Rip-off Britain: why is everything so expensive?

[TrueBlueTerrier]

http://www.guardian.co.uk/money/2012/ap ... -expensive" onclick="window.open(this.href);return false;

Stamps

James Eadie, Royal Mail spokesman

GW: Why are first-class stamps going up by 30% to 60p?

JE: I think most of the questions you are asking are covered in the press release.

GW: I know Royal Mail have said they are being forced to put up the price because they have to ensure a universal service. It appears the government is going to allow 90% of the Royal Mail to be privatised by 2014. Are Royal Mail putting up prices to make Royal Mail more desirable?
1st class stamp

JE: Any issues of future ownership are a matter for the government. Mail volume is in decline – it has fallen by 25% since 2006. And over the last four years we've lost around £1bn of our core letters, so price rises are needed now.

GW: But a 30% rise for first-class and a staggering 39% on second-class stamps. Why so much?

JE: Ofcom itself has said the Royal Mail's financial position has put the viability of the service at severe risk. It recognised that material price increases were needed.

GW: Did Ofcom specify that it needed to be a 30% rise on first-class stamps and a 39% rise on second?

JE: In their decision document, they set a cap of the price of second-class stamps at 55p.

GW: Surely Royal Mail must be concerned that, in bringing up the price so spectacularly, they are going to lose customers? Why would I spend 60p when an email is free?

JE: We know how hard it is for households and businesses. We thought very carefully about this, but regretfully we have no option.

[jockstrapp]

It's the age old British way: if the number of people cut down using things eg. Not sending letters, not using trains, not using buses etc. THEN LETS INCREASE THE PRICE then more people stop using them then they stick the price up again. feckin unbelievable.

[PhilthyPhil]

Surely the main reason why there has been such a large increase this year is because postcom had been forcing us to keep prices artificially low for so long? 60p to send a letter between any two places in the country next day (mostly) is hardly expensive is it?

[fishtank]

I would imagine this rise is more to do with providing enough space between what we charge residential customers and what we charge businesses.
It's a lot easier to argue that 44p for a franked letter is a bargain when a 1st class stamp costs 60p.

[TrueBlueTerrier]

In the past Royal Mail was probably a bit socialist in its pricing - everyone paid comparatively the same for whatever service they wanted, and where there was bulk mailing there was a discount but in essence Business Mail subsidised Social Mail.

Now with the "Liberalisation" of the market and impending Privatisation large bulk users get bigger discounts and social users are no longer subsidised. One slant you could put in it is that in the Bulk Market the lower the unit price the more the client will send and therefore the more money you make. Or another slant is those that are rich enough to spend large amounts of money on post get a discount, whilst those who can't don't.