From 1 January 2021 the price of a 1st Class stamp will increase by 9p to 85p and the price of a 2nd Class stamp will increase by 1p to 66p. These changes are necessary to help ensure the sustainability of the one-price-goes-anywhere Universal Service, according to Royal Mail.
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The Universal Service Obligation, which requires Royal Mail to be able to deliver to 31 million home and business addresses across the UK, comes with high fixed costs.
During the coronavirus pandemic, letter volumes saw a 28% fall. The reduction in letter volumes has had a significant impact on the finances of the Universal Service which lost £180 million in the first half of the year.
Royal Mail says they are working tirelessly to deliver the most comprehensive service in difficult circumstances as the coronavirus pandemic continues to impact operations.
With the health and safety of its colleagues and customers remaining its number one priority, Royal Mail has faced significant, additional costs related to COVID-19 (£85 million for the first six months) such as protective equipment, elevated absences, overtime and agency staff as well as the impact of necessary social distancing measures.
The company has taken a decision not to call upon the Government’s furlough scheme (Coronavirus Job Retention Scheme) throughout the pandemic.
Royal Mail says its stamp prices are among the best value in Europe compared to other postal operators. Royal Mail research shows that the European average price for 1st Class letters (0-100g) is £1.21.
“Like other companies, 2020 has been a challenging year for Royal Mail. Our people have worked tirelessly to keep the UK connected throughout the pandemic and associated restrictions. These price increases will help us continue to deliver and sustain the Universal Service in challenging circumstances,” said Nick Landon Chief Commercial Officer at Royal Mail.
Royal Mail did not say if additional price increases are under consideration that may impact parcel shipping costs.
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