Business

Royal Mail to raise stamp prices by record 5p

Actress Lacey Turner promotes the Royal Mail's Christmas deliveries deadline
Image caption Royal Mail said it needed to make more money to fund its £2bn modernisation programme

Royal Mail is to raise the cost of a first-class stamp by a record 5p to 46p in April, the company has confirmed.

It will be the largest increase since first-class postage began in 1968. A second-class stamp will rise by 4p, taking it to 36p.

Regulator Postcomm gave permission for the price rises last month.

Royal Mail currently loses 6.4p for each stamped letter it delivers. The price rises should provide it with £380m in additional annual revenues.

There have been larger percentage increases, notably in the high-inflation 1970s, but a 5p rise on a standard first-class stamp would be unprecedented in cash terms.

Higher charges

"No-one likes to pay more and we regret having had to take these tough decisions on pricing," said Royal Mail chief executive Moya Greene as the company unveiled the price rises.

"After these increases, we will continue providing value for money, as our prices will still be among the lowest in Europe.

The price rises, which will take effect from 4 April next year, were part of series of proposals outlined by Postcomm.

Postcomm said the changes would help Royal Mail to fund its modernisation programme and help safeguard the one-price-goes-anywhere universal service in the UK.

Earlier this month, Royal Mail said its half-year profits had fallen by more than two-thirds and its core letters delivery business had returned to making a loss.

"With the sharp declines in mail volume, our revenues are falling," said Ms Greene.

"That means if we don't generate more income, we will simply not be able to keep funding our six-days-a-week collection, sorting, transport and delivery operation to the UK's 28 million homes and businesses."

Competition

The mail operator also wants to charge competitors up to 15% more, and said that Postcomm had told it that it was "minded to" accept the price increase.

Rivals such as UK Mail collect and sort letters themselves, but have to pay Royal Mail to deliver over what is known as "the final mile" - up to people's letterboxes.

Royal Mail says current rules have meant it loses 2.5p on each item delivered in this way.

More than 45% of all letters delivered by Royal Mail are now handled by a rival under access arrangements, the company claimed.

Philip Cullum, of watchdog Consumer Focus, said: "Consumers will be extremely disappointed by the latest inflation-busting increase given that stamp prices having gone up at double the rate of inflation over the last five years.

"Royal Mail needs to modernise but customers are being asked to pick up the tab. In return, they will expect to see a far more efficient, effective and competitive service. Consumers cannot be expected to continually bail out an inefficient Royal Mail."

More on this story

Related Internet links

The BBC is not responsible for the content of external Internet sites