Graham Corbett, chairman of postal services watchdog Postcom, has reportedly surrendered to the heavy-artillery lobbying of Royal Mail chairman Allan Leighton, and will now allow the state-owned postal service to raise its prices beyond the one penny increase already agreed for first and second class mail.

The original deal came with strings, capping rate increases at 2.5% below the retail price index for three years from April 2003 – effectively a price freeze if inflation remains at today’s level.

But the Royal Mail – a virtual monopoly that succeeds in losing over £1 million of taxpayers’ money daily – is demanding greater largesse: a price increase of between 1% and 5% on letters, postcards, printed papers and small packages sent by airmail, as well as parcels over 350 grams.

According to a report in commercial weekly newspaper The Business, a meeting scheduled for Thursday will see the regulator loosening some of the present constraints on postal rates and the exemption of certain services from an across-the-board price cap.

One of the main bones of price-cap contention is the charge to competitors (thin on the ground in these early days of competition) for access to the RM’s delivery network. This, fumed Leighton, was “regulation gone mad”.

If the report is correct, Thursday’s meeting will mark a significant victory for Leighton’s energetic offensive on Ofcom which he rammed home with threat of legal action and a personal letter to every member of the 639-strong House of Commons.

Data sourced from: BrandRepublic (UK); additional content by WARC staff