Last gasp bid to settle Royal Mail price row

Last ditch efforts will be made today to prevent the dispute between Royal Mail and the postal regulator over letter prices from being referred to the Competition Commission for a six-month inquiry.

Adam Crozier, the Royal Mail's new chief executive, is to meet the full board of commissioners at Postcomm in a final attempt to reach agreement on the proposed 1p increase in first and second class postage prices.

Royal Mail has until midnight tomorrow to decide whether to accept Postcomm's three-year price curbs or appeal to the Competition Commission. Unless Postcomm gives ground, Royal Mail is understood to be ready to refer the dispute to the Competition Commission. This would prevent the price rise from being introduced for at least six months, depriving Royal Mail of nearly £100m in additional revenue. However, Royal Mail's chairman Allan Leighton is determined not to agree to price curbs that would undermine his rescue plan for the heavily loss-making organisation.

Royal Mail is still losing £1m a day but under the Leighton plan, which involves 30,000 job losses and £1.2bn in cost cuts, it would be turned around to a £400m profit by 2005-06.

It is possible that Royal Mail will announce later today whether it is has decided to go to the Competition Commission although an announcement may be delayed to tomorrow. "No final decision has been made, this will go right down to the wire," said one executive.

Royal Mail desperately needs the 1p price rise to help staunch its losses. But it also wants greater freedom than Postcomm is proposing to allow it to rebalance prices across the range, particularly for second class post which lost Royal Mail £172m last year.

Separately, the Postcomm chairman Graham Corbett will today be re-appointed to the post for up to a year by the Government. Mr Corbett's three-year term of office expires at the end of this month. But he has told the Secretary of State for Trade and Industry, Patricia Hewitt, that he would be prepared to extend it for up to 12 months in order to oversee the introduction of postal competition and the new Royal Mail price curbs.

The postal minister Stephen Timms is today expected to confirm in the Commons that Ms Hewitt has agreed to the extension and has begun the search for a permanent successor to Mr Corbett.