Royal Mail price hike for businesses “unacceptable”

The planned Royal Mail price rise for business mail will have a “far greater” impact on mail volumes than the Royal Mail estimates, according to the Direct Marketing Association (DMA).

Regulator Postcomm proposed allowing Royal Mail to raise the price of business mail by up to 19 per cent last November. The proposal was made as part of a package of deregulatory suggestions that have been subject to consultation. Postcomm is expected to set out its decisions imminently.

The DMA has submitted evidence gathered from its members to Postcomm to illustrate that volume and revenue generated business mail underpins the “universal service” provided by the Royal Mail to every UK household.

The DMA says that the rise “will prompt businesses to revert to other forms of communication or significantly reduce their mailing volumes”.

It also argues that for those businesses where mail is the only option, this price hike is “unacceptable” in the current operating climate.

Chris Combemale, executive director of the DMA, says: “Royal Mail’s decision to raise funds at the expense of businesses is counter-productive and, while the effect might not be immediate, it will be irreversible. This price rise will accelerate the move to digital and experience has shown that once a company has migrated to other media they don’t come back.”

A Royal Mail spokesman says: “We are pleased Postcomm recognises the significant financial pressures on Royal Mail and has agreed our pricing proposals. We fully understand the pressures our customers face in today’s challenging market conditions. No-one wants to see price increases. With a sharp decline in mail volume, Royal Mail’s revenue is falling. In the first half of the current financial year, Royal Mail made an operating loss. If we don’t generate more income, we simply will not be able to keep funding our six-days-a-week operation to the UK’s 28 million homes and businesses. Royal Mail is doing all it can to modernise its operations to reduce its costs, improve efficiency and delivery the services our customers rely on.”

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