UK Direct Marketers Face Shock Postage Increase

13 May 2002

Britain's lossmaking Post Office (aka Consignia) has received the nod from government ministers to increase first and second class postal rates, each by one penny. The current basic rates, respectively £0.27 and £0.19, are among the lowest in Europe.

Although prices are theoretically frozen until 2003, an earlier increase can be approved by postal regulator PostCom if “Consignia gives good reason”.

“Good reason” will undoubtedly be the announcement later this month of Consignia’s worst ever loss – reportedly in excess of £1 billion (€1.6bn; $1.5bn).

Concomitant with this, the organisation is expected to announce further job cuts of up to 15,000 – although on Sunday the Communication Workers Union made it clear that if any of the cuts are compulsory, it would call a national strike.

The CWU was unequivocal: “We accept there are areas of the business with [staff] surpluses. But if they make any announcement on compulsory redundancies, we will take industrial action.” The union has already agreed to the excision of 15,000 staff – equating to a total reduction over three years of 30,000 jobs.

Meantime, Consignia is calling for the return of £1.8bn in dividends paid over the past twenty years by the former Post Office to the government. Chairman Allan Leighton has reportedly demanded the cash – currently invested in gilts – to cover the cost of a massive restructuring. The Treasury has already relinquished the £64 million dividend due for the current year.

Data sourced from: Financial Times; additional content by WARC staff