Allan Leighton, combative former boss of the Asda supermarket chain, now chairman of the Royal Mail Group, has accused postal regulator Postcom of undermining its recovery efforts.

Although the regulator has acceded to the RM’s request for a one penny rise in first and second class postal rates, it has imposed a new range of price controls alongside stringent performance targets with financial penalties for failure.

Leighton told BBC Radio 5 Thursday that Postcom was giving with one hand and taking with the other. “These are shocking proposals. The regulator is trying to put us in a straitjacket.”

This uncomfortable garment, he claimed, would cost the Royal Mail £500 million ($783.89m; €795.17) over the next three years, fatally damaging the chances of recovery. “It will just make my job, which was difficult, almost impossible,” he told the interviewer. Royal Mail lost £1.1bn last year.

Postcom has proposed that first and second class stamps increase by one penny to £0.20 and £0.28 as of April 2003, frozen at that level until 2006. It has also unveiled plans for paying compensation if mail is delivered late – up to £14 per item for late mail and up to £27 for lost or damaged post.

Leighton said he had no problem with the latter proposals, only with the price controls. “We've always accepted that our prices should be subject to regulatory control – but just when we need a degree of flexibility, we're being invited to put ourselves in a headlock,” he complained. “We would be like turkeys voting for Christmas if we accepted this pricing package.”

He demanded an urgent meeting with Postcom chairman Graham Corbett.

Data sourced from: BBC Online Business News (UK); additional content by WARC staff