Price of UK first class stamps to rise
The price of a first class stamp will rise by two pence to 32p from today.
The increase is part of the Royal Mail’s bid to work out future financing as it deals with competition since the postal market was opened up in January.
But the firm has been reined in from costing its stamps too high by its regulator Postcomm, until 2010 when first class stamps will go up to 37p.
The price rise will also see first Class franking prices go up to 31p, second class stamps up to 23p, and a second class franking price will be introduced at 22p.
The Special Delivery service will increase by 25p to £4.10 for mail up to 100g.
The modest increase will enable the Royal Mail to modernise its operations, secure the nationwide delivery service and help to plug its £4 billion pension fund deficit.
Postcomm chairman Nigel Stapleton said the changes offered a “fair deal” while allowing Royal Mail more money for pensions and investment as well as protecting the organisation against risk if mail volumes or pension assets changed significantly.
As the regulator unveiled its plans for capping the price increases, he said: “Our proposals challenge Royal Mail to push harder for greater efficiency and to bring about a radical transformation in its letters business.
“The rises in stamp prices are substantially less than Royal Mail wanted and a little more than we planned.
“But without a contribution from customers, Royal Mail’s weak financial position, brought on by its large pension deficit, would have put its ability to provide the universal service at risk.”
In February the Royal Mail said it had managed to exceed its targets, delivering nine out of 10 first class letters on time in the last few months of 2005.
Between October and early December 94% of first class mail arrived a day after being posted, against a target of 93%.
Postwatch, the watchdog for postal services, said then that there was every chance the Royal Mail would meet its first class target for the year for the first time.
The Royal Mail is also due to change the way it charges for mail from August 21 with its Pricing in Proportion scheme, which will see the size as well as the weight of mail taken into account.
