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60p first-class stamps!? Royal Mail can set its own prices

Royal Mail is now free to set its own first-class stamp prices. The regulator Ofcom says this action is needed to save Royal Mail’s universal service, but does this have your seal of approval?

We’ll soon find out what Royal Mail’s new freedom will mean in practice. From 30 April the price of a first-class stamp will rise from 46p to 60p. That’s quite a jump, and a record annual rise.

The price of a second-class stamp will also go up, from 36p to 50p. Ofcom has set a cap for second-class stamps at 55p – meaning Royal Mail has packaged it a little bit lower. Plus, this limit could rise with inflation every year.

Sending a large letter will cost 90p (instead of 75p) to post first-class, and 69p (rather than 58p) to send second-class. Parcels and everything else will also go up in price.

Higher prices to save Royal Mail

So, with relaxed controls come higher prices. Moya Greene, Royal Mail chief exec, has said this is needed to protect Royal Mail’s countrywide service:

‘No-one likes to raise prices in the current economic climate but, regretfully, we have no option. Royal Mail provides one of the highest quality postal services in Europe for among the lowest prices.’

There’s no getting away from the fact that people are sending less mail, but the fear is that higher prices will further add to this trend. Ofcom says the average household only spends about the price of chocolate bar (50p) on post per week. And even though Royal Mail delivered 16 billion letters last year, it’s still a loss-making business (£120m lost in 2010-11).

Your Royal Mail views

On Twitter, Dan ‏(@danthegooner) told us he doesn’t think the service is up to scratch:

‘Different postman every day if/when they turn up and numerous “lost” parcels. Never send via Royal Mail if I can. Rather use a courier.’

However, Craig (@craigpberry) thinks the new prices are worth it:

‘60p is hardly expensive! This is a sensible move. Buy cheaper birthday cards if 14p is going to break the bank.’

Almost three quarters of those who voted in our Which? Convo poll said they were against Royal Mail being given the freedom to set its own prices. Commenter Jon Large explained why:

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

And Peter Millard thought higher prices would results in fewer people posting letters:

‘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?’

As for me, I do still enjoying receiving mail (as long as it’s not junk or bills) but I have had my fair share of bad Royal Mail experiences. The latest was being asked to pay £1.12 for a letter that had been underpaid by the sender – I coughed up the money and the letter arrived ripped in half inside an ‘apology’ bag. I’d have preferred if Royal Mail had left it at the depot.

Still, that’s one case in hundreds of perfectly and promptly delivered post – and maybe it’s worth paying Royal Mail 60p to deliver them?