ANGUS MACDONALD CLAIMS STAMP HIKE WILL PRICE SMALL BUSINESSES OUT OF FIRST CLASS MARKET
Tuesday, 27 March 2012 22:18
BLOW FOR BUSINESSES AND THREAT TO UNIVERSAL SERVICE OBLIGATION
Commenting as Royal Mail announced that the price of a first-class stamp is to increase by more than 20 per cent from April - from 46p to 60p Falkirk East MSP Angus MacDonald has warned that the increase would price small businesses out of the first class market.
The increase comes as Ofcom suggest there should be no cap on prices for the vast majority of Royal Mail’s services, including business post, bulk mail, and large letters and parcels sent second class.
Angus MacDonald, who is a member of the Scottish Parliament’s Economy Committee, condemned the move saying:
"This is a ludicrous increase at a time when small businesses are under pressure from ever increasing costs and a lack of access to lending from the banks. The result of this inflation busting hike will price small businesses out of the first class market. Indeed, even my own Parliamentary office in Falkirk East will now see a significant increase in operating costs, thanks to this outrageous hike in stamp prices.”
Effectively, the USO will now be restricted to second class postage for small businesses. Ofcom and the UK Government have given no thought to the stresses on small business in agreeing to this increase. The UK Government claims to support small businesses, but this action flies in the face of such a claim.
A further fear is that this increase could result in a downward spiral, with less people sending letters, and in turn leading to even higher prices.
The situation could get worse, with Ofcom proposals to allow Royal Mail to charge whatever it wanted for first class services while the cost of second-class postage could rise by more than 50 per cent.
Under their proposals Ofcom are to define the universal service as the current second class service, and even there the price is to rise substantially.
Large businesses who send a lot of mail will never pay the full first class price but will always be able to get a better deal or bulk discount from Royal Mail. They would also have the option of doing a deal with one of the alternative private providers.
These options are not available to our small businesses. They rely on Royal Mail’s service to be able to deliver letters and small packages around the country. They could be priced out of the market risking their very survival.
The April increase may well be a sign of things to come, and we need action by the UK Government to protect our postal services.”