Stamp price hike disaster warning

Hugh Evans

Hugh Evans

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BUSINESS leaders have blasted Royal Mail’s decision to raise stamp prices by a record 14p – and say it could spell disaster for the delivery firm.

The price of a first class stamp will rise to 60p, and second to 50p, after regulator Ofcom gave Royal Mail the freedom to set its own prices.

But business leaders say the move will heap more misery on firms, and will backfire on Royal Mail at the same time.

Hugh Evans (pictured) of the Blackpool-based North and Western Lancashire Chamber of Trade said: “This will probably price Royal Mail out of the market.

“I can understand why Royal Mail have done it, but there are a lot of alternatives out there.

“Businesses which depend on post for orders and processing cheques are going to struggle – and this will speed up the process of them finding an alternative.”

Steve Pye, chairman of the Fylde coast branch of the Federation of Small Businesses, agreed and said: “This could be the death knell for Royal Mail.

“They’ve done this as soon as Ofcom told them they could set their own price – it’s contempt for its customers.

“It’s going to heap more costs on small businesses – and that’s something they don’t need now.”

But the postal group warned that the universal service, under which post is delivered to any house in the UK for the same price, was in “peril” without higher stamp prices.

Chief executive Moya Greene added: “This is a very high-quality, cherished service, but it needs to be paid for. The increase will restore our finances and maintain the universal service. We had no alternative but to increase prices.”

During the past four years, Royal Mail has made a loss in its core mail business, including packets, of almost £1bn.

Ms Greene said research showed the average household spent 50p a week on stamps, so she believed there was no “affordability issue” with higher prices.

But the Forum’s for Private Business chief executive, Phil Orford joined the criticism and blasted Ofcom’s decision.

He added: “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 small and medium enterprises.