Watchdog ties postal price rise to better service

First and second-class stamps will cost a penny more from April 2003 if proposals by the post office regulator are accepted by Consignia, the mail operator.

Postcomm has put forward proposals for consultation under which postal price rises would be limited and Consignia would be required to deliver better services.

The proposed 3 per cent rise would boost Consignia’s revenues by £510m over the next three years. In return, Postwatch, the postal consumer watchdog, wants Consignia to reach performance targets or compensate customers where it fails.

Peter Carr, chairman of Postwatch, said: “This must be the last time customers are asked to pay more to bail out this monopoly. This half a billion pounds represents a leap of faith by customers that Consignia will be able to become efficient, return to profit and provide the service levels they expect.”

Postcomm has proposed a subsequent freeze on prices until March 2006 – an extension of the interim price freeze on most products imposed by Consignia’s original licence two years ago.

The new standards also raise the target for the number of first class letters delivered the next day, remove unacceptable regional disparities and put in place schemes to compensate domestic and business users for late delivery of post.

Domestic users would be able to claim £3 when a first-class letter was more than four days late or a second-class letter more than six days late.

The compensation would rise by £1 a day to a maximum of £14.

Consignia said it was concerned that competitors would win market share for cheaper-than-average products, leading to an increase in Consignia’s average costs.