Stamp price increase breached Ofcom rules but could raise £60,000 for charity

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22 February 2019
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From 25 March, the price of a 1st Class stamp will increase by 3p to 70p and the price of a 2nd Class stamp will increase by 3p to 61p, Royal Mail have revealed.

Royal Mail recently announced that from 25 March, the price of a 1st Class stamp will increase by 3p to 70p and the price of a 2nd Class stamp will increase by 3p to 61p. However, the organisation soon realised the increase was in breach of an Ofcom price cap.

According to Royal Mail the changes are necessary ‘to help ensure the sustainability of the Universal Postal Service’. But the timing of the increase is in breach of the Ofcom rules, which state that the price of a 2nd class stamp cannot exceed 60p before 1 April. Royal Mail have now apologised for this mistake and promised to pay the extra 1p to charity.

In July 2018 Ofcom raised the level of the ‘2nd class standard letter safeguard cap’ to 65p for the period 1 April 2019 to 31 March 2020, meaning any increase above 60p would need to wait until 1 April. Royal Mail’s decision meant the price rise would be seven days prior to the price-cap date.

A statement from Royal Mail read: ‘Due to an error on our part, our new 2nd class stamp price of 61p will be 1p above the existing regulatory price cap for seven days. We apologise for this mistake.

‘We are putting this right by donating the revenue we expect to collect from the error – around £60,000 – to our chosen charity, Action for Children. We informed our regulator about the mistake as well.’

An Ofcom spokesperson said: ‘We’re very concerned that Royal Mail has exceeded the price cap and we are urgently seeking clarification from the company over how this happened.’

The original statement from Royal Mail, regarding the price increase, said: ‘Royal Mail understands that many companies and households are finding it hard in the current economic environment. As a result, we have considered any pricing changes very carefully and in doing so have sought to minimise
any impact on
our customers.

‘From 25 March, the price of a 1st Class stamp will increase by 3p to 70p and the price of a 2nd Class stamp will increase by 3p to 61p. These changes are necessary to help ensure the sustainability of the Universal Postal Service.

‘Royal Mail’s stamp prices are among the best value in Europe when compared to other postal operators. Royal Mail research shows that the European average for 1st Class letters (0-100g) is 99p. The UK 1st Class stamp price comes in at below this price. The European average for 2nd Class letters (0-100g) is 77p. The UK 2nd Class stamp price remains below this. The UK also has one of the highest quality of service specifications of any major European country.

‘Separately, as previously communicated, Royal Mail is making changes to the pricing structure of its Redirection service. From March 25, pricing will be based on the number of applicants rather than on a per-surname basis to be more reflective of modern society.’

Read more about Royal Mail's special stamp programme…