/ Money

Royal Mail free to set its own stamp prices – yay or nay?

Stamps could soon see the most dramatic price rise in years. Ofcom has said Royal Mail should be able to set its own first-class stamp prices, but is it wrong to put such power in Royal Mail’s hands?

The new postal regulator Ofcom (previously Postcomm) is to begin an 11-week public consultation on what should be done with Royal Mail and its loss-making letters business.

If you’re a big letter sender, Ofcom’s proposals might make you wince, so brace yourself:

  • Royal Mail should have the freedom to set its own first-class stamp prices, with current caps removed.
  • The same freedom should also be allowed for large second-class deliveries, business mail and bulk mail.
  • A cap will be put in place for second-class stamps, but this could be between 45 and 55p – up from the current 36p.

There’s no doubt that Royal Mail’s losing money – people are sending fewer letters and this decline is speeding up, not slowing down. Therefore, Ofcom has argued that its proposals are necessary to ensure the survival of an affordable six-days-a-week universal service.

Are stamps worth the extra cost?

Still, since 2003 first-class stamp prices have grown by 70% and second-class by 90%. Can we really take an even heftier price rise? When we last talked about the issue, opinion was largely split. Susie70 said she was happy to pay more:

‘Although in this computer age I use the Royal Mail less and less, I still think it is a bargain.’

However, Snowdin didn’t think the service they were getting justified the increase:

‘I think it’s a big rise especially for people living outside cities where internet services can be patchy and slow.’

And that’s the crux of it. Many of us might be happy to pay more for a stamp, but if the service stays static – or even gets worse – are we really getting value for money? Our Royal Mail investigation this year found that we’re getting an inconsistent “third-class” service, such as other people’s post being dropped on your doormat.

Prices could keep on rising

Richard Lloyd, our executive director, had this to say about Ofcom’s proposals:

‘Many people tell Which? they find the postal service patchy or inconsistent and the pricing of postage confusing. Ofcom must explain how these proposals will maintain a universal service that is increasingly efficient whilst remaining affordable for consumers.

‘It is essential that these plans don’t result in a downward spiral, with more people put off sending letters, leading to even higher prices.’

And who’s to say that Royal Mail’s newly found power won’t see it burst out of control, greedily ramping up prices? You’d hope Ofcom would step in, but we’ve previously seen Royal Mail allowed to increase the cost of renting its PO Boxes by a staggering 170% in just two years.

Many of you were outraged by this PO Box price increase, so much so that some have told us that they have been forced to stop using the service. But perhaps that’s the price we have to pay to keep Royal Mail afloat?

Should Royal Mail be free to set its own stamp prices?

Nay (70%, 147 Votes)

Yay (28%, 60 Votes)

I don't buy stamps (2%, 4 Votes)

Total Voters: 211

Loading ... Loading ...
John Symons says:
21 October 2011

My biggest fear is the downward spriral one. Also if we all switch to second class for all mail, no doubt the cap will be removed

Until privatisation became a reality the Post Office’s prices were tightly controlled with the result it was always underfunded for providing an “universal service” and introducing modern technology etc.

Now, suddenly , with privatisation round the corner the controls are all removed and the private company will be able to get the money needed to run the service.

David Harrison says:
23 October 2011

Not strictly true. As a postman the money which is being invested does not make up for the years and years where no funding was available. All this price rise will mean is we can hopefully compete with the competition who have a much better infrastructure than we have

over the past 4 years i have had about £100 of items and several letters that contained financial details go missing in the post. i have received other people’s mail with at least two lines of the address being completely different to mine. a friend of mine posted a camera from Japan and he tracked it all the way across the world to England. it was never seen again once it entered the British postal system and i still don’t think he has managed to trace it or recover the money. if there was a reliable and equally accessible alternative i think they would be in big trouble.

In contrast I have never had any problems with Royal Mail or Parcel Force deliveries, both receiving and sending items – possibly very dependant on locality.

David Harrison says:
23 October 2011

Have all the items that have been sent, been sent through Royal Mauil or one of the rivals. It seems some of the bashing Royal Mail gets should be directed at TNT, DHL etc

I don’t think they should until there’s easier access for the general public to competitors services.

It is fair that Royal Mail be allowed to set it’s own prices with the proviso there are other competing independent companies providing the same service, then consumers can choose to vote with their feet if they wish to. Royal Mail has been operating at a loss for years.

Currently (March 2012), Royal Mail is a monopoly for letters, but not -strictly- for parcels. Although consumers can utilise DHL, Fed Ex, City Link, TNT, Lynx and others, the availability of other parcel carriers is not as convenient or as easy as services from the Post Office.

Royal Mail is made to carry TNT and other firms letters but at a loss. As soon as other (independent) letter carriers are brought onto the market and allowed to compete with all the others, including Royal Mail, there will be a variety of prices and service quality.

balmcake says:
23 October 2011

I have had lots of mail go missing with R.M even had people throw letters addressed to us over our fence obviously it had been delivered to them in error, we have had to call postman back to give him letters which had been put in our letterbox not even the correct address or same street, I have had important documents go missing and packets with items in ,and have even been penalised by a certain bank because documents went astray cost to me £15 I got intouch with R.M to complain but they didnt even respond, I would happily pay a little extra for a good service but R.M is far from good, they use postment where I live who do not speak much English so I imagine reading it would be difficult, we have often had to deliver other peoples mail which has been put in our letter box by mistake, and we have had mail delivered at 5pm when we used to get it before 7am its not good and the really need to get their act together.

The only time I think much about the price of postage is before Christmas, when I pay a fortune for postage stamps. The recent price rises suggest that postage has become rather expensive, but I really don’t know.

What I like about Royal Mail is the fact that I can collect parcels from a depot close to my home, whereas another carrier is 50 miles away.

I recently ordered a couple of phone batteries on Friday afternoon and they were delivered (Royal Mail, First Class) on Saturday morning, after less than 20 hours. Fantastic service and just a pity that I did not need them in a hurry.

What customers want is access, consistency & reliability . Maybe the price has to go up but I record most of the time as can’t trust a first class will arrive the next day – there is no difference [ fraud?] . What madness is it to have to weigh each individual item & wait in queues of over 30 when you have mobility problems. What madness is it to make customers collect every item that hasn’t been delivered because haven’t tried, because filled in cards at P.O before delivery . Then deliveries are not every day at same time , I had the card put on mat when door open? Why on earth are they not open till 9pm . As for parcels why are catalogue companies[ allowed to charge questionable amounts] sending the items in bulk orders separately?

I think the Post Office is much maligned

They are the cheapest postal service in Europe – so increases will only bring them in line with other countries.

It is a universal service – the same price to the Outer Hebrides or next door. Private companies cherry picking the profitable areas – No wonder the PO is losing money.. Increase of Internet use yet they still manage to deliver within three days – magnificent!

Like Wavechange – My Sorting Office is a couple of miles away – UPS is about 30 miles.

Regular reliable delivery – The postman even asks about my dogs!!

I think they should be able to charge a reasonable amount to make a profit – I send out around 1500 letters a year for my charity – and receive over 500 parcels and letters a year. so any increase will have an effect. But I wouldn’t like to see this excellent service disappear.

How can royal mail justify these hugh increases? Is it to make it more attractive to sell off.? Is it to pay large amounts to Govt ( underhand tax ) ?

Chris says:
9 November 2011

Well, now they will be private, they need to make money somehow. I thought the argument for privatisation was to make them ‘more competitive’ with other services. Yet, all the other services were more expensive, and remain so. There definitely are changes to be made, but this one is only to benefit the shareholders, not the consumers. It’s interesting that the government always argues privatisation will make services cheaper and more efficient, yet the reverse is almost always true for utilities and national services.

Peter Millard says:
1 December 2011

Surely, putting up the price of a shrinking service is only going to make the demand for the service even less? Does there not need to be a REDUCTION IN PRICES in order to attract customers? If that does not increase revenue sufficiently, then some radical re-think on how the service is delivered, will be necessary. Putting prices up hugely in a shrinking market, is only going to send customers away even faster! For example, I still prefer sending greetings cards by Royal Mail, but it is already becoming prohibitively expensive to send cards outside the UK, so next year may see me reluctantly turning to electronic Christmas cards – thus Royal Mail will end up with everless revenue!

50p for a 2nd class stamp, thats 10 shillings to me, once it was 1/3 of a weeks wages.

Think I will have to start using the Internet to deliver my mail. It will definitely make people stop and think.

One big issue IMHO is that if you want to purchase stamps at a supermarket you can only get them in books of 12 (at least at my store) – £6 for stamps I won’t use for months.

If the various government agencies send me a letter which requires a reply in writing they better send a prepaid envelope otherwise I am damned if I will cough up, I will send it without a stamp.