Hike in postal charges will drive small businesses out of first class market


By a Newsnet reporter

Commenting as Royal Mail announced that the price of a first-class stamp is to increase by more than 20 per cent from April, from 46p to 60p, while that of a second class stamp will almost double from 28p to 50p, SNP Postal Affairs spokesperson Mike Weir MP warned that the increase would price small businesses out of the first class market.

It is thought that the price hike is being introduced in an attempt to make the Royal Mail more attractive to private investors in order to ready the service for privatisation.

A spokesperson for the Royal Mail warned that the universal service, under which post is delivered to any house in the UK for the same price, was in “peril” without higher stamp prices.

Royal Mail chief executive Moya Greene said; “This is a very high-quality, cherished service, but it needs to be paid for. The increase will restore our finances and maintain the universal service. We had no alternative but to increase prices.”

The increase comes as Ofcom suggest there should be no cap on prices for the vast majority of Royal Mail’s services, including business post, bulk mail, and large letters and parcels sent second class.  

Mr Weir said:

“This is a ludicrous increase at a time when small businesses are under pressure from ever increasing costs and a lack of access to lending from the banks. The result of this inflation busting hike will price small businesses out of the first class market.

“Effectively, the Universal Service Obligation will now be restricted to second class postage for small businesses. Ofcom and the UK Government have given no thought to the stresses on small business in agreeing to this increase. Far from being all in this together, small businesses have been thrown to the wolves.

“A further fear is that this increase could result in a downward spiral, with less people sending letters, and in turn leading to even higher prices.

“The situation could get worse, with Ofcom proposals to allow Royal Mail to charge whatever it wanted for first class services while the cost of second-class postage could rise by more than 50 per cent.

“Under their proposals Ofcom are to define the universal service as the current second class service, and even there the price is to rise substantially.

“Large businesses who send a lot of mail will never pay the full first class price but will always be able to get a better deal or bulk discount from Royal Mail. They would also have the option of doing a deal with one of the alternative private providers.

“These options are not available to our small businesses. They rely on Royal Mail’s service to be able to deliver letters and small packages around the country. They could be priced out of the market risking their very survival.

“The April increase may well be a sign of things to come, and we need action by the UK Government to protect our postal services.”