Friday, 2 March 2012

Coming soon to a post office near you - rising prices.

Much has been written in the popular press about the possibility of the price of second class mail rising to 55p, and I outlined the arguments for this, and the public consultation here.

Over the last week a committee of members of parliament (the Commons Business Committee) has been considering the Royal Mail and OfCom proposals.  

On 21 February, the BBC reported that 
MPs have challenged a regulator about plans to remove price caps on first-class stamps and raise the price limit on second class to as much as 55 pence.

On 28 February....
Moya Greene told the Commons' Business Committee that the cost of stamps would have to rise.
Plans to increase the prices of stamps will not lead to an "affordability issue", the Royal Mail chief executive has told MPs.

Most of the British press - but not apparently the BBC - also reported on plans to allow benefits claimants to buy stamps for Christmas at current prices.  This from the Telegraph online:

"For the first time, stamp prices will be frozen for some pensioners and benefit claimants to help them with the cost of sending Christmas cards this year.  The deal will be limited to a few weeks in December and Royal Mail said customers would be rationed to prevent abuse of the scheme. It is preparing for a public backlash when it announces large rises in the cost of first and second-class stamps. 

Moya Greene, the chief executive of Royal Mail, told MPs on the business, innovation and skills committee that first and second-class Christmas stamps sold over the festive period would be pegged to 2011 prices for “vulnerable families”. She said that more than half of all consumer mail was sent over the Christmas period. "

This was under the headline: 
Millions to be offered cheap Christmas stamps as Royal Mail fears price rise anger 

The Daily Mail headline, however, told a different story:

Outrage over Royal Mail plan to offer cheaper stamps to five million claiming benefits

So how would that work, and how would it be controlled?  And why is it that if - according to Royal Mail - the average individual posts only one letter per week, that the extra 15-19 pence would be so much of a hardship?  Although prepared for a public backlash over the price rise, Royal Mail appears unconcerned by a backlash from hard-pressed taxpayers and businesses subsidising others - because surely the cost of these cheap stamps must be factored in to calculating the new tariffs that everybody else will be paying?

Maybe the clue is in the last sentence - "more than half of all consumer mail was sent over the Christmas period".  Of course Christmas is a very expensive time for everybody who buys cards and presents.  So why give a discount on both 1st and 2nd class stamps?  If those on benefit plan their Christmas posting they can send everything 2nd class, so they won't need discounts on 1st class stamps.  (Anyway, at Christmas there's little point in using 1st class stamps as most of the post travels together!)  

How many people would benefit?  The Mail figures show some 4.5 million on one or another state benefit.  Assuming they post half of their average 1 letter per week at Christmas, that's 26 each making 117 million stamps.  And at, say, 16p each (assuming a rise from 36p to 52p) that's £18,720,000 that has been factored in to the new prices to ensure that Royal Mail doesn't lose any more, because the rest of us will pay the full price.

Today the BBC reports that:

Stamps price rise is backed by MPs

A committee of MPs has given its backing to a planned rise in the price of stamps, despite raising concerns about the cost to vulnerable people.
The Commons Business Committee said it was "appropriate" for the price of first class stamps to increase above the current 46 pence.  It also accepted that second-class stamps should go beyond the current price of 36p.

I'm sure that will give all of you a nice warm feeling that you are helping the needy.


3 comments:

  1. What I would like to know is to what extent we philatelists are bailing out Royal Mail finances. Our purchases represent vast quantities (millions of pieces?) of mail which will never be posted and will never need to be handled or delivered. Maybe we should all agree a particular date, sacrifice a sheet of Smilers stamps (perhaps with an appropriate label!) and all add an additional 20 items to the post on the same day? I suspect the results would be ... interesting!

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    1. Despite the ever-rising cost of collecting (by volume and price) I don't believe we are making much of a dent in the finances of Royal Mail. The circulation of the Philatelic Bulletin is 12,000. Even if only 1 standing order customer in 5 buys it, that's still only 60,000 collectors.

      However, it is true that some Machin specialists buy not only cylinder blocks of 6 (£30 for the £5 stamp) but blocks from every grid position! The 1p and 10p are printed in 12 positions on the cylinder making £7.20 for a set of 10p cylinder blocks.

      Even so, when compared with the £2 million-a-day loss incurred by the letters business, our contribution is small beer.

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  2. 1 Stop Stamp Shop6 March 2012 at 20:24

    I'm with Ian on this one, as much as we would all like to think we are more important, philately is a very small portion of RM's income in the big scheme of things, certainly when it comes to its impact on postal revenues. If the impact were that big, RM would de-value stamps every few years to prevent older issues being used on mail.

    I did allow myself a wry smile and a shake of the head when I read a comment somewhere recently that suggested that the multiple security codes on Machins were added to "fleece collectors"! I've had several customers suggest that multiple cylinder grid positions are part of the same ploy - and then go on to ask in the next sentence if I had them all in stock.

    Of course, sheets of ten 1st class stamps that cost £13.95 are a whole different ball game....

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