StampsWhat would Henry VIII’s reaction have been to the latest round of price increases for postage stamps? “Off with their heads” probably and there are many who would agree with this sentiment as the once great national postal system is pimped and primed to look more attractive to private investors.

The notorious King Henry established the ‘Master of the Posts’ in 1516, laying the foundations for the Royal Mail, but it was not until 1635 that Charles I allowed the general public to use the system albeit with the recipient paying the postage.

The service grew and evolved with the Uniform Penny Post being introduced in 1840 and the first adhesive stamp, the Penny Black, appearing on 6 May that same year.

166 years down the road with unparalleled changes in methods of communication and a dramatic drop in customers, the Royal Mail finally lost its 350 year old monopoly in January 2006 but sadly for the organisation, its death knell had been ringing for some time.

In March 2012, the announcement was made that from 30 April a first class stamp would go up from 46 pence to 60 pence (an increase of 30%) and second class would increase from 36 pence to 50 pence (an increase of 39%).

To give you some idea as to how the cost has increased:

YEAR 1980 1990 2000 2010 30 April 2012
1st Class 12p 22p 27p 41p 60p
2nd Class 10p 17p 19p 32p 50p

The latest meteoric rise was defended by Royal Mail’s Chief Executive Moya Greene who said it was essential to increase the price to ensure the continued success of the business and the Department for Business said “… the top priority is to protect the universal service on which people rely”.

But the minister mantra of protecting our national postal system has more to do with European penalties they will face due to a Brussels’ enforced mandate rather than any concern for our national heritage.

Whilst the communications watchdog, Ofcom, removed the price cap restriction for 1st class stamps, they will continue to regulate the price of 2nd class stamps for the next seven years. Ofcom’s Director of Competition, Stuart McIntosh said
“Competition from other delivery companies and mobile phones and email would help prevent the Royal Mail from abusing deregulation …”

Royal Mail’s justification is quite simple: “if we don’t put up the price, we won’t survive” as according to their statistics there are now 16 million fewer letters being posted compared with 5 years ago.

But with less than 10% of their business coming from ‘social’ mail (greeting cards, personal letters, etc), their biggest customers: businesses, charities, government departments, banks and utility companies must be the cause of the decline and it is going to be far easier for these large organisations to go elsewhere.

That means the 10% i.e. Joe Public will have no choice but to pay the increased price, although there is some suggestion that low income families will receive a form of subsidy.

The Forum of Private Business has said smaller organisations that are already struggling in the recession are going to suffer even more and following attempts by some to save money by buying large quantities of stamps prior to the increase, Royal Mail put a stop to this by restricting supplies to retailers.

Royal Mail spokesman James Eadie said “These allocations are in place for all retailers so that we can balance the customer demand with the need to protect Royal Mail’s revenue … our priority is to ensure the proceeds … go to sustain the six day a week service …”

There is no doubting the main reason for the increase; having offloaded their £9.5 million pension deficit to the State on 31 March, all of a sudden the Royal Mail looks far more attractive to potential buyers. It is predicted that by the autumn of 2013 a large proportion of the Royal Mail will be in the hands of private investors.

The Communication Workers Union’s (CWU) Billy Hayes said “… preparing for privatisation is preparing for a rip off …” and when the possibility of strike action was questioned he replied “… many private investors are frightened of well organised workers.”

A veiled threat? Perhaps, but the future prosperity and happiness of many small business and individuals is about to be jeopardised and that can only add to our general gloom and despondency and increased disillusionment with those who are making decisions for our future.

Is The Royal Mail Still First Class?

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