Postcomm 'minded to' accept Royal Mail's revised proposals to restructure its prices
5 April 2005
After extensive consultation and following detailed discussions with Royal Mail, Postcomm is minded to accept recently announced revised proposals from Royal Mail to price letters and packets according to their size, as well as their weight, as from April 2006. However, Postcomm is consulting interested parties before making a final decision, both on the proposals and on the notice period before their introduction.
At the moment letters and packets are priced purely according to their weight, but Royal Mail says it costs it more to sort, handle and deliver big envelopes and packets. This means that light but bulky items are priced below cost, whereas heavy items are generally overpriced. Royal Mail wants to change its prices to more accurately reflect its costs.
“With full competition in postal services starting next January, it is essential for all parties that Royal Mail's prices align with its costs,” said Nigel Stapleton, chairman of Postcomm. “Some of its current prices are a carry-over from its days as a national monopoly when cost reflective pricing was less important. To allow this to continue would unbalance a fully competitive market.
“A notice period of 12 months from now would seem to strike a reasonable balance between the need to give users time to adapt, while at the same time providing certainty for the market, including those businesses whose postage costs will reduce as a result of the new prices,” Mr Stapleton said.
“I am pleased that Royal Mail has taken on board so many of the points raised following our earlier consultation. After extensive discussions, in which we have tested its revised price proposals, we are now satisfied that they are cost reflective. Any changes must also be revenue neutral.”
Postcomm's first consultation, in April 2004, drew around 10,000 responses.
NOTES FOR EDITORS
| Format | Maximum size | Maximum thickness | Weight | First class current* stamp prices | SBP first class | Second class current* stamp prices | SBP second class |
|---|---|---|---|---|---|---|---|
| Letter | 240 x 165mm | 5mm | 0 -100g | 30 – 46p | 30p | 21 – 35p | 21p |
| Large Letter | 353 x 250mm | 25m | 0 -100g 101-250g 251-500g 501-750g |
30 – 46p 64 – 94p 107 – 178p 215 – 271p |
42p 61p 85p 123p |
21 - 35p 47 - 71p 83 - 148p 175- 212p |
35p 53p 72p 105p |
| Packet | All items larger than large letters | over 25mm | 0 -100g 101-250g 251-500g 501-750g 751-1000g |
30 – 46p 64 – 94p 107 – 178p 215 – 271p 290 – 364p |
94p 119p 159p 206p 253p |
21 - 35p 47 - 71p 83 - 148p 175- 212p |
80p 104p 132p 166p 199p |
*Current stamp prices are from 7 April 2005 when Royal Mail will change its prices
If Postcomm confirms its position following consultation it will require Royal Mail to mount a significant national awareness campaign to ensure customers know about the changes.
Research commissioned by Postwatch showed that a large majority of both residential users (85%) and businesses (72%) were of the view that “one year or less” would be a sufficient notice period from the announcement of the proposed changes. In addition, a majority of both residential users (73%) and businesses (55%) were of the view that about “six months or less” would be long enough.
The consultation document: Royal Mail’s revised proposals for Size Based Pricing (‘Pricing in Proportion’) is published on Postcomm's website www.psc.gov.uk. Printed copies will shortly be available from Postcomm at 6 Hercules Road, London SE1 7DB. Responses are requested by 5 July 2005. The earliest Postcomm will issue a decision statement is later that month. If this were the case and the changes were introduced from April 2006, this would give customers at least 8 months’ notice from a formal decision.
