First-class stamp rises likely as RM given price-setting

[TrueBlueTerrier]

First-class stamp rises likely as Royal Mail given price-setting powers

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Royal Mail is to be given the freedom to set its own prices for first-class stamps and other mail, the regulator has announced.

Ofcom said that, subject to safeguards, Royal Mail would make decisions on the price of stamps, not the regulator.

Ofcom has capped the price of second-class stamps to protect vulnerable consumers. Over the next seven years, this will ensure that the price of second-class stamps can go no higher than 55p. The cap will be indexed in line with inflation.

Tuesday's announcement is set to lead to higher stamp prices, currently 46p for first class and 36p for second class.

The average household spends around 50p a week on post, with low-income families typically spending less. Ofcom said it believed the cap would ensure postal services remained affordable for such families and vulnerable consumers generally.

Ofcom will continue to require Royal Mail to provide competitors with access to its delivery network. Royal Mail will have the freedom to set the price for access but there will be rules regarding the margin between its wholesale and retail prices.

Ofcom said this would help ensure that efficient competitors could compete with Royal Mail.

"The central aim of the decisions announced today is to ensure that Royal Mail's universal service obligation (USO) is financially sustainable and provided efficiently," Ofcom said in a statement. "Without regulatory changes there is a risk that Royal Mail may not be able to continue to deliver the USO to the same standard as today."

Stuart McIntosh, Ofcom's group director of competition, said: "Ofcom's decisions are designed to safeguard the UK's postal service, ensuring it is sustainable, affordable and high quality, to the end of the decade and beyond. The measures ensure that Royal Mail's products remain affordable for vulnerable consumers and small businesses."