Royal Mail has announced a substantial increase in the price of first-class stamps, citing “very real and urgent” financial challenges. The price hike will take effect from October 7, 2024.
- First-class stamp prices will rise by 30p to £1.65.
- Second-class stamp prices will remain unchanged at 85p.
Royal Mail attributes the price increase to several factors:
- Declining letter volumes: Letter postage has fallen from 20 billion items in 2004-05 to about 6.7 billion in 2023-24.
- Rising business costs associated with maintaining the universal service.
- The average household now receives only four letters per week, compared to 14 two decades ago.
The company reported a significant loss of £419m last year, despite previous price increases and growth in parcel deliveries. Royal Mail has called for urgent reform of the Universal Service Obligation (USO), which requires it to deliver letters six days a week (Monday to Saturday) and parcels five days a week (Monday to Friday).
Ofcom, the UK’s postal regulator, is considering potential reforms to the postal service, including:
- Ending second-class letter deliveries on Saturdays.
- Implementing alternate weekday deliveries for second-class mail.
Royal Mail estimates that such reforms, along with changes to its performance targets, could save the business £300m annually. However, the company stated it still has “no certainty on regulatory reform.”
Any changes to the postal service would require approval from the government and parliament to amend current legislation. Ofcom aims to publish a consultation in early 2025 and make a decision by the summer.
This price increase comes as Royal Mail’s parent company, International Distribution Services, is in the process of being acquired by Czech billionaire Daniel Kretinsky for £3.57bn. Mr. Kretinsky has committed to honoring the universal service obligation for five years, but the takeover will face a government probe, including an investigation into potential links with Russia.
The new first-class stamp price of £1.65 will take effect on October 7, 2024.