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Postage stamp prices must go up to ease Royal Mail’s financial problems, Adam Crozier, chief executive of the state-owned group, said yesterday. Royal Mail had returned to profit after several years of heavy losses but still lacked investment and had an old-fashioned pricing structure, he said. “None of our prices are aligned with our costs.” Business customers paid more to subsidise domestic stamp prices. Royal Mail was also pressing for the introduction of size-based, rather than weight-based, pricing of mail to better reflect the costs of sorting and delivery.

Christmas postal deliveries in London could be hit if union members balloted today vote to take industrial action over pay, the BBC reported. The Communication Workers Union (CWU) is calling for strikes in a row over overtime needed to clear the increase in post in the run-up to the holidays, according to the report. The union claimed workers were being forced to work on their days off, but the Royal Mail said the CWU was asking for extra pay for overtime that may not be needed.

The chief executive of the Royal Mail apologised to British businesses for the poor service it has provided but stressed it had now turned the corner. Adam Crozier told the CBI Annual Conference in Birmingham that stamp prices were likely to rise in the future so Royal Mail could compete with other European operators entering the market. But despite making progress, Mr Crozier denied claims that the service was being primed for privatisation. He said: ‘My aim is to run a more efficient Royal Mail. The future ownership of the Royal Mail is a matter for the shareholder – the Government. ‘My understanding is that is not on the agenda at the moment.’ He said great progress had made during the Royal Mail’s renewal plan, but much work needed to be done.

Stamp prices must rise to cover the cost of delivering letters, the chief executive of Royal Mail said yesterday. Adam Crozier told delegates at the CBI annual conference in Birmingham that the subsidising of personal letters by businesses would have to end over the next few years. Mr Crozier said: “Stamp prices will need to go up. The price people pay ought to bear some resemblance to the cost of providing the service.” The postal group is expected to increase the price of a first-class stamp from 28p to 29p or 30p in April. Any price rise would have to be announced by the end of the year, although Royal Mail said that no such decision had been made. The price of posting a first-class letter has increased by only 2p since July 1996. Royal Mail lost GBP247 million delivering stamped mail last year. The group loses 5p on every first-class stamped letter it delivers, and 9p on every second-class letter. Mr Crozier said that the mesh of cross subsidies in the postal system would have to be unwound for Royal Mail to survive increasing competition for business mail.