Royal Mail faces price capping
by brian_turner
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The Royal Mail believes that proposals by regulator Postcomm to limit the cost of first class stamps to 34p by 2010, could lead to a decline in its service and make it difficult to maintain the same price for deliveries to remote areas.
Postcomm’s proposals also include higher penalties for missing delivery targets which could cost Royal Mail £280m in refunds. Four new performance standards would be introduced, including a target of delivering 99% of mail by the next working day.
Consumer group Postwatch said the proposals represented a “better deal for customers”.
However, the Royal Mail’s chairman Allan Leighton said: “These proposals will literally starve Royal Mail of vital investment.”
Unless the recommendations are changed, the company plans to make a complaint to the Competition Commission.
The proposed pricing caps, which also include limiting second class stamps to 23p by 2010, assume inflation does not exceed 2.5%.
Postcomm’s proposals will go out to consultation for three months from Wednesday.
According to Postcomm’s chairman, Nigel Stapleton, the “proposals seek to strike an appropriate balance between Royal Mail’s regulatory freedom in a newly liberalised market and the interests of mail customers and rival postal operators.â€
The postal market will be opened up to greater competition next year. The Royal Mail fears that rivals will take-over mail that was easy to deliver, placing the future of the Royal Mail’s universal service at risk.
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