Royal Mail asks for stamp price increase

A package of proposals delivered by Royal Mail to Postcomm has asked for an increase in the price of stamps and for changes to Royal Mail’s universal service obligation (USO). Other provisions include an end to the regulation of bulk business mail such as advertising.

Royal Mail wants to increase stamp prices by 6p, to 38p for a first class stamp and 29p for a second class stamp. The price increase is the same amount as Royal Mail says it currently loses on each stamped letter it delivers. Under the current pricing agreement with Postcomm, Royal Mail is allowed to increase prices on stamps. Under the agreement, however, the next price hike was not to come until 2008. The new proposal does not say when Royal Mail would implement its proposed increases.

Royal Mail’s chief executive says the changes are necessary in order to keep Royal Mail in business and competitive. It has lost a number of contracts since the market was opened to competition last year. Under the changes, businesses would lose the right to have franked mail delivered to every address n the UK. Royal Mail, according to the new proposal, wants its delivery obligation to apply only to mail with a first or second class stamp on it. In addition, Royal Mail wants to be able to charge businesses more for bulk “junk” mailings than it can under current controls.

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