News

January 31, 2012 - Anonymous

Royal Mail price hikes threaten small firms, warn business groups

Small businesses reliant on postal services will be hit hard should the proposed Royal Mail price increases go ahead, business groups have warned.

Ofcom is currently considering plans put forward by the postal service that could see second-class stamp prices soar from 36p to 55p, and unlimited price increases for first-class stamps until 2018.

The increases are part of a consultation aimed at giving greater commercial freedom to Royal Mail, which suffered a £120-million loss last year, and are expected to be implemented in April 2012.

Royal Mail has argued that changes need to be introduced in order to remain profitable as the use of traditional mail services has been badly affected by the use of email, the internet and mobile phones.

The Forum of Private Business (FPB) has urged the watchdog to veto the price hikes. “We believe it is unjustifiable for Royal Mail to increase its prices by large amounts without check,” said FPB’s head of campaigns Jane Bennett.

“These rises will hit small businesses hard, who tend to be regular users of the service, at a time of economic difficulty and already high business costs,” she added.

In addition, an FPB spokesman said that even though the impact of higher prices could be huge for small firms, many were unaware of the proposals.

“That’s why we’re campaigning against the changes. Imagine if the Government said it was going to increase fuel duty by 50 per cent? That’s effectively what’s happening with the Royal Mail in terms of price rises, but not many firms know about it,” he said.

However, Royal Mail insisted no final decision had yet been made though Ofcom was expected to return its verdict in the next few weeks, it said.

“Royal Mail is awaiting the outcome of Ofcom’s consultation on its proposals for future regulation of UK postal services before announcing stamp prices for 2012. No final decisions have been made but we will inform customers of any changes as soon as we are able to,” a spokesperson said.