'Light touch' regulation of Mail could add 5p to stamp prices

The postal regulator is planning to give the Royal Mail greater commercial freedom to help it tackle growing competition, and it signalled support for higher prices which could see first class stamps increase by 5p.

Postcomm said Royal Mail will have the flexibility to raise prices on stamped mail by up to 10 per cent in light of its decision to roll forward price control to 2011-12. If Royal Mail applied this maximum price increase, it would equate to a 5p increase in the cost of a first-class stamp to 46p, and a 4p increase in the cost of a second-class stamp to 36p.

Postcomm said it intends to bring in "substantial deregulation" of packets and parcels weighing more than 2kg. Royal Mail will be given greater freedom to compete in the pre-sorted bulk mail market, where it has lost business to competitors.

Postcomm added that it was minded to accept Royal Mail's request for additional revenues to help maintain the pace of its modernisation programme, required to safeguard the provision of the universal service, under which mail is delivered anywhere in the country for the same price.

The regulator also said a survey had revealed that most residents would accept the loss of Saturday mail deliveries and collections, and would not object to slight increases in stamp prices or minor reductions in the quality of service.