USO could collapse unless stamps prices rise

[POSTMAN]

http://www.telegraph.co.uk/news/uknews/ ... -rise.html" onclick="window.open(this.href);return false;

The universal postal service is in danger of collapsing unless the Royal Mail is allowed to push through an inflation-busting increase in the price of stamps, the industry regulator has warned.


By Christopher Hope and Harry Wallop
Published: 10:00PM GMT 18 Dec 2009
Post woman, postman, Royal Mail: Amazon working on contingency measures to avoid Royal Mail disruption
The 'one price anywhere' universal postal service is in danger unless Royal Mail can increase the price of stamps, the regulator has warned Photo: REUTERS

Consumers face the prospect of a rise of as much as 3p in the price of a first class stamp, taking the cost of a posting first class letter past 40p for the first time, in an attempt to help raise an extra £100 million a year.

The rise - which Royal Mail could announce as early as next week - has been provisionally agreed by Postcomm, the industry’s regulator, after it gave warning that “at present Royal Mail does not enough money from mail revenue alone for us to be confident that it can continue to deliver the universal service”.


The ‘universal service’ is the 170-year-old pledge to deliver a letter or parcel to any address in the British isles for the same price.

Next week’s likely rise will be the seventh consecutive year of stamp price increases with the cost of a first class letter set to increase by as much as 3p to 42p. The price of a second class stamp could also jump from 30p to 32p from April 2010.

Postcomm has also agreed to allow Royal Mail to scrap a decade-old link between stamp prices and inflation, paving the way for much bigger rises in the future.

The news comes in the wake of the worst national strikes for two years, with more stoppages set to hit the network next month after the ending of a Christmas truce between management and unions.

Consumer groups had been hoping that the price of stamps, a key expense for millions of people on low incomes, could be frozen or even fall because inflation has been in negative territory for most of this year.

Royal Mail first asked for the price rises in September and Postcomm, the regulator, has provisionally agreed to them. The controversial increase is likely to be rubber-stamped next week, although last night MPs and campaigners were urging Postcomm to think again.

A 50-page document, entitled “Royal Mail’s Price Control From April 2010”, shows the regulator has gone a step further and decided to remove the link between stamp prices and inflation, to bring in an extra £100million in revenue to Royal Mail.

The controversial move was fiercely opposed by business groups and consumer groups. Postcomm said many lobby groups had complained “that Royal Mail should cut its costs and become more efficient and that this would be a better means of supporting the universal service”.

However, Postcomm replied in the document: “Whilst we are concerned about the impact price rises may have on mail users and also mail volumes, we consider they are necessary because of the impact of a number of factors on Royal Mail’s ability to fund the universal service.”

Royal Mail itself estimates that it loses 9p on every item of stamped mail it sorts and delivers. Royal Mail has told the regulator that the numbers of letters and parcels sent in 2009/10 is set to fall by 10 per cent.

Postcomm also appeared to say that customers were being punished with higher prices because of Royal Mail’s failure to tackle its long-standing industrial relations problem, including the widespread adoption of outdated 1970s-style “Spanish” working practices.

The regulator said that Royal Mail would not be able to reduce its costs “because approximately 70 per cent of Royal Mail’s costs are labour related and these are likely to be ‘sticky’ (difficult to reduce) in the short to medium term.”

It added that the proposals “will allow Royal Mail to make higher price increases in 2010/11 than would otherwise have been the case, but does not oblige them do so”.

The likely rise was condemned by MPs and campaigners. Peter Luff, the chairman of the Business, Innovation and Skills Select Committee which has oversight of Royal Mail, said: “The problem with Postcomm is that it is an organisation that no one has any confidence in, making an announcement which is likely to be very unpopular.”

Postcomm was due to be abolished as part of plans to sell off up to 50 per cent of Royal Mail. But the plans, which were being promoted by Business secretary Lord Mandelson, were derailed by left wing MPs and unions.

He said: “Consumers are paying the price of the failure of the Government to resolve the issues around Royal Mail, including who should regulate them.”

Charities gave warning that many vulnerable people still relied heavily on Royal Mail. A spokesman for Help the Aged Age Concern said: “Before putting up the price of stamps, Royal Mail should consider the impact its decision will have on vulnerable groups, especially older people on low incomes.

“Older people would end up shouldering the burden of any increase as they are less likely than younger age groups to have access to alternative forms of communication, such as the internet and email.

“Although the 3p rise currently proposed will seem paltry to many, it represents an eight per cent increase to the current price, which is significantly above the recently announced 2.5 per cent increase to the basic state pension.”

Stephen Alambritis, a spokesman at the Federation of Small Businesses, said: “Increasing the price of a first class stamp from 39p to 42p is way above inflation and will cost many businesses a fortune.

“Royal Mail should not be allowed to duck and dive out of its commitment to raise prices in line with inflation now that we have deflation.

“If Postcomm gives them permission for these increases, the least Royal Mail can do is return to the universal service.” He pointed out that many small businesses were now forced to pay £3,000 a year if they wanted to guarantee a delivery before 7am.

Postcomm declined to comment until the consultation finished on Monday. Royal Mail declined to comment.

[POSTMAN]

Ahhhh liberisation and competition,don't you just love it

[POSTMAN]

Royal Mail has told the regulator that the numbers of letters and parcels sent in 2009/10 is set to fall by 10 per cent.

[smokerjim]

Call me a dangerous radical full of weird ideas, but.....instead of making small businesses and Granny Smith pay more, why not allow RM & the DSA companies to operate under equal regulation ( instead of the current handicapping system ), furthermore allow RM to charge DSA companies cost + small %-age of profit for final mile delivery ( more like final 10+ miles ). Finally ( & perhaps most dangerous of all ) reduce the maximum salary, benefits and bonuses of ALL employeees of RM to a mximum of circa £50k pa - that alone should save a few bob ( and inspire some useless money grabbers to F*ck off elsewhere )

[Big Daz]

Ist class stamps will still be cheaper than a quadrant Mars bar

[not me]

how about we concentrate on franking all stamps
charging all underpaid items and 2nd use stamps
how about we charge all unofficial redirections

then see how much revenue that creates/saves

[POSTMAN]

How about getting rid of PPI,we must seriously be scammed with that.

[fishtank]

"The universal postal service"

The clue is in the first 4 words.

Why don't we stop putting unrealistic commercial values onto what will always be a loss making SERVICE.

We don't expect the fire service,police,armed forces etc to turn a profit so why the postal service?

Even the union has bought into this "race for profitability". It will end in the fragmentation and eventual destruction of the USO regardless of stamp price increases.

[dropbag_clone]

Finally ( & perhaps most dangerous of all ) reduce the maximum salary, benefits and bonuses of ALL employeees of RM to a mximum of circa £50k pa - that alone should save a few bob


Steady on.... that might mean that the brightest and most innovative managers might seek work elsewhere.

On second thoughts we haven’t got any like that so it will just be a clear out of the greedy overpaid talentless lot that inhabit the upper sections of the Royal Mail.

[norbert]

How about getting rid of PPI,we must seriously be scammed with that.

well all dockets are filled in honestly - they have Revenue Protection Teams but they can't go through every bag and the dockets are thrown away anyway - I might be a bit out of date though

[norbert]

"The universal postal service"

The clue is in the first 4 words.

Why don't we stop putting unrealistic commercial values onto what will always be a loss making SERVICE.

We don't expect the fire service,police,armed forces etc to turn a profit so why the postal service?

Even the union has bought into this "race for profitability". It will end in the fragmentation and eventual destruction of the USO regardless of stamp price increases.

that's what the then DTI Minister Stephen Byers wanted in the first place and got Leighton with his Walmart " Union avoiding experience " in for . It's so much easier to fragment after you've split into sectors like processing , delivery etc .

McCarthy wanted a sweetheart staff association in 2003 - " We don't intend to derecognise the union " - The real villain is Mandy as he didn't get his own way in 98 so the Blairites went Euro fanatic with all the EEC directives .

A fluffy plant " the CWU has all these outdated socialist ideas about service and expect us to make a loss - what is wrong with profit ? "

[k979aaa]

Finally ( & perhaps most dangerous of all ) reduce the maximum salary, benefits and bonuses of ALL employeees of RM to a mximum of circa £50k pa - that alone should save a few bob


Steady on.... that might mean that the brightest and most innovative managers might seek work elsewhere.

On second thoughts we haven’t got any like that so it will just be a clear out of the greedy overpaid talentless lot that inhabit the upper sections of the Royal Mail.

Yep they are as bright as the TNT DSA ones we have too deliver at Christmas at all times of year with DIM wits as this and our mail volumes are falling 10% a year!. Yet we can justify spending billions on walk sequencing machines when the mail is falling and billions more on CDV's when the government is urging companies and individuals to be more green and save energy!.

[Godric]

the problem is not the prices we are charging for stamped mail ... the problem lies in the price we charge for meter, DSA and buisness mail the prices are rising for the public yet the buisness sector prices remain the same ... why should royal mail be forced to subsidise every single DSA item posted by the so called competition

[jaja]

Good let it collapse who gives a damm anymore,Royal Mail will do whatever anyway, they have got away with it after the strikes
who gives a s**t....there are other jobs out there

[pickaname]

The sooner this company goes bust the sooner i have an excuse to look for another job