Post Office warns £1 first-class stamps will be cost of Brussels push to end monopoly

The cost of posting a first-class letter could rise to more than £1 under European Commission proposals to end the monopoly held by national postal services, the chief executive of the Post Office warned yesterday.

The cost of posting a first-class letter could rise to more than £1 under European Commission proposals to end the monopoly held by national postal services, the chief executive of the Post Office warned yesterday.

John Roberts told a House of Lords Committee that the cost of a first-class stamp, currently 27p, could rise four-fold in rural areas.

He also warned that 40 per cent of those using the Royal Mail would see their postal charges rise.

The present system gives national postal operators a monopoly over the delivery of any letter weighing more than 350 grammes. Brussels is proposing to reduce this in 2003 to 50 grammes - less than the weight limit covered by a first-class stamp.

Mr Roberts said that if the monopoly was cut by this much it would cost the Post Office £250m to £300m in lost profits, forcing it to increase postal charges to cross-subsidise loss-making services in remote areas. He said the cost of sending a letter from London to Scotland, for instance, was £2.50 while the cost of delivering one within London was 15p.

Commercial operators would cherry-pick this lucrative city centre to city centre business, he said, wiping out the Post Office's profits and threatening its ability to maintain a universal service at a uniform price.

The Post Office, backed by the Government, has proposed a compromise whereby the monopoly is cut initially to 150 grammes. The Council of Ministers is due to meet on 22 December to decide on the Commission's proposals although some observers believe that the decision, which will be determined by qualified majority voting, will be put off until next year.