Stamp prices expected to rise by one penny

POSTCOMM, the mail regulator, is expected to allow the price of first and second-class stamps to rise by a penny after proposals are published today. The regulator, which sets the price of stamps and monitors delivery performance, is likely to suggest that first-class postage will rise to 28p, while second-class will rise to 20p. It is a U-turn on behalf of the regulator, which last year indicated that any application for a price rise in first-class stamps would be turned down. Graham Corbett, who heads Postcomm, said he believed that the organisation’s woes stemmed from financial inefficiency rather than lack of revenue. Many industry spectators believe Postcomm has been approached by the DTI to persuade it to allow the rise. Consignia, which is losing pounds 1.5m a day, has embarked on a cost-cutting operation under the eye of chairman Allan Leighton. This has included 30,000 job cuts over three years. After this price rise is put in place, Postcomm has indicated that it will effectively freeze the amount that Consignia can charge per item until March 2006. Under the terms of the proposals, the public will also be able to claim compensation for late delivery of mail for the first time. The scheme is likely to offer domestic users up to pounds 14 an item for late mail, while lost and damaged mail could be compensated by a payment of up to 100 times the cost of a stamp. Bulk mailers would be entitled to 1pc off their bill for every 1pc that Consignia fell below relevant delivery targets. If Consignia’s performance continues at last year’s level, a compensation scheme of this magnitude could cost the business pounds 60m a year. Postcomm will now consult with Consignia on these proposals. The mail delivery organisation is understood to be concerned that Postcomm is proposing a tougher price control for items such as special delivery and airmail.