Royal Mail hikes stamp prices as USO losses balloon
Wednesday, December 2, 2020
Royal Mail has announced an inflation-busting increase of nearly 12% on the price of a 1st Class stamp, citing the need to “ensure the sustainability of the one-price-goes-anywhere Universal Service”.
From 1 January the price of a 1st Class stamp will jump from 76p to 85p. However, the price of 2nd Class stamps will only increase by 1p, or 1.5%, to 66p.
In its justification for the change, Royal Mail said that stamp prices in the UK were “among the best value in Europe compared to other postal operators”. The group said that the European average price for a 1st Class letter was the equivalent of £1.21.
Royal Mail said that its Universal Service Obligation (USO), which could be reduced from six days to five, had high fixed costs and lost £180m in the first half of the year as letter volumes fell by 28% due to the Covid-19 pandemic.
“This demonstrates the need for change in the Universal Service. We are working tirelessly to deliver the most comprehensive service we can in difficult circumstances as the coronavirus pandemic continues to impact our operation.”
Royal Mail also acknowledged the economic difficulties being experienced by many households because of the pandemic. “As a result, we have considered any pricing changes very carefully and in doing so have sought to minimise any impact on our customers,” it stated.
It also emphasised that it had not called upon taxpayer support via the JRS furlough scheme during the pandemic.
Nick Landon Chief Commercial Officer at Royal Mail commented: “Like other companies, 2020 has been a challenging year for Royal Mail. Our people have worked tirelessly to keep the UK connected throughout the pandemic and associated restrictions. These price increases will help us continue to deliver and sustain the Universal Service in challenging circumstances.”
Parcels revenue overtook letters for the first time in Royal Mail Group’s interim results.
Royal Mail has also announced the last posting date for Christmas 2020: Friday 18 December for second class and second class signed for, Monday 21 December for first class and first class signed for. Tuesday 22 December for Royal Mail Tracked 24.
Prices from 4 January 2021 for Royal Mail Wholesale customers are available on its website.