Stamps set to go up but Mail faces tougher targets

Stamp prices should rise by a penny from next spring, the postal regulator is expected to announce next week.

Postcomm is likely to suggest that alongside the increase, which would net Royal Mail ý170m a year, the company should face tougher performance targets and a compensation scheme for customers.

The regulator said the contents and release of its proposals had not been finalised. But if confirmed, the price rise would mark a victory for the loss-making Royal Mail as it seeks to repair its tattered finances.

The state-owned company, which recently announced ý1.1bn losses and 30,000 job cuts, asked for a price increase several months ago.

It linked its proposals to plans by the regulator to allow competitors into its core market from next January.

Royal Mail said yesterday it had hoped for a price rise by the end of the year, but accepted it was no longer likely. “There is a bottom line impact of the delay,” it added.

The price rise, to 28p for first-class stamps and 20p for second class, is expected to be accompanied by a three-year price freeze.

Industry watchers suggest the freeze would be a signal that the company had to stand on its own in its drive to restructure and cut costs. “We recognise we need a strong Consignia. A penny now and a three-year price freeze is a good deal for customers when the rest of the package is a compensation scheme and improvements in the standard of service,” said Postwatch, the postal consumer watchdog.

Royal Mail was last allowed to put up the price of a first-class stamp in April 2000, before Postcomm was set up. The regulator has said consistently that it would not allow customers to fund Royal Mail’s inefficiency with a price rise. It denied yesterday it would be backtracking if it pressed for an increase as part of its price control proposals.