Stamp price to rise to 60p

The price of a 1st Class stamp is set to go up to 60p this month, after MPs and regulator Ofcom backed Royal Mail’s plans to raise prices.

The thirty percent price rise follows a long consultation period with regulator Ofcom and the Business Select Committee, and will see 1st Class stamps rise from the current 46p to 60p and 2nd Class stamps go up from 36p to 50p, on 30 April. A cap of 55p on the 2nd Class rate has been introduced, though this may rise with inflation. In a controversial move, customers claiming benefits will be able to purchase stamps at the same rate as last year during the Christmas period.

Royal Mail confirmed that those claiming Pension Credit, Incapacity Benefit or Employment and Support Allowance will be able to buy Christmas stamps at the 2011 prices, with a limit of 36 stamps per customer per Post Office branch from 6 November until the last mailing date for Christmas. Other customers will only be able to buy the stamps at the new, higher rates. The way in which the proposed pricing will affect the design of stamps has not been detailed as yet.

Moya Greene, CEO, said:  'We know how hard it is for households and businesses when our economy is as tough as it is now. No-one likes to raise prices in the current economic climate but, regretfully, we have no option. Royal Mail provides one of the highest quality postal services in Europe for amongst the lowest prices for both consumers and business. That service is under threat from declining volume, e-substitution and ever increasing competition.  Because of these pressures Royal Mail has lost £1 billion over the last four years; the sustainability of the service is now at risk. Price increases are needed to return the Universal Service to sustainability.'

Read the reaction from Stamp & Coin Mart readers and contributors and share your views on our forum.

Reaction to the proposals has varied between media outlets, with the Daily Mail claiming ‘raises the prospect of benefit cheats being allowed cheaper stamps.’ The official minutes of the Business Select Committee meeting also showed concern: ‘We note Royal Mail’s announcement that Christmas 2012 stamp prices will be held at their 2011 level for vulnerable consumers. While protecting vulnerable consumers in this way is a welcome aspiration, it is not a fully-formed policy… we are concerned about the practicalities of introducing it.’

In a statement Royal Mail said:

• We know how hard it is for households and businesses when our economy is as tough as it is now. We have thought very carefully about the impact on our customers and on our own business, before deciding to raise our prices.
  Following Ofcom’s decision today about a new regulatory framework, Royal Mail is announcing that from April 30, the price of a First Class stamp for a standard letter will rise from 46p to 60p. The price of a Second Class stamp for a standard letter will increase from 36p to 50p.
• Ofcom has said Royal Mail’s financial position puts the viability of the Universal Service at severe risk. Royal Mail has made a loss on its core mails, including packets, activities of almost £1 billion over the last four financial years. Price increases are therefore needed to put the Universal Service on a sound, sustainable and secure basis.
• Postal service standards in the UK are high and increases are needed to pay for them. Royal Mail’s next day target of 93% is the highest for any major EU country. We also deliver six days a week while many EU countries only provide a five day delivery service.
• For low income households, Royal Mail will keep stamps for letters for Christmas 2012 at the same price as in 2011. Households on pension credit and employment and support allowance (or incapacity benefit) will be eligible. They will be able to buy up to three books of 12 stamps – 36 stamps in total – in one purchase from any of the 11,801 Post Office branches from 6 November until the last posting dates before Christmas.