Royal Mail backs down in NHS letter overcharging row

[POSTMAN]

https://www.telegraph.co.uk/business/20 ... rging-row/

Postal service reduces extent of price rises for logistics companies sending hospital letters and bank statements

Royal Mail is watering down planned price rises for NHS hospital letters and bank statements following a backlash.

The postal service previously said it would increase the amount it charges third-party logistics companies that collect and sort bulk mail by 25pc.

The price rise was due to come into effect next month and would have followed an increase of around 9pc in January.

But Royal Mail will now implement a reduced price rise of 18pc instead after logistics companies protested over the plans.

The climbdown comes after Ofcom intervened to resolve the dispute. The regulator said it would rule on whether the price rises were “fair and reasonable” within the next four months.

Postal bosses have decided to water down the proposals over concerns about the financial impact of a lengthy Ofcom review.

The move ends the dispute and means the revised price increases will come into force in December.

However, it is unclear whether the Mail Competition Forum, which represents logistics firms such as Whistl and UK Mail, will choose to challenge the 18pc price rise after objecting to the 25pc increase.

Doing so could trigger a fresh Ofcom review.

It has previously described Royal Mail’s price rises as “excessive” and criticised the postal service’s “abysmal” quality of service.

The wrangling is centred on wholesale mail, which covers some NHS letters, energy bills and bank statements, rather than the amount consumers pay for a stamp.

Bulk mail costs have remained significantly lower than stamp prices, which have risen sharply in recent years.

The price the public pays for a first-class stamp hit £1.80 in April – almost double what it cost in 2022.

‘Institution in meltdown’
But Royal Mail has been under scrutiny for its quality of service, with customers complaining of hospital letters turning up after appointment dates and delayed bills triggering late-payment charges.

The postal service has been hit with repeated fines for missing its delivery targets, including a record £21m penalty last year.

Liam Byrne, chairman of the Commons business and trade committee, branded the company an “institution in meltdown”.

Royal Mail, which was acquired by Czech billionaire Daniel Křetínský in a £3.6bn deal last year, argues that price rises are needed to put the struggling business on a sustainable footing amid a sharp decline in letter-sending.

he company, which has racked up almost £800m in losses over the last four years, has secured approval to overhaul its universal service obligations, which require it to deliver letters across the country six days a week.

The reforms, which include scrapping second-class letter deliveries on Saturday and watering down Royal Mail’s quality of service targets, are currently being rolled out.

A Royal Mail spokesman said: “Delaying price increases for access business customers is negatively impacting on the financial sustainability of the universal service and as a result we have notified customers of increases that will take effect in December.

“Royal Mail made losses of almost £800m over the last four years and the company’s profitability remains below the level Ofcom considers financially sustainable for the provision of a universal service.”

“It is vital that our business prices reflect the true costs of delivering a service to the UK’s 32 million addresses, when letter volumes continue to fall and the costs of maintaining a nationwide service and 130,000 jobs continue to rise.”