Postwatch is finalising its response to Postcomm’s price control proposals and will publish it tomorrow.
Postwatch argues that a penny price rise on 1st and 2nd class stamps is overdue. Royal Mail needs this extra cash - £510 million over the next three years – to fund its renewal programme and restore service levels. Postwatch are, however, concerned that the regulator, which has been much criticised in the press, are simply passing through extra price increases without proper explanation or justification.
These could see stamp prices rise by as much as 3 pence on 1st class and 2 pence on 2nd class. Under pressure from Royal Mail, Postcomm has also backed away from giving customers a proper compensation scheme. A mandatory scheme covering all types of failure – lost, damaged and delayed – was promised two years ago.
Now consumers are only to be guaranteed compensation for delayed mail and at levels lower on average than Royal Mail currently offers. Peter Carr, Chairman of Postwatch, notes, “Customers are now being asked to pay an extra £240 million in addition to the £510 million proposed in October. The penny increase on 1st and 2nd class mail should be implemented this April. Royal Mail needs the extra money now.
The remaining £240 million involves complex arrangements, which need to be fully justified and understood.” Postwatch remains concerned that the Regulator did not allow enough time for interested parties to prepare their responses to its final proposals and that it has not given itself sufficient time to give adequate consideration to comments that are made. It is expected Postcomm will rush out its decision in a matter of a few working days.
Postwatch’s Chief Executive, Gregor McGregor commenting in advance of completing the response, said “The regulator has put us in a very difficult position. The February proposals are significantly different from those consulted upon in October. A flawed process has resulted in flawed proposals. The new proposals look too generous on price and are too weak on compensation. We have a statutory duty to consult widely among customers but this has been difficult to do in the limited time available.”
Since awarding Royal Mail (then Consignia) its first licence Postcomm has had two years to prepare a replacement price control for Royal Mail. Yet it only released final proposals for comment in February 2003.
On the technical level Postwatch’s response will question whether Royal Mail can provide the regulator with the data necessary to support a “tariff basket” methodology. Also, Postwatch does not accept that the proposals incentivise the Royal Mail to become more efficient.
