Stamp prices could soar in shake-up for the Royal Mail

The price of postage stamps will rise by at least 25 per cent next spring under sweeping changes to the Royal Mail proposed by its new regulator, Ofcom.

In the biggest planned changes to Britain's postal service in more than 170 years, the reforms will abolish price controls on all but second-class mail, which would be set between 45p and 55p compared with the current 36p. This would then track inflation.

Ed Richards, head of Ofcom, said: "If you want post delivered six days a week that's obviously going to cost a certain amount of money."

The Royal Mail recorded a £120m loss for its letters business last year. Postal volumes have fallen by 25 per cent since 2006 as the use of email and text messaging has increased.

Household spending on postal services has fallen to just 40p a week, about the cost of a single postage stamp.

Royal Mail's chief executive, Moya Greene, welcomed Ofcom's planned reforms, which she said were necessary to replace regulatory controls that have "accelerated" the organisation's financial decline.

Ofcom will discuss the planned reforms with groups including the private sector and the public over the next 11 weeks before a final decision on the regulatory changes, which is expected by the new year.