Royal Mail seeks higher prices for business services

[apple]

http://www.bbc.co.uk/news/business-11569073" onclick="window.open(this.href);return false;

Royal Mail is seeking permission from the postal regulator to raise prices on business mail products in order to generate extra revenue of £100m.

The proposed increases would apply to products such as "access" mail - where Royal Mail delivers letters and parcels for other firms.

Royal Mail says it loses 2.5p on average for each of the 6.4bn pieces of access mail it delivers a year.

The move would not affect first or second class stamps, it said.

Small businesses would also not be affected by the price increase, which would only apply for one year, it added.

"What we are asking for is the chance once-and-for-all to charge a fair price to other companies who use our network to carry mail and to end what is, in effect, the very substantial built-in subsidy which our rivals have enjoyed for years, " said Moya Greene, Royal Mail's chief executive.

If the mail industry regulator, Postcomm, agrees to consider Royal Mail's application to review the price controls, there would first be a public consultation.

If approved, the price rises would come into effect in April 2011.

[noggin1969]

Bit late no

[POSTMAN]

Royal Mail’s request for additional revenue to raise extra cash in 2011-12 – Application submitted

Royal Mail today published a summary version of a supplementary response(http://www.psc.gov.uk/documents/1043.pdf" onclick="window.open(this.href);return false;) to Postcomm’s May consultation requesting additional revenue under the price control in 2011-12. In its confidential written response to our recent consultation on the development of a new regulatory framework, Royal Mail notified Postcomm that it may submit such a supplementary response; we published a redacted version (http://www.psc.gov.uk/documents/995.pdf" onclick="window.open(this.href);return false;) of this earlier response on Thursday 07 October.

Postcomm will give careful consideration to the supplementary consultation response as a matter of priority. At this stage it would be inappropriate for Postcomm to offer a view on this or any other consultation response


Notes to editors

Postcomm set price control limits for a four-year period in 2006, which were subsequently extended to April 2011, to allow Royal Mail to earn sufficient revenue to finance its licensed activities and in particular the universal service. Whilst price controls are designed to constrain how much Royal Mail can charge for some of its products, it is a framework only and Royal Mail still retains flexibility to set prices within a defined range. The company has previously chosen not to implement all of the different price increases which it was able to under its licence, given its assessment of commercial conditions in the market.

Royal Mail’s application for Postcomm to further relax the existing price controls for 2011-12 cites serious and recently emergent risks to the financability of the universal service. Postcomm’s primary duty is to safeguard the universal service. Royal Mail has assured Postcomm that it has explored all other possible options, including discussion with interested parties, before submitting this application.

The process of transformation on which Royal Mail is already embarked has previously been identified by Royal Mail, Postcomm, the Hooper Review and Government as essential and urgent to safeguard the provision of the universal service in the UK. In this application Royal Mail has also identified the need to increase revenue from its price controlled products to enable an acceleration of this ongoing process of cost reduction and modernisation.

[Guevarista]

About time too! DSA has been sapping the life-blood out of RM since its introduction... I'm sick up to the back teeth of putting money into TNT et al's coffers through this iniquitous arrangement. Have a look at the D2D arrangements too, Moya: I'm pig sick of delivering their direct marketing material week in week out. Years ago my kids used to deliver it with the local newspaper. These days we're obviously a cheaper option!

[Eric]

Please can we have a We Love Moya smilie thing?

[Broxi51]

If RM get privatised will they still have to go to offcomm to increase or reduce prices?