Consignia set to win 1p post rise
The price of stamps is set to rise by a penny as postal industry regulator Postcomm bows to pressure from Consignia and the Government.
Senior Cons
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ignia sources indicate that they are confident Postcomm will agree at least to a rise to 28p on first-class letters to mitigate the effect of its plans for the staged opening of the postal market to competition.
In January, Postcomm head Graham Corbett unveiled plans to introduce competition in bulk letter deliveries this spring, ending Consignia’s monopoly with full liberalisation by 2006.
Allan Leighton, appointed by the Government as Consignia chairman last month, has warned the plan would ‘kill off’ the group, which is losing £1.5 million a day. Leighton has claimed it costs 28p to deliver a 27p letter.
Last year Postcomm rejected an approach for a rise from Consignia, on the ground that the poor financial performance was due to inefficiency, not lack of revenue. But last month Leighton unveiled a radical cost-cutting plan, including 30,000 job losses over three years, in an attempt to slash £1.2 billion from costs. This has convinced Ministers that the company is taking its cost-cutting seriously.
A senior Consignia source said: ‘We have applied for a price rise. The regulator has extremely discreetly been approached by Ministers at the DTI. They were appalled at how radical the regulator’s proposals are, but they are deeply concerned that they do not publicly undermine his independence. It has been made clear that, if competition proposals go ahead, a price rise would be helpful, and Allan is confident that he will get one.’
A Department of Trade and Industry spokesman said Ministers often spoke to both the company and the regulator, but denied there had been any lobbying for a price rise.
