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Price of a second class stamp could be raised to 55p

By Claire McNeilly

A major shake-up of the UK postal service could see the price of stamps rise dramatically.

Ofcom, the postal regulator, is considering allowing Royal Mail to increase the price of a second class stamp by an unprecedented 50% and to remove the cap on first class stamps.

Under the proposed seven-year deal the cost of a second class stamp would rise from 36p now to between 45p and 55p.

There would be no limit on the price of a first class stamp, which currently costs 46p and is the cheapest in Europe - although the price has soared by 70% since 2003.

Nigel Dodds MP said he opposed the proposed price hikes which he also claimed would be bad news for the consumer.

"This would be a big blow to household incomes and small businesses which still depend a lot on the mail," Mr Dodds said.

Ofcom said its proposals, which are subject to an 11-week consultation, were aimed at protecting the universal service obligation (USO) under which the Royal Mail has to deliver to any address in the UK for the same price, six days a week.

Without regulatory changes, it was warned that there was a risk that the USO would not be delivered to the same standard.

Ofcom chief executive Ed Richards said the Royal Mail had been under "inexorable pressure" in recent years because of falling mail volumes of business.

A spokesman for the postal watchdog Consumer Focus said: "Royal Mail is going through major transformation, including modernisation and operational changes, as well as changes to its regulatory regime."

A spokeswoman for Royal Mail last night said it was awaiting the outcome of Ofcom's consultation on its proposals for future regulation of UK postal services before announcing stamp prices for 2012.

Factfile

A schoolmaster from England, Rowland Hill, invented the adhesive stamp in 1837, for which he was knighted. Through his efforts the first stamp in the world was issued on May 6, 1840 when the Penny Black was released, engraved with the profile of Queen Victoria. His stamps made the pre-payment of mail postage possible and practical.

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