ROYAL MAIL tried to raise the price of a first-class stamp by 60 per cent, according to the industry regulator, who yesterday pledged to curb rises, halve the organisation’s profits and cut its potential sale value by more than £2 billion.

Nigel Stapleton, the chairman of Postcomm, is to limit the rise in stamp prices to 4p for first-class stamps over four years to 34p. By limiting how much Royal Mail can charge he plans to allow it to make profits of £285 million. This compares with £537 million that the organisation made last year. In a blow to the hopes of Allan Leighton, Royal Mail’s chairman, for a partial sale of the business, Postcomm has valued it at £2.2 billion, against the £5 billion that Mr Leighton believes it is worth. Royal Mail is also to face fresh service standard targets, although some of the existing demands will be streamlined.

The clash between the two sides over a pricing programme to apply from next year may prompt Royal Mail to call for an inquiry by the Competition Commission.

Mr Stapleton said: “These proposals offer customers a better deal and secure the universal service.

“The revised price caps are challenging, but achievable, as Royal Mail prepares for the full opening of its market in 2006.”

Postwatch, the consumers’ group, said: “Postwatch welcomes the protection that has been given to captive domestic customers. Royal Mail proposed that first-class stamp prices should rise from today’s 30p to 48p by 2010, an increase of 60 per cent.”

But Royal Mail claimed that it had only “observed” that if it were to fund its pension deficit and make profits in line with other postal groups the first-class price would be 48p.

It said it had sought a rise to 41p. Mr Leighton said: “These proposals will literally starve Royal Mail of vital investment and so wreck the quality of service we have fought so hard to improve. We cannot accept them. It’s as simple as that.”

Mr Leighton said that the plans would send the organisation “back into a spiral of decline”. The plan will be open for consultation for three months.

The final proposals are due by November for implementation next April, four months after the market opens to full competition.

A Competition Commission inquiry would result in a delay of at least six months.

PRICE RISE LICKED

Nigel Stapleton is determined to keep postal costs down — including his own. Just before Royal Mail put up first-class stamps by 2p to 30p in April he bought 200. As the price is no longer printed on most stamps, consumers can hoard before price increases. The head of Postcomm saved £4.