Guernsey Post says it knows the rises will be unpopular

The Office of Utility Regulation (OUR) is looking at whether rises of about 25% are justified.

The company blames the move on increased running costs and the Royal Mail, which wants an extra �3.4m to receive post sent from the island to the UK.

However, some businesses have reacted angrily to the proposed changes, saying bulk mailers will be forced to find alternatives.

We will be seeking to ensure that postal prices remain as low as possible Jon Buckland, Office of Utility Regulation

Guernsey Post wants to increase its tariffs by up to 25% from February.

It will mean the price of sending a local letter will rise by 6p to 28p, and parcels by 40p to �2.40.

Guernsey Post Managing Director Mike Hall said the move will bring the island in line with the UK.

He said he knew the rises would be unpopular but that the company needs to catch up with market rates elsewhere.

One of Guernsey's biggest mail-order businesses says the rises would act as a turn-off for e-commerce.

Derek Coates, managing director of Healthspan, describes the increases as absurd and says if prices go up as suggested some will be forced to find alternatives.

He said: "That kind of price increase and level will mean that companies such as ours will be forced to find a way of by-passing the post office.

"It will mean, in current terms, something like �8m of the Guernsey post office's revenue from just three of the largest of the post users, including us, will be removed from the post office."

Increased costs

The OUR said it was important postal charges remain as low as possible while allowing Guernsey Post a reasonable profit.

Regulatory manager Jon Buckland said a number of issues have to be taken into account before a decision is made to allow the increases.

He said: "We have to take into account the impact on the wider economy, but we also have to make sure Guernsey maintains a robust and substantial postal service.

"For an island economy such as ours, a strong postal service is essential.