Stamp prices to rise

Royal Mail has just announced its price schedules to operate from 7th April 2008.

The price of the First Class stamp will rise by 2p from 34p to 36p, while that of the Second Class stamp will rise by 3p from 24p to 27p.

While these price rises are permissable under Postcomm's price control, customers will be disappointed to see above inflation increases, following on from the recent industrial action.

Regulator proposes 2nd class stamp price rise

Postcomm, the postal regulator, has proposed to allow Royal Mail to raise the price of 2nd class stamps to 29 pence in April 2009. 2nd class stamps currently cost 24 pence.

Price rises are never good news for customers, and Postwatch will be asking the regulator to justify its proposal. We believe the priority should not be allowing Royal Mail to impose further inflation-busting price hikes, but exploring ways to make efficiency gains.

Prices under control?

Postwatch has submitted its response to Postomm's consultation on revisiting certain aspects of the price control.

For Postwatch (and for Postcomm also) it is imperative that the outcome of these applications should be a price control that is balanced fairly between customers, efficiency, competition and protecting the universal service.

To achieve this, Postcomm needs:
- sufficient and reliable data on Royal Mail’s internal workings;

- sufficient and reliable data on trends in (and beyond) the mail market; and

- to apply a rigorous, independent and transparent analysis of such data to test the applications by Royal Mail and UK Mail/TNT.


Postwatch believes that Postcomm is essentially being asked to re-set:

- the price control,

- Royal Mail’s charges for access to its upstream business (through access arrangements), and

- Royal Mail’s charges for use of its downstream delivery business, and the apportionment of those charges between wholesale and retail customers (zonal pricing).

These issues affect every aspect of Royal Mail’s business and go the heart of the mail service as a regulated industry. We urge Postcomm to undertake a transparent and objective analysis not only of the data supplied in these applications but also of the data omitted from it - and to publish the results of this analysis before they make their decision.

At that point, and only at that point, we believe Postcomm will be in a position to determine how far granting or refusing these applications will reconcile the aims of protecting the universal service, promoting efficiency within Royal Mail and ensuring the maximum consumer benefit from competition. Until then, it is difficult to look favourably at an application which seeks major changes to a price control agreed little more than a year ago.

The full text of the response can be viewed here.