Will Sending a Rural Letter Cost Us More?

Daily Mail (London), October 19, 2005 | Go to article overview

Will Sending a Rural Letter Cost Us More?


Byline: BECKY BARROW

ROYAL Mail bosses yesterday raised the prospect of letters sent to rural addresses costing more than those sent from city to city.

They told MPs that ending the postal monopoly in January will have dramatic consequences for the 84million letters posted every day.

It could threaten the longstanding universal pricing principle that has allowed customers to send letters to any part of Britain for the same price, regardless of distance or location.

The structure has been in place since 1840. But Royal Mail chief executive Adam Crozier warned that unless stamp prices go up when the monopoly ends it could become uneconomic to provide a universal service as competitors 'cherry pick' other lucrative parts of the business.

He wants a 30p first-class stamp to go up to 39p by 2009-2010.

MPs on the Trade and Industry Select Committee were told that prices have been hit badly in other countries where monopolies have ended.

In Sweden, where it ended 12 years ago, stamp prices have almost doubled for letters sent to remote rural addresses.

But they have fallen 30 per cent for letters sent from one city to another as competitors enter the market offering a cheaper service.

At present, Britain enjoys one of the cheapest postal services in Europe, Royal Mail chairman Allan Leighton said.

It costs just 30p to send a letter weighing less than 60 grammes to any address in the country, however remote, by first-class post. The same service in Spain, the second cheapest European country, costs 44p.

But with the end of the monopoly, Royal Mail's rivals are expected to target the lucrative business contracts while ignoring the loss-making 'social' letters such as birthday cards.

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