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Royal Mail could hike the price of stamps again despite having imposed price rises just seven months ago and despite growing operating profits.
A first-class stamp rose from 46p to 60p on April 30 and second class jumped from 36p to 50p, in one of the biggest rises since the issue of the first stamp, the Penny Black, in 1840.
Royal Mail’s chief executive Moya Greene yesterday refused to promise customers that prices will not rise again.
Meanwhile, the group yesterday admitted (taht)
almost half of all postal deliveries are junk mail and warned that the volume of 'direct marketing mail' will only grow in its drive to make bigger profits. The rise is fuelled by the removal a year ago of a cap that stopped postmen delivering more than three unaddressed letters to a house in a week.
This – along with much higher stamp prices – saw Royal Mail report vastly improved operating profits yesterday.
The stamps price increase was controversial because Royal Mail was being allowed for the first time to set prices, rather than be restricted by rules laid down by the regulator Ofcom.
The sole remaining rule is that Royal Mail cannot charge more than 55p for a second class stamp, a cap which will be increased in line with inflation until 2020. There is no limit to the cost of first-class mail.
Robert Hammond, of the campaign group Consumer Focus, said: ‘Some consumers may find it frustrating that almost half of mail received now is direct marketing and that this will be contributing to higher profits.
‘However the hard fact is that without this revenue stream for Royal Mail and the associated profits, customers could in fact face paying more for their stamps.’
Royal Mail made £144million in the first half of the year compared with only £12million in the same period of 2011. Around £1billion of its annual revenues come from junk mail.
On the rise again: Royal Mail hiked prices for first-class stamps from 46p to 60p on April 30 and second class from 36p to 50p
Ms Greene said such ‘direct marketing’ was approaching 50 per cent of all deliveries. She described herself as a huge fan of the ‘powerful medium’, adding: ‘We are poised to increase our share of it.’
The growing profitability of Royal Mail opens up the possibility of it being floated on the stock market or sold off to a rival.
Michael Fallon, Tory business minister, said yesterday: ‘Parliament decided, via the Postal Services Act 2011, to inject private capital into the company in order to secure the future of the universal postal service.
‘The structure and timing remain open, but Government is committed to doing that to ensure the ongoing viability of the company.’
A potential sell-off has been helped by shifting responsibility for Royal Mail’s pension fund to the taxpayer. Assets of £28.5billion were transferred to the Government along with £37.6billion of liabilities, which are the cost of pension promises to postal workers and its retired staff.
Yesterday’s financial results revealed how the stamp price hike has hit Royal Mail’s letters business, with the number of letter deliveries dropping by 9 per cent.
Miss Greene said however that 50p for a second-class stamp was a bargain. Insisting she did not mean to be ‘glib or flip’, she added: ‘Realistically, what can you buy for 50p today?’