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Royal Mail is increasing the cost of posting letters and parcels for businesses over Christmas and imposing a net zero “green surcharge”.
In a move that risks increasing costs for shoppers, business account customers will be asked for an additional 5p or 10p “peak surcharge” for deliveries between November and January, on top of a 2p “green surcharge” to help fund “decarbonisation measures”.
Consumers paying for deliveries will ultimately bear the extra costs, with the charges risking an increase in inflation, businesses and MPs warned.
It comes as Royal Mail grapples with slumping profits and follows a number of increases in the price of stamps.
The 507-year-old business was beset with delays in the run-up to Christmas last year, failing to deliver almost half of first-class post on time – thought to be the worst performance in the firm’s history.
It has been forced to contend with repeated strikes in a long-running dispute with the Communication Workers Union over pay and changes to working conditions. It made an operating loss of £419m last year and expects to lose £450m this year.
It is also pushing to cut costs by stopping deliveries on Saturdays.
Martin McTague, the National Chair of the Federation of Small Businesses, a trade body, said the higher costs “will inevitably lead to higher prices” for consumers.
He said: “Christmas is a crucial season for UK small businesses, and after last year’s strikes they were looking forward to a disruption-free festive period. For many, today’s news will be a gift they would rather not unwrap.
“Extra costs will inevitably lead to higher prices for their goods to stay economically viable, which will in turn drive up inflation at a time when we should be trying everything to bring it back down to the 2pc Bank of England target.”
The “green surcharge” is set to come into force on Nov 6 and run indefinitely, while the peak surcharge will be introduced on Nov 20 and apply until Jan 7 2024.
It will apply to the 24- and 48-hour postal deliveries of “account customers”, while the peak surcharge applies to large letters and parcels sent by 24- and 48-hour delivery.
The increase will come shortly after a rise in the cost of first-class stamps, which are due to jump in price by 15p to £1.25 from October 2 – the second increase this year. It will mean a book of eight stamps will cost £10 for the first time.
The increase means the cost of stamps has doubled since Royal Mail was privatised in 2013.
It also comes on top of an additional £1.10 surcharge now applied to old-style stamps that do not have new barcodes.
Tory MP Greg Smith said that the cost of posting anything had become “mind-bogglingly expensive.”
He added: “Royal Mail needs to focus on getting the basics right at a price people can afford, or they are just digging themselves a hole they’ll never get out of.”
Craig Mackinlay, head of the Net Zero Scrutiny Group of Tory MPs, said the incoming green surcharge was “yet another” cost of net zero, adding: “At the end of the day, consumers pay the price of all of this because consumers are at the end of every supply chain.”
A Royal Mail spokesman said the surcharges would only affect business account customers, adding its “green surcharge” helped make it “the greenest carrier in the market”.
She added: “Christmas is our busiest time of year – every year we take on thousands of additional staff and vehicles and increase capacity.
“This all comes at a cost to our business, at a time when we have reported a £419m loss at our most recent full year results. Other parcel couriers already apply a similar surcharge during the Christmas period.”
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