Tag: Europe

Royal Mail must not expect taxpayers or customers to help bail out its pounds 4.5bn pension deficit, the industry’s regulator Postcomm told MPs last night.
Giving evidence before the Commons Trade and Industry Select Committee, the Postcomm chairman Nigel Stapleton warned that if Royal Mail was allowed to raise prices to tackle the deficit, it would drive customers away. He said the best safeguard of Royal Mail’s future and a one-price-goes- anywhere letter delivery service was for the state-owned company to improve its efficiency. The regulator has proposed that the price of a first class stamp should increase only from 30p now to 34p over the next five years. Royal Mail wants the price to increase to 39p to help close the huge hole in its pension fund. But Mr Stapleton said: ‘There comes a point where you push too much on price and people go elsewhere. Our biggest concern is that people will move to e-mail or texting while direct mailers will move to business magazines and we will get into a horrible vicious circle.’

Royal Mail’s controversial switch from twice-daily to once-a-day deliveries last year, which the postal operator predicted would save more than Pounds 100m a year, has actually increased net annual costs by Pounds 105m, its regulator has told MPs. Nigel Stapleton, chairman of Postcomm, yesterday cited the figures to explain why the regulator believed the state-owned postal operator could make double the 1.5 per cent a year efficiency savings it has proposed for the four years to 2010. Postcomm and Royal Mail still appear at daggers drawn over the potential for efficiency savings, a core component of bitterly contested price controls the regulator is due to finalise this month.