Year: 2006

The loss of key government contracts with the Royal Mail could lead to thousands of the country’s post offices having to close, it was claimed last night. The Department for Work and Pensions has decided not to extend the pounds 1bn contract for the Post Office account card, which is used by 4 million people to draw their pensions and benefits, when it expires in 2010. Meanwhile, a change in the passport application process will also hit Royal Mail revenues. Baroness Prosser, a non-executive director of Royal Mail, has told the House of Lords that as well as the decision not to renew the card account contract which, according to the Work and Pension Department, is worth pounds 1bn from 2003 to 2010, the government’s plans to set up high street offices to vet passport applications would “dig into” the pounds 12m that the Post Office made from processing passports. She told peers: “It is simply not possible to maintain the service politically demanded while at the same time being deprived of the wherewithal to underwrite the cost of that service.”

A basic First Class stamp will rise by 2p to 32p from 3 April 2006, Royal Mail confirmed today. The rise, which was indicated in Postcomm’s price control announcement last month, remains subject to alteration if Royal Mail does not accept the regulator’s overall price control, which is currently out for consultation. A decision on this will not be taken until the beginning of March 2006. The price of a basic Second Class stamp will also rise by 2p to 23p, subject to the same condition. First Class franked mail and items carrying a printed postage impression (PPI) will continue to get a 1p discount for items up to 60g compared to the price of stamped mail. For the first time, this discount will also apply to Second Class franked and PPI mail, Royal Mail announced today.