UK Royal Mail seeks stamp price rise

Stamp prices must rise to cover the cost of delivering letters, the chief executive of Royal Mail said yesterday. Adam Crozier told delegates at the CBI annual conference in Birmingham that the subsidising of personal letters by businesses would have to end over the next few years. Mr Crozier said: “Stamp prices will need to go up. The price people pay ought to bear some resemblance to the cost of providing the service.” The postal group is expected to increase the price of a first-class stamp from 28p to 29p or 30p in April. Any price rise would have to be announced by the end of the year, although Royal Mail said that no such decision had been made. The price of posting a first-class letter has increased by only 2p since July 1996. Royal Mail lost GBP247 million delivering stamped mail last year. The group loses 5p on every first-class stamped letter it delivers, and 9p on every second-class letter. Mr Crozier said that the mesh of cross subsidies in the postal system would have to be unwound for Royal Mail to survive increasing competition for business mail.
“We need a complete root and branch review of all our products. We have to have market-led prices,” he told business delegates. “If business prices remain too high, we will lose your custom.”

Royal Mail said that it must be allowed to raise the prices for first-class and second-class mail to cover the cost of universal service — where a flat rate applies for any delivery to any part of the country.

Britain has the lowest stamp prices in Europe and Royal Mail the lowest profit margin of postal services.

CLASS ACT

Cost of sending a 60g letter first class:

UK: 28p
Spain: 45p
Denmark: 48p
Ireland: 54p
Luxembourg: 56p
Finland and Portugal: 58p
Austria: 68p
Belgium: 70p
Sweden: 75p
Greece and Neth: 79p
Germany: 94p
Italy: 112p

Source: Royal Mail