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PRICE CAP: The communications regulator Ofcom revealed new proposals which would also scrap the current price cap on parcel services (Photo by PA)
In a bid to ensure that sending letters remains accessible for all, the UK communications regulator, Ofcom, has announced plans to tie the price of second class stamps to inflation until at least 2029. This move aims to prevent soaring costs and maintain affordability for letter-senders.
However, Ofcom also proposed scrapping the current price cap on parcel services. By implementing these measures, the regulator aims to strike a balance between affordable postage and a competitive market.
As of April, a second class stamp for a standard letter, which typically takes two to three working days to arrive, cost 75p. It was increased by 7p, while the price of a first class stamp was hiked to £1.10 from 95p.
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Royal Mail typically increases the price of stamps annually. The new rules would mean it has to base price rises against the Consumer Prices Index (CPI) inflation rate in September the previous year.
It comes as CPI inflation in the UK stayed at 8.7 per cent in May for the second month running, despite hopes it would ease further and heaping extra financial pressure on households. However, the inflation rate is expected to drop sharply at the end of this year and get closer to its 2 per cent target, the Bank of England has said, which could limit future price hikes on the stamps.
With this move, the regulatory body wants to safeguard the universal service which mandates Royal Mail to deliver letters six days a week and parcels five days a week to every address in the UK at an affordable and uniform price.
Marina Gibbs, Ofcom’s director of post, said: “We might not be sending as many letters as we used to; but when we do, it can be an important way for family and friends to keep in touch. So we’re proposing that stamp prices for second class letters should only rise by inflation, and no more, to make sure there’s always an affordable option available to everyone.”
Research conducted by Ofcom revealed a decline in personal letter-sending, with around a fifth of consumers reporting fewer greetings cards, invitations and formal letters compared to two years ago. However, nearly two-thirds of people still send letters each month, mainly for special occasions like birthdays and Christmas.
In a separate aspect of the proposals, Ofcom plans to remove the price cap on Royal Mail’s parcel services. The watchdog acknowledges the significant competition Royal Mail faces from rapidly expanding parcel companies, which limits its ability to increase prices.
However, Ofcom emphasises that Royal Mail would still be required to set an affordable single price for parcel services across the UK, ensuring fair access for consumers. The regulator also reserves the right to intervene if concerns about affordability arise during the five-year period.
Furthermore, it would have the flexibility to set prices for certain second class letters, such as heavier post, so long as the weighted average overall price of letters does not rise above inflation.
Currently, Ofcom is investigating Royal Mail’s failure to meet delivery targets over the past year, as it fell short of performance expectations for first and second class mail and delivery routes. Ofcom said it is consulting on its new proposals until September, and plans to publish its final decisions later in the year.
By Anna Wise, PA Business Reporter
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