Stamps price rise is backed by MPs

[POSTMAN]

http://www.bbc.co.uk/news/business-17234876" onclick="window.open(this.href);return false;

A committee of MPs has given its backing to a planned rise in the price of stamps, despite raising concerns about the cost to vulnerable people.

The Commons Business Committee said it was "appropriate" for the price of first class stamps to increase above the current 46 pence.

It also accepted that second-class stamps should go beyond the current price of 36p.

But it said the increase could be a problem for small businesses.

An announcement is expected shortly from Royal Mail on higher prices, although the cost of posting Christmas cards in 2012 will be the same as last year for some consumers on certain benefits.

"There is no doubt that market uncertainty is placing significant, additional pressures on Royal Mail and that some increase in the price of stamps is necessary," said the committee's chairman Adrian Bailey, in a report on stamp prices.

Royal Mail should "consider robust data on the position of vulnerable consumers and small businesses when determining the future prices of stamps", he added.

"It must also be sensitive to the possible effect on its volume of business and the need for higher prices not to operate as a disincentive against efficiency measures.

"The principle of universal access underpins our mail service and must be maintained at an affordable rate."

Robert Hammond, of watchdog Consumer Focus, said: "Royal Mail faces a huge challenge in turning the business round and maintaining a universal one-price service, but that must not lead to unjustified hikes in stamp prices.

"This is an essential service and the right balance must be struck between the needs of the business and its customers. Stamp prices are likely to rise but any increases must be based on a convincing analysis of the market and Royal Mail's costs."

The committee listened to evidence as regulator Ofcom consults on plans to remove price caps on first class stamps and raise the price limit on second class to as much as 55p.

Ofcom, which has taken over regulation from Postcomm, has previously 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.

[Straight4ward]

Has Moya pulled it off?

Respect!

mountiemoose.gif

[fishtank]

Has Moya pulled it off?

I'm not even going there...i'll leave that to DGP.

On a more serious note...
Should we be happy that she's upping the prices?
I'm not particularly.

[wandle]

Has Moya pulled it off?

I'm not even going there...i'll leave that to DGP.

On a more serious note...
Should we be happy that she's upping the prices?
I'm not particularly.

Fishtank, I thought you were savvy enough to realise that any business that is seeing a decline in revenues has only three main ways to maintain profitability
1. cut costs (normally achieved by slashing jobs)
2. raise the price of it's products, or
3. a combination of 1 & 2 above

Yes, a rise in stamp prices may hit Joe Public in the pocket when he sends a letter, but that person-to-person letter traffic is a tiny proportion of RM's revenues in an era of text messaging, emails etc etc. (I think it only accounted for 3% of traffic when I joined RM many many moons ago).

Personally, I'd much rather see a rise in prices than the alternative: more job losses

[Straight4ward]

I guess FT was thinking about getting a better/fair price for DSA rather than increase prices for general postage.

Now that's something we would all like to see.

[fishtank]

Fishtank, I thought you were savvy enough to realise that any business that is seeing a decline in revenues has only three main ways to maintain profitability
1. cut costs (normally achieved by slashing jobs)
2. raise the price of it's products, or
3. a combination of 1 & 2 above

I'm savvy enough to know that the only edge we have over the competition is the price and reach combination and if you up one you make the other far more appealing to the opposition,hence i suppose the dabbling with end to end deliveries in the smoke by TNT Post.
The more the price of a first class stamp goes up...the more the sharks start circling.
A reduction in costs is sad but necessary if revenues are declining but raising prices can be counter-productive if all it results in is a decrease in sales.
Raising prices is a short-term(possibly necessary) sticking plaster on a deep cut that really needs stitched up.

[nataddick]

It is a fact that the average UK household spends less than 50p a week on stamps - so currently £26 a year, the actual increase in the price of second class stamps will hardly impact on the average customer.

Moya mentioned this fact when she met a group of staff during a site visit about a year ago and yet she chose not to make this point when grilled by MP's? Instead she used a flawed 'vulnerable' one which went down like a lead ballon in the press.

Large businesses don't pay full price anyway and RM ,if given the commercial freedom to operate at a reasonable margin, will always discount based on volumes and for pre-sorted mail.

I don't really see how our mail competitors will benefit from the increase since the price we charge them for the 'final mile' will also rise and stop us subsidising them in the future. I accept the fact that business will inevitably pass on the increase in postal costs to consumers but these costs are a relatively small. Why should RM operate at a loss when the organisations that use our services wouldn't contemplate doing so - a point OFCOM and the MP's now to have grasped.