First class stamp price to be hiked by 2 pence next year

First class stamp price to be hiked by 2 pence next year

	Published : Wed, 07 Dec 2005 17:05 By : Richard Owen Print this Story

The price of first class stamps is set to rise by 2 pence to 32 pence from next April as per the plans of the postal service regulator Postcomm.

According to Postcomm, the "modest" increase in prices of stamps would facilitate Royal Mail to fund its 4 billion pound deficit in its pension fund apart from modernising its operations, which would help it to service its customers better.

It is projecting to cap the maximum price of a stamp at 36 pence by 2010. On the other hand, Royal Mail feels the price needs to rise to 39 pence by the same time.

Adam Crozier, chief executive of Royal Mail, said: “The regulator has moved a long way from its initial stance but no one should regard the proposals as anything other than tough, particularly for a business with challenges on the scale that Royal Mail faces.”

He added: “We need to see all the detail and access the full impact on our business, our people and our ability to go on delivering the record high quality service that customers have seen over the past year.”

The Communications Workers' Union judiciously welcomed Postcomm’s proposals. Billy Hayes, its general secretary, said the proposals were a "step in the right direction".

2006 will see Royal Mail facing competition in its mail business. TNT Mail, a leading private-sector rival to the Royal Mail, hailed Postcomm’s decision last night saying it was "encouraged" by the regulator’s announcement, opining that regulator was seriously promoting competition.

Postcomm chairman Nigel Stapleton said: “This is a fair deal for customers, Royal Mail and new entrants to the competitive market.”

The hike in stamp price would provide Royal Mail 1.2 billion pounds to modernise its network, besides giving it 320 million annually which would help it reduce its pension deficit, according to the regulator

Royal Mail announced an operating profit of 159 million pounds for the half year up to September which shows an increase of 20.5% over the same period last year.