From the 2nd of October 2023, the price of First Class stamps will increase by an inflation busting 15p, to £1.25. This will impact consumers and businesses that purchase their postage online or through marketplaces. The price of Second Class stamps will remain at 75p.
Royal Mail say that this is due to increasing cost pressures, the challenging economic environment, and the lack of reform of the Universal Service Obligation (USO) despite the significant structural decline in letter volumes.
Royal Mail say that the new price of a First Class stamp is in line with European median prices, and Second Class stamp prices remain well below the median. They add that they have sought to keep price increases as low as possible in the face of declining letter volumes. Letter volumes have fallen from 20 billion in 2004/5 to 7 billion a year in 2022/3, while the number of addresses has risen by four million in the same period.
Royal Mail also recently announced two new surcharges which will hit business account customers – a new 2p Green Surcharge, plus a new 10p Peak Surcharge. These are on top of the 8% fuel surcharge. Here at ChannelX we see no reason for a Green Surcharge, just sounds like a price hike that should be in contract prices and the Peak Surcharge just penalises businesses for giving Royal Mail profitable parcels!
Royal Mail also say that the USO – which currently requires Royal Mail to deliver letters to all 32 million UK addresses six days a week – is in need of urgent reform. Royal Mail has been clear that the cost of delivering an ever-decreasing number of letters to an ever-growing number of households six days a week is unsustainable.
Ofcom’s own research in 2020 shows that that a five day a week Monday to Friday letters service would meet the needs of 97% of consumers and SMEs. Given the ongoing decline in letters, Royal Mail continues to call on Ofcom and the Government to review and modernise the USO to better reflect changing customer needs.
OfCom are already laying the groundwork for providing advice on how Royal Mail’s universal service obligation might need to evolve to better reflect the changing needs of postal users
At the full year results in May 2023, Royal Mail reported a £419 million loss. This is pretty much the result of their protracted industrial dispute with employees under their previous management.
We understand the economic challenges that many of our customers are currently facing and have considered the price changes very carefully in light of the significant decline in letter volumes.
Letter volumes have reduced dramatically over recent years, down more than 60% from their peak in 2004/5 and 30% since the pandemic. It is vital that the Universal Service adapts to reflect this new reality.
– Nick Landon, Chief Commercial Officer, Royal Mail
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