Postcomm reappoints commissioner amid renewed clash with Royal Mail

LONDON - Postcomm has secured government approval for the reappointment of economist Robin Aaronson as a commissioner until December 2006, as it continues to clash with Royal Mail over price caps.

Aaranson has been a commissioner for Postcomm since its formation in 2000, and was initially appointed for a five-year term that ended on May 31. He was a member of the Post Office Users National Council from 1998 to 2000.

He is an associate of economic and business consultancy LECG, and has worked for PricewaterhouseCoopers, and as a senior economic adviser at the Monopolies & Mergers Commission and as a economic adviser at the Treasury.

Postcomm chairman Nigel Stapleton said that Aaronson's background in regulatory economics was proving invaluable as full opening of the postal market approached.

Stapleton has engaged in a war of words with Royal Mail chairman Allan Leighton following last week's proposals from the regulator to put a cap on Royal Mail stamp increases.

Royal Mail slammed the proposals saying that they would starve it of investment as it faces increased competition.

Stapleton said that Leighton "has shot himself in the foot" with an "entirely predictable" response last week.

Leighton had threatened to involve the Competition Commission and had 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."

The proposals include a cap on price increases for first class stamps of 4p over the next five years and increased penalties for not meeting delivery targets.

Postcomm believes that Royal Mail should be allowed to make a return on investment of 8%, whereas Leighton claims it should be allowed to make a return on investment of 12%.

The two sides also disagree on how much Royal Mail is worth, with Stapleton saying £2.2bn and Leighton saying £5bn. Postcomm takes the worth of the business into account when calculating the profit Royal Mail is allowed to make.

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