Stamp price rise plans are affordable. says Royal Mail

[TrueBlueTerrier]

http://www.bbc.co.uk/news/business-17191881" onclick="window.open(this.href);return false;

Plans to increase the prices of stamps will not lead to an "affordability issue", the Royal Mail chief executive has told MPs.

Moya Greene told the Commons' Business Committee that the cost of stamps would have to rise.

Regulator Ofcom is consulting on plans to remove price caps on first class stamps and raise the price limit on second class to as much as 55 pence.

But MPs heard that some people would be safe from price rises this Christmas.

Price plan
Ofcom, which has taken over regulation from Postcomm, has previous said that the industry is facing "huge changes" and that reform is needed.

It told MPs last week that its proposals, announced in October, were designed to make sure UK consumers continued to benefit from an affordable, universally-priced postal service six days a week.

The cost of a first-class stamp is currently 46p. Under the plans, Royal Mail would be allowed to set this price at a level it considered to be appropriate and competitive.

The only price cap would be the charge for second class letters, which is currently 36p, to a range of between 45p and 55p.

Christmas reprieve
Now Royal Mail has told the same committee that stamp prices will almost certainly have to rise, but argues that families will be able to cope with the extra cost.

"I think prices in the UK will have to come up," said Ms Greene.

"We do not think there is an affordability issue. This is not like electricity or gas. The price of a first class stamp today is only about 25% of the cost of a single fare on the bus in London."

She said that Royal Mail, which made a £120m loss from its letters business in 2010, was "looking to cover our costs and have a commercial rate of return" in the future.

But she said Royal Mail would charge 2011 prices for festive mail sent by vulnerable households in 2012, at the busiest time of the year for the service.

[not me]

But she said Royal Mail would charge 2011 prices for festive mail sent by vulnerable households in 2012,

vunerable?
well if things are that tight,I wouldnt be wasting money on cards!

[TrueBlueTerrier]

But she said Royal Mail would charge 2011 prices for festive mail sent by vulnerable households in 2012,

vunerable?
well if things are that tight,I wouldnt be wasting money on cards!

I am such an anorak I am listening to a replay of the session and I don't think she means "vulnerable households " specifically, she mentions that at Christmas in 2012 they are planning that the prices will be at the same level as 2011, although she did mention it at the same time.

[Lounge Lizard]

"But she said Royal Mail would charge 2011 prices for festive mail sent by vulnerable households in 2012, at the busiest time of the year for the service." So there's going to be a means test for each Christmas card posted, proof of poverty having to be shown at Post Offices at their busiest time of year when posting cards, and what's to stop anyone passing cards to their poorer neighbours or impoverished relatives to post to benefit from the cheaper rate ? You couldn't make it up.

[TrueBlueTerrier]

Yes - an amendment by me - at the end of the session she did emphasise it would only be for vulnerable households, as Lounge Lizard points out there are certain questions over how it would be applied on checked on.

[Lounge Lizard]

Yes - an amendment by me - at the end of the session she did emphasise it would only be for vulnerable households, as Lounge Lizard points out there are certain questions over how it would be applied on checked on.

But are those vulnerable households those of Royal Mail employees, who already get given 50 Christmas stamps ?

[Lincox]

What she means is that if you can,t afford royal Mail stamps at christmas, b gger off and get the boy scouts to deliver them

[not me]

http://www.dailymail.co.uk/news/article ... efits.html" onclick="window.open(this.href);return false;

[k979aaa]

Ok here is a link to the debate but must warn you it is 1 hour and 15 min here is the link http://www.parliamentlive.tv/Main/Playe ... ngId=10357" onclick="window.open(this.href);return false; but if you speed it up to 1 hour 2 min and listen to moya she actualy makes a case for why our deliverys take longer. Now i am not a barrister but if she said it take's longer because we have more and more packets and they take longer to deliver your manager don't have a leg to stand on!.

[TrueBlueTerrier]

http://www.publications.parliament.uk/p ... 105.htm#a3" onclick="window.open(this.href);return false;

39. We put it to Royal Mail that affordability at the Christmas peak spending period was far more of an issue than at other times, which Royal Mail acknowledged.[42] During the evidence session, Moya Greene announced that Royal Mail would be holding Christmas 2012 stamp prices at 2011 levels for vulnerable consumers. It subsequently clarified that:

Royal Mail is planning for those on pension credit, and employment and support allowance (previously called incapacity benefit) to be eligible for participation in the scheme. Around 5 million people will be eligible under those criteria.

40. Given that family expenditure on mail increases by factors of ten or more over the Christmas period, this announcement is not unwelcome, but we have substantial concerns about how the scheme might work in practice. Furthermore, it should not detract from the need to address the needs of vulnerable consumers beyond 2012 and in other areas, and to develop more robust statistics to support the relevant pricing decisions.

41. It seems to us that Ofcom's approach of measuring affordability based on comparing stamp and fuel prices is misguided. The more pressing issue is whether vulnerable consumers have extra money to spend on stamps at periods of peak spending. This should have been at the forefront of Ofcom's mind, and research data on it should have been obtained in time to inform the forthcoming regulatory decision. This makes it all the more important for Royal Mail to consider reliable data on likely spending patterns before setting prices.

42. We note Royal Mail's announcement that Christmas 2012 stamp prices will be held at their 2011 level for vulnerable consumers. While protecting vulnerable consumers in this way is a welcome aspiration, it is not a fully-formed policy. In the absence of any detail we are concerned about the practicalities of introducing it. Royal Mail will need to reassure us that this initiative will not be open to fraud and will not be introduced as a crude form of means testing. In any event this should not detract from the need for data on actual effects of price increases and for appropriate follow-up action to help vulnerable parties further if necessary. The consequences of price increases for vulnerable consumers should remain a priority for Ofcom, and the regulatory model should include the ability to re-open this issue if need be.