Ministers back call for stamp price rise

The price of postage stamps looks set to rise by a penny after ministers privately backed Consignia’s requests for an increase.

The company has asked for the increase as soon as possible, on the price of first and second class stamps. Stamp prices in Britain are among the lowest in Europe and Consignia believes the rise would net it Pounds 170m a year.

Stamp prices are frozen until 2003, although PostComm, the regulator, said a rise could happen earlier if “Consignia gives good enough reasons”.

While the decision lies with the regulator, ministers are arguing the rise is merited because the company is taking tough action to cut its losses as the domestic market opens up. Consignia has warned that more price rises may be necessary if competition is introduced at the speed the regulator is proposing.

News of the decision emerged as the company is planning to announce 15,000 job losses in a second wave of redundancies at the end of this month.

The former Post Office is finalising plans for restructuring the Royal Mail, its deliveries arm, as it struggles to cut mounting losses.

Trade union leaders threatened a national strike if the group, which is losing Pounds 1.5m a day, makes any compulsory sackings. The redundancies will accompany news of annual losses of more than Pounds 1bn. A boardroom shake-up could be announced too.

The government is considering whether to hand back Pounds 1.8bn in dividends paid by the former Post Office over the last 20 years. Allan Leighton, Consignia chairman, is understood to want the money, which is invested in gilts, to help pay for the restructuring. The Treasury has agreed to forego a Pounds 64m dividend this year.

The fresh job losses will take the total over the next three years to at least 30,000, a figure unions had expected. Losses through natural turnover could push the total towards 40,000.

The Communication Workers’ Union said: “If the figure is too high we would act. We accept there are areas of the business with surpluses. But if they make any announcement on compulsory redundancies, we will take industrial action.”

The government and Consignia are hoping that an agreement on a voluntary redundancy scheme negotiated with CWU officials will be ratified shortly. This would offer alternative employment within the company and safeguard the pay of those transferred.

There may be more details on the planned closure of at least 3,000 of the 17,000 sub post offices. PostComm is expected to defer publication of revised plans for opening up the postal market until after the redundancies are announced. www.ft.com/consignia

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