Royal Mail given permission to raise stamps by up to 5p

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Do you guys care about the stamp price? Personally I find all mail is junk. Bills etc can be done online. Only thing left is greetings cards. Things purchased come by courier anyways.

Source: http://www.bbc.co.uk/news/business-11710061

Royal Mail has been given the green light to raise the cost of a first-class stamp by 5p to 46p next April.

This would be the largest increase since first-class postage began in 1968.

A second class stamp could rise by 4p, taking it to 36p, under final proposals from regulator Postcomm.

Royal Mail will decide next month whether to implement a rise of that magnitude. It currently loses 6.4p for each stamped letter it delivers.

There have been larger percentage increases, notably in the high inflation 1970s, but a 5p rise on a standard first-class stamp would be unprecedented in cash terms.

Higher charges

The changes are part of series of proposals outlined by Postcomm.

If Royal Mail chooses to increase all the charges up to the maximum allowed, it could mean an additional £380m a year to the operator, which is facing falling profits.

Other proposals allow Royal Mail to increase the price it charges big business customers such as banks and big energy companies for delivering letters.

The mail operator could also be able to charge competitors up to 15% more.

Rivals such as UK Mail collect and sort letters themselves, but have to pay Royal Mail to deliver over what is known as "the final mile" - up to people's letterboxes.

Royal Mail says current rules have meant it loses 2.5p on each item delivered in this way.

The chief executive of UK Mail, Guy Buswell, said all customers of Royal Mail - business and consumer - were effectively "bailing them out".

Speaking to BBC News, he warned that any increases in charges to business users would inevitably be passed onto consumers through higher prices.

New rules

The plans also include the relaxation of some regulations to help Royal Mail compete more effectively with its private sector rivals.

Postcomm said the changes would help Royal Mail fund its modernisation programme and help safeguard the one-price-goes-anywhere universal service in the UK.

Royal Mail welcomed the announcement.

"With mail volumes falling rapidly... it's essential the current regulatory constraints on Royal Mail are eased to allow it to compete fairly in the bulk business mail, and packet and parcel markets, where competition is extremely robust and growing," said chief executive Moya Greene.

Earlier this month, Royal Mail said its half-year profits had fallen by more than two-thirds and its core letters delivery business had returned to making a loss.

The mail operator, which is set to be sold off by the government, has long argued for lighter regulation as competitors have won more of the profitable bulk mail market.

But industry insiders believe its problems have more to do with a failure to modernise quickly enough.

And UK Mail's Guy Buswell said the regulator should have tried to compel Royal Mail to become more efficient, describing the proposals as "short-sighted".

In a statement, Postcomm chair Nigel Stapleton said he welcomed the Royal Mail's pledge to improve as quickly as possible.

But he said he "regrets that the company is unable to do so without making further demands on its customers".
 
It currently loses 6.4p for each stamped letter it delivers.
So, How do they make profit then? Surely the majority of mail is stamped?

Also, doesn't really bother me, Cant remember the last time I used Royal Mail, or delivered anything for that matter.
 
This will have a knock on effect economically to other businesses large and small, I can see it going towards the Royal Mail becoming even less competative.
 
if they lose so much money then maybe its time to lose the queens head from the stamp.
maybe failing/forgotten celebrities can pay to have their image on x amount of stamps. bit like hey remember me from the 80's ...please remember my face and want me back on t.v.
 
Yeah didn't they recently try to blame the internet for their demise?

Except for the fact that the internet has almost continually grown e-commerse wise and so have their share of it.

So which is it?

I don't proffess to know a lot on the subject, but I can't help feel its a slow decline regardless of the action taken.

Even the government barely uses it anymore.
 
Yeah didn't they recently try to blame the internet for their demise?

Except for the fact that the internet has almost continually grown e-commerse wise and so have their share of it.

So which is it?

I don't proffess to know a lot on the subject, but I can't help feel its a slow decline regardless of the action taken.

Even the government barely uses it anymore.

Well it makes sense for letters. For royal mail to break even on letters, its likely they need very large volume given the fixed costs of labour and equipment.

When's the last time anyone has written a letter? I also receive far less with all bills and statements being delivered via email to me.

But you are right that parcels and special delivery items have probably increased massively. However, thats the area where they have fierce competition from multiple companies.
 
This is a good thing. The UK is one of the cheapest countries in Europe to for 1st and 2nd class mail. Most countries are 60p - 80p for a standard 1st class letter!
 
This will have a knock on effect economically to other businesses large and small, I can see it going towards the Royal Mail becoming even less competative.

Where can I find a more competitive price for sending a letter than the Royal Mail?
 
Don't care, most business are trying to convince you to not use mail. Mail is a dying business, but parcels is an ever increasing business.

Government screwed RM over anyway. Other companies get to pick up large business mail really cheaply, then pass it on to RM for the expensive final delivery.

Sooner privatisation the better just look at the dutch post office, to see how it should be run and cost.
 
So, How do they make profit then? Surely the majority of mail is stamped?

Also, doesn't really bother me, Cant remember the last time I used Royal Mail, or delivered anything for that matter.

RM thanks to the idiocy of the Postcom (or whoever they are called now) break down the postage into 3 parts based on averages.

The collection of the mail.
The sorting of the mail and delivery to the local sorting offices.
The actual delivery of the mai.

Mail sent by individuals is normally "stamped" but very expensive to collect (a few dozen/hundred from tens of thousands of post boxes).
Mail sent by businesses is normally Franked and collected by the tens/hundreds of thousands from single locations (say all of Barclaycards bills from a single stop).

Business/junk mail (franked), has always subsidised the cost of actually delivering the stamped mail.

What the regulator did in the interest of "fairness and competition" was to work out the average cost and split it so that the private companies could in theory do all the work themselves, or do some of the work and pay RM for the part they did.

What's happened in reality is that the private companies have basically said to the likes of Barclay card "we can undercut RM by 2p a unit of mail", then collected the mail and passed it on to RM to do the final step of delivery - the final step being by far the most expensive part of the whole process.

The result: The private mail companies who can pick and chose who/what they do can make a tidy profit, whilst RM who have to deliver everywhere are screwed as they are no longer able to cover the costs of the expensive mail (as is their obligation under universal service), by using the profit from the cheaper mail.

Effectively RM have been shafted by a regulator and government who decided that the best way to have an "open and fair" system for competition, was to lump one company with obligations that were far from open and fair as they couldn't pick and choose who they deal with thus get lumbered with the expensive bits the private money making companies didn't want.


As for not using RM for anything...not even those bills, invoices, letters etc from your bank, or the small packages from mail order that aren't big or expensive enough to warrant a courier delivery at 2x+ the price of the RM option?
Any increase in the cost of using RM tends to affect everyone who receives anything through the post, although in most cases the change will be fairly small (but it will put pressure on businesses that use it, but are not big enough to be attractive customers for the likes of DHL's post).
 
Don't care, most business are trying to convince you to not use mail. Mail is a dying business, but parcels is an ever increasing business.

Government screwed RM over anyway. Other companies get to pick up large business mail really cheaply, then pass it on to RM for the expensive final delivery.

Sooner privatisation the better just look at the dutch post office, to see how it should be run and cost.

But the royal mail are happy to take that mail on, aren't they? They already have the postmen and sorting offices in place and so would be stupid to decline some money, however little that is.

The question is, why aren't they winning the lucrative contracts. Also, this 5p rise will surely appropriate some of the profits these other companies make.
 
Just send everything 2nd class. Don't know about now but when I worked as a postman other than cost there was no difference in the 1st and 2nd class service by and large.
 
Where can I find a more competitive price for sending a letter than the Royal Mail?

I was talking more in terms of bulk business use/discount.

Reliability.

TNT etc are far more predominant now.

I buy one or two stamps a year. Everything else is free post or no post. :)
 
This is a good thing. The UK is one of the cheapest countries in Europe to for 1st and 2nd class mail. Most countries are 60p - 80p for a standard 1st class letter!

I fail to see how this makes it a good thing? Don't you want to live in a better place than most other countries?
 
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