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Ofcom Royal Mail Business

Forum of Private Business criticise decision by Ofcom to let Royal Mail choose stamp price


By The Drum Team | Editorial

March 27, 2012 | 2 min read

The Forum of Private Business has criticised the decision made today by Ofcom, which will allow the Royal Mail to set the price of a first class stamp without limit.

Ofcom say charges for second class post will be indexed linked to inflation with a ceiling for second class stamps of 55p until 2020.

The Forum believes this will almost inevitably lead to first class charges becoming unaffordable for many small firms, forcing reliance instead on the far slower second class system.

Phil Orford, the Forum’s chief executive, said: “We think these changes are bad for business, and will ultimately cost small firms – the bread and butter users of the postal service – far more to send items via first and to a lesser extent second class in the years ahead.

“If Ofcom thinks it can give Royal Mail these new freedoms and prices won’t immediately go up, it is deluded. This will merely prove to be yet another increase in the cost of doing business for SMEs.

“It will also result in a postal system where the bulk of all post will eventually be sent second class. Simple economics suggests this will, ultimately, force the cost of first higher as increasingly fewer people use the ‘premium’ service. There are also implications for rural areas where delivery times are usually that bit longer.

“There will always be those customers desperate to get a mail from A to B in a hurry, and for those there will be few options but to pay out what will no doubt rapidly become exorbitant prices. By adopting a: ‘the sky’s the limit’ mentality for first class, there’s a danger it will become a cash cow.”

Ofcom Royal Mail Business

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