I am writing to address some of the claims in the story (9 April) on what might follow were Royal Mail to be sold.
It is pure speculation to suggest that stamp prices could reach £1 in the next few years. Stamp prices, whether set under public or private ownership, are subject to significant competitive pressures.
Customers have many alternatives to the post. In fact, in 2013 there was no increase in the price of first- or second-class postage for letters. The Postal Services Act also requires that stamp prices must be affordable, and only last month the regulator, Ofcom, confirmed that they were. Consumers in the UK benefit from some of the lowest stamp prices in the EU. In five of the six weight steps for first- and second-class mail, the costs of UK stamps are ranked in the bottom half of prices when compared with other EU countries.
In some cases, the UK is the cheapest. We provide good value for money. It is incorrect to say that stamp prices might become subject to VAT if Royal Mail is sold. VAT exemptions for Universal Service Providers’ (USPs’) provision of core postal service delivery products such as stamps are in place in the vast majority of EU countries, under the European VAT directive. Under the Postal Services Act 2011 Royal Mail is the USP in the UK. The conditions for VAT exemption would apply regardless of whether Royal Mail was in public or private ownership.
Similar VAT exemptions are in place for Universal Service products in Germany, Austria and the Netherlands. In each country the USP is privately owned.
Attracting external investment in Royal Mail will help protect the six-day-a-week, one-price-goes-anywhere universal service we enjoy in the UK. The high quality Universal Service is strongly protected by both UK and EU legislation and the regulatory framework. That will not change and we remain honoured to provide the Universal Service.