Parliamentary Committees and Public Enquiries
|Printable version||E-mail this to a friend|
Business, Innovation and Skills Committee publishes report on stamp prices
Comments from the Chair
The Chair of the Committee, Adrian Bailey, commented:
"The Committee's short inquiry into the future price of stamps has been hugely valuable.
There is no doubt that market uncertainty is placing significant, additional pressures on Royal Mail and that some increase in the price of stamps is necessary.
However, this report highlights the need for Royal Mail to consider robust data on the position of vulnerable consumers and small businesses when determining the future prices of stamps.
It must also be sensitive to the possible effect on its volume of business and the need for higher prices not to operate as a disincentive against efficiency measures.
The principle of universal access underpins our mail service and must be maintained at an affordable rate."
Areas of concern
The report identifies a number of areas that continue to cause concern, some of which are highlighted below:
1. On price controls
- The Committee does not believe that continuing with length procedures for determining prices is a practical future means of supporting Royal Mail’s business.
- The Royal Mail needs to get a much clearer grasp of the costs and profitability of its product lines.
"No compelling case was made for the continued use of price controls.
However, I was surprised at the lack of detail Royal Mail provided with regards to the cost of specific services.
A clear grasp of underlying costs should underpin any future price changes. Without that, the scale of increases being discussed becomes far harder to justify."
2. On vulnerable customers
- The most pressing issue for Ofcom to consider is the resources available to vulnerable customers at periods of peak spending.
- The Committee notes Royal Mail's announcement of specific protection for vulnerable consumers at Christmas time.
- The consequences of price increases should remain a priority for Ofcom and the regulatory model should include the ability to re-open this issue if necessary.
"Although the aspiration behind Royal Mail's announcement of a one-year freeze on Christmas stamp prices for vulnerable people is to be welcomed, there are concerns about how this might work in practice.
The Committee may return to this issue in due course.
Equally important will be the need for Royal Mail to ensure wider affordability in the longer term and to nurture and sustain its customer base on the back of improved productivity."
3. On SMEs
- The Committee is not convinced by the working hypothesis that affordability for SMEs is the same issue as for consumers.
- Ofcom and Royal Mail should reconsider the evidence on this point
"SMEs often operate on tight margins and have completely different needs to other consumers.
Unless Ofcom and Royal Mail take account of this fact, many SMEs struggling with other cost pressures in the current economic climate may find any such price increases a real problem."
4.On efficiency savings
- The Committee agrees that Ofcom should retain the ability to step in and regulate prices if a failure to deliver efficiency savings results in additional significant price rises.
- The Committee feels five years would be more suitable than the seven currently being suggested and that this timeframe would provide greater incentives for rapid progress.
"Royal Mail should be looking to efficiency savings to keep downward pressure on prices."
Latest News from
Parliamentary Committees and Public Enquiries
No record of homes built on sold-off public land29/09/2015 15:25:00
The Public Accounts Committee (PAC) recently published a report on disposal of public land for new homes, its second report of 2015-16.
BBC Charter Review inquiry launched03/08/2015 11:25:00
The Culture, Media and Sport Committee announces an inquiry into the BBC Charter Review, following the publication of the Government's Green Paper which has started the formal process of public debate over the position of the BBC beyond 2016.
EU Committee reports on referendum on EU membership29/07/2015 14:25:00
The Lords EU Committee has yesterday published a report analysing the process leading up to the referendum on UK membership of the EU, which is to be held before the end of 2017.
Lords urge Goverment to opt into relocation of migrants proposal16/07/2015 08:05:00
The House of Lords EU Home Affairs Sub-Committee has yesterday published a short report calling on the Government to participate in the negotiation of a proposed scheme to relocate migrants, provided that the European Commission either amends its existing proposal or drafts a new proposal in line with the Conclusions of the European Council of 25 June 2015.