01 January 2000

POSTAGE RATES are to rise from April. According to Post Office chief executive John Roberts, the current price freeze - four years in the case of the standard first class rate - has been a ‘significant factor’ in the PO’s poor interim results which saw pre-tax profits sag by one-third to £185m (excluding exceptionals). The PO is now on course to make its first full-year loss in 23 years - the result of a disastrous aborted computer project to pay social security benefits.

The increases will take effect on 3 April, with the standard rate for first class mail rising from 26p to 27p. The basic second class rate remains unchanged at 19p although heavier mail sent by either class will cost more. Mail to Europe rises from 34p to 36p. All other international mail will increase by 3.9%.

Said Richard Dykes, group managing director of mail services: ‘Postal prices in the UK are among the lowest in Europe ... it is inevitable that we have to make some changes. But we have kept prices as low as possible.’

The government-appointed Post Office Users’ National Council [a toothless watchdog if ever there was one] declared the increases ‘disappointingly large’ and demanded that the PO explain them. The 1p rise in first class post and the freeze on second class, the Council averred, disguised ‘very hefty’ increases elsewhere. ‘These may badly hit the business community’, it yapped.

The increases, which include a 2.1% hike in Mailsort and household leaflet delivery costs, are also under fire from the DMA which threatens to lay the matter before the European Commission unless a ‘comprehensive price suspension’ is conceded. ‘The EU agreed at Rheims II that mail users should not bear the full burden of price rises’, says DMA director of postal affairs David Robottom.

Intense lobbying by unions and from within the Labour Party has forced the government to backtrack on its recent decision to dilute the RM’s delivery monopoly on all letterpost under £1 to 50p. Instead, the monopoly will be referred to the yet-to-be-appointed postal services regulator. Said CWU general secretary Derek Hodgson: ‘We are relieved the government has finally seen sense.’