PostComm's proposals, but said that stamp price increases had already fallen behind the rate of inflation in recent years and that postal charges in Britain were among the cheapest in Europe.
A spokesman said: "The price of a first-class stamp has fallen 5 per cent in real terms over the past five years and the price of a second-class stamp has fallen 12 per cent over the same period." Since 1989 the price of a first class stamp has risen by 35 per cent, from 20p to 27p, while that of a second-class stamp has risen 27 per cent from 15p to 19p. Over the same period, inflation has risen by 48 per cent.
First and second-class stamps were introduced in 1968, costing 5d and 4d, changing after decimalisation to 3p and 2 1/2p. Stamp prices were last increased in April 2000, when the first-class stamp went from 26p to 27p. The last increase in the price of a second-class stamp was in 1996.
Peter Carr, chairman of the postal consumers' group Postwatch, said he would welcome a reduction in prices, but gave warning that "we also want to raise the (quality of the) service". PostComm, the Postal Services Commission, announced yesterday that it has asked the consultancy group WS Atkins to look at Consignia's efficiency and consider how much the business could be squeezed to give customers a better deal.
The new price controls for Consignia will come into force in 2003 after a lengthy consultation period and will apply for a period of either three or five years.
The Communication Workers Union (CWU) will hold a meeting of its senior activists today to discuss whether to stage a strike ballot across Consignia's operations. The CWU wants the group to reverse some of its reorganisation plans and to revive a commitment on job security that was abandoned in July.
Consignia's Pounds 281 million loss over six months came after an operating loss of Pounds 100 million was worsened by a Pounds 201 million write-off on its Parcelforce business. It avoided a total loss of Pounds 301 million by taking some interest from its reserves at the Treasury.
The operating loss of Pounds 100 million compares with a loss of Pounds 3 million for the last full year and a profit of Pounds 385 million for 2000. In 1999 the operating profit was Pounds 608 million – a record amount. In 1990 the profit was Pounds 78 million.
