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Royal Mail plans London surcharge.

01 Apr 2007, 14:52

Royal Mail is planning to charge businesses more to deliver post in London than in other parts of the country.

According to proposals submitted to industry regulator Postcomm, business mail, including bulk deliveries such as bills, statements, and mailshots, will attract a surcharge if delivered to London and low-density rural areas.

The plans have caused surprise at Postcomm and angered business users because it was assumed delivery to urban centres would be cheaper than to rural areas, where costs were higher.

However, in its application for the introduction of 'zonal pricing' on business post, Royal Mail, led by chief executive Adam Crozier, indicates that it wishes to make a surcharge of 2.5 per cent over current prices for delivery in London and 4.8 per cent for 'low-density' rural areas. It claims the move will reflect the higher costs of delivery to these areas. Factors including 'London weighting' and congestion charging are behind the increases in the capital.

In 'high-density' areas other than London, Royal Mail is planning price cuts between 4.9 per cent and 1.7 per cent.

Postcomm is expected to launch a nine-month consultation on the proposals this week, and will examine Royal Mail's claims regarding London closely.

Businesses and competitors are highly critical of Royal Mail's plans, fearing the rise in London will significantly increase their bills and that price reductions elsewhere will undercut potential rivals.

Alan Halfacre, chairman of the Mail Users Association and the Direct Mailing Association, said: 'People are not convinced that this is in the customers' interest. This is in Royal Mail's interest because it could have a negative impact on competition.

'The decision to increase prices in London reflects London weighting but also the fact that it is less efficient in the capital.'

Postcomm declined to comment ahead of the launch of its consultation.


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