New stamp price rise on the way?

Despite the cost of stamps soaring in April - first class rose to 60p from 46p and second class to 50p from 36p - Royal mail boss Moya Greene hasn't ruled out another rise in the near future. 50p for a stamp is a bargain she says.

"Realistically, what can you buy for 50p today?" Not much but isn't April's 39% price hike enough?

Profit turnaround

Especially when you consider that real UK wages are not - by a long mark - rising in line with inflation. Latest consumer prices index (CPI) saw a nasty, unexpected hike in September, soaring from 2.2% in September to 2.7% in October.

Meanwhile Royal Mail is benefiting from April's stamp price rise. In the first half of 2012 Royal Mail made £144m in group profits compared with just £12m in the same time frame in 2011. Much of that profit though comes from its parcels business.

By law the brakes can still be applied to future price rises of second class stamps, but only in line with inflation till 2020. There is no cap on future price rises for first class stamps whatsoever. Tellingly, Royal Mail admitted letter volumes have fallen a hefty 9% since April's stamp price rise.


That won't worry Royal Mail. It's increasingly being fattened up for private sale - even a stock market float is a possibility - with a focus on the more profitable parcel delivery arm of the business. Last year the Government introduced the Royal Mail Bill, allowing the Royal Mail to be sold off by the end of 2013 at the earliest.

A sell-off does not go down well with Dave Ward, the Communications Workers Union deputy general secretary. Ward worries a sell-off will go to private sector cherry-pickers: "Competition destabilises the universal service - companies being allowed to cherry-pick profitable contracts while paying low wages for example."

Sting in the tail

"There's also a problem," he adds, "with pressure that Royal Mail managers are putting on delivery workers to make unrealistic cost savings. This is causing mayhem in many offices with staff being pressured to work unpaid overtime when really the managers have got the workloads wrong."

There's another nasty sting for the British taxpayer from a Royal Mail sell-off: in order to sweeten a deal, taxpayers' will still be on the hook for Royal Mail's £8.4bn pension deficit. Accusations of privatising profits and socialising losses, then, could be set to return.

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