Responding to the Business, Innovation and Skills Committee report on stamp prices published today, Robert Hammond, Director of Postal Policy and Regulation at Consumer Focus, said:
‘This is a very welcome report. Royal Mail faces a huge challenge in turning the business round and maintaining a universal one-price service. But that must not lead to unjustified hikes in stamp prices. This is an essential service and the right balance must be struck between the needs of the business and its customers.
‘Given falling mail volumes and the need to establish a sustainable future for Royal Mail, Ofcom are right to take a long hard look at price controls. Stamp prices are likely to rise but any increases must be based on a convincing analysis of the market and Royal Mail’s costs.
‘It is essential that Ofcom keeps the pressure on Royal Mail to look for efficiencies before it raises prices. We agree with the Committee that Ofcom needs to closely monitor Royal Mail’s progress on achieving greater efficiency. Transparency is even more vital if regulation is to be relaxed and Ofcom must stand ready to step in if satisfactory progress is not made.
‘The implications for more remote communities, vulnerable households, and small businesses, have to be thought through much more carefully. We support a price cap on all second-class letter and parcel products, not just letters as proposed, to help protect vulnerable consumers and small businesses.’
Consumer Focus agrees with the Committee that Ofcom will need to take another close look in 2017 to make sure its decision has not had any unforeseen consequences, particularly given that this is a changing market.
ENDS
Notes to editors:
Factfile:
- The volume of mail in the UK has fallen by 25% since 2006.
- A price rise to 55p for a second-class stamp would take UK mail prices from the low-end of pricing across Europe to the top-end.
- Consumer Focus’s supplementary evidence to the committee showed that the indicative tipping point, where there’s a noticeable jump in the number of people who would stop using Royal Mail, is if second class stamps rise to 50p and first class to 75p. At these prices the number of people abandoning using Royal Mail altogether would be likely to be more than double the rate at current prices.
