UK goes postal over stamp price hikes

Stat of the day: 60p. The price of a 1st class stamp now that Ofcom has scrapped price controls at Royal Mail.

by Rebecca Burn-Callander
Last Updated: 09 Oct 2013

Royal Mail has been freed from its regulatory shackles and can now raise stamp prices at will. It's lost no time introducing the first hikes, either: 60p for 1st class and 50p for 2nd as of next month.

Business customers are taking a licking from the stamp rises too. Those with franking machines, take note: 1st class will increase from 39p to 44p, and 2nd class will increase from 28p to 31p.

Of course, these rates are still amongst the cheapest in Europe. And the price of our 2nd class stamp has been capped at 55p to protect low earners, so it's not all bad.

Royal Mail explains that the price rises are a necessary evil: 'This is a very high-quality, cherished service, but it needs to be paid for,' says Royal Mail CEO Moya Greene. 'The increase will restore our finances and maintain the universal service. We had no alternative but to increase prices.'

Indeed, Royal Mail hasn't has the easiest run of it lately. Postal volumes are down 25% and losses have mounted due to competition from e-mail: £1bn over four years. And then there's the small issue of its imminent privatisation. With government bearing Royal Mail's onerous pensions burden, if the business can turn its finances around, it could be quite the plum purchase.

MT doesn't expect a stampede any time soon though...

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