Green light for Royal Mail price changes

Thursday, 18 August 2005 12:00 AM

The cost of sending a letter will depend on its shape and size rather than how heavy it is under new plans to be introduced by Royal Mail.

Postal regulator Postcomm has today approved proposals to charge more for light but large items, such as big cards, and less for heavier, smaller items, such as books.

The new price structure is described as the "greatest change in postal pricing since the introduction of the Penny Black" and follows two years of intensive consultation.

Royal Mail insisted the changes, which will take effect from next August at the earliest, were necessary to cover the extra costs incurred in the handling of large or bulky mail.

It assures it will not make any extra money- some prices will go up, while others will go down - but argues the new price structure will enable it to remain competitive when the postal system is liberalised next year.

Ten companies have been licensed to compete with Royal Mail from January 1st next year, challenging the company's 95 per cent share of the market.

"This new system will be fairer to customers, as well as more accurately reflecting the costs to our business," said Lorna Clarkson, Royal Mail's head of commercial policy and pricing.

The firm believes that about 20 per cent of residential mail and 30 per cent of business mail will be affected by the changes.

"This is a major change to the way people pay for their post," said Postcomm chairman Nigel Stapleton.

"It will promote the development of a successful and growing postal market by allowing Royal Mail to bring its prices much more closely into line with its costs. This is particularly important given the full liberalisation of the postal market in January."

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