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Postal increase
Tuesday 27th March 2012

Believe it or not there are still people and businesses that rely on Royal Mail and not e-mails but Royal Mail has hiked up the price of stamps just hours after the regulator gave it the freedom to set its own prices.

From April 30th, the cost of first and second class stamps will increase to 60p and 50p, respectively, from 46p and 36p now.

The 14p change represents a 39% increase for second class stamps.

The decision follows a ruling by the communications watchdog Ofcom to allow Royal Mail to charge what it likes for first class and business mail as part of a range of measures to safeguard the UK's universal postal service.

A consultation was launched last year after the company argued that it might not survive unless it is given more freedom.

Chief executive Moya Greene, who was the head of Canada Post previously, said the inability to set prices while having to maintain the Universal Service Obligation - the flat fee pricing and six day a week service - were restricting the company.

Although the new rules have given it some leeway, Ofcom said second class stamps could not rise above 55p for the next seven years.

Royal Mail will also be required to give its competitors access to its delivery network.

Posting large letters first class will cost 90p, up from 75p, and 69p if they are sent second class.

The state owned postal service defended the increases saying second class stamps will still be the cheapest in Europe and first class will be around average.

It added that millions of people on low incomes will be able to buy up to 36 stamps for Christmas at the current price.

Robert Hammond, from Consumer Focus, said it is a necessity that will be unpleasant for ordinary Brits.

"This is not great news for consumers. I doubt anyone is going to think about the challenges facing Royal Mail when they are paying 60p for a first class stamp.

"Unfortunately, the economics of Royal Mail meant that something had to give to maintain the Universal Service Obligation," he said.