'Stamp price must rise 6p or Royal Mail is bust'

Consumer groups reacted with alarm today to reports that a first-class stamp could rise by as much as six pence to 38p.

Royal Mail bosses are demanding the increase to offset the scale of the losses made on its stamped letters operations.

In an interview in the Financial Times, Royal Mail's chief executive Adam Crozier said the losses threaten the company's survival. He said: "This is not scaremongering in any shape or form, you can see that when you look at (Royal Mail's) financial numbers."

Royal Mail makes a loss of about 6p on every stamped letter sent around the UK. Under its "universal service obligation" it is obliged to charge the same amount for a letter, regardless of how far it has to travel in the UK.

But consumer group Postwatch pointed out that under the current price control regime Royal Mail is entitled to put up the price of a first-class stamp by 2p to 34p in April, with another 2p rise in April 2008.

Postal professor Ian Senior described Mr Crozier's call for a 6p rise as "sabre-rattling".