Royal Mail has confirmed that the price of a basic First Class stamp will rise by 2p to 32p from3 April 2006. The price of a basic Second Class stamp will also rise by 2p to 23p.
The rise, which was indicated in Postcomm’s price control announcement last month, remainssubject to alteration if Royal Mail does not accept the regulator’s overall price control, which iscurrently out for consultation. A decision on this will not be taken until the beginning of March2006.
First Class franked mail and items carrying a printed postage impression (PPI) will continue toget a 1p discount for items up to 60g compared to the price of stamped mail. For the first time,this discount will also apply to Second Class franked and PPI mail. The price of some business mailservices will decrease for heavy weight items. However, business mail will still continue tosubsidise social mail, such as personal letters and birthday cards. Royal Mail said it currentlyloses 5p on every First Class stamped letter and 8p on every Second Class stamped letter.
Lorna Clarkson, Royal Mail’s Director of Commercial Policy and Pricing, said: “Now that the UKmail market is open to full competition, it is essential that our prices are more closely alignedto the true cost of collecting, sorting and delivering 83 million items of mail a day to 27 millionaddresses across the UK. Royal Mail’s stamp prices remain great value. First Class stamps are stillcheaper than almost anywhere else in Europe – in Spain a 60g letter costs 44p to send, 80p in theNetherlands, 85p in France, 96p in Germany and £1.12 in Italy,” she added.
Referring to Postcomm’s recent price control proposals, Clarkson said: “The price control finalproposals are tough and do not deliver the £2 billion investment that Royal Mail needs to moderniseits business. Royal Mail continues to discuss with its shareholder, the Government, the need tomodernise its business and talks continue with the Royal Mail Pension Trustees about how we tackleour pension fund deficit. We also need to ensure we can continue to provide theone-price-goes-anywhere universal service on which we all depend.”
Royal Mail’s prices will further move towards reflecting the cost of handling mail later whenPricing in Proportion (PiP) is introduced on 21 August 2006. This new pricing system will berevenue neutral for Royal Mail and it will take into account the size and shape, as well as theweight, of mail. Around 80 per cent of stamped mail, and 70 per cent of business mail, will beunaffected by the PiP price changes.
