Document-Genetics-GlobePrice of a first class stamp 'could soar to £1 in just three years if Royal Mail is privatised' campaign group warns

8th April 2013

The price of a first class stamp could soar to £1 in just three years if Royal Mail is privatised, campaigners claim.

Save Our Royal Mail - set up by charities and pensioner groups to fight the expected sell off - said the cost would increase because other companies would be able to challenge Royal Mail's VAT-free status under competition law.

Bankers and government ministers are paving the way for a Royal Mail flotation. It is believed it could happen as early as the Autumn.

 

Stamps are exempt from  VAT but lawyers have warned that if the Royal Mail is privatised, this exemption will be challenged – almost certainly successfully – by other delivery companies.

The price of sending a first class letter last year rose to 46p to 60p - an increase of 30 per cent.

If 20 per cent VAT was added the price would increase to 72p. A further rise of 30 per cent would see the stamp cost 94p by 2015.

The group has warned that even if VAT were not applied, the price of sending a first class letter would 'likely hit £1 in three/four years, assuming two increases in that period', The Daily Telegraph reports.

Brian Binley, a Conservative MP and member of the Business Innovation and Skills Committee - which oversees the work of Royal Mail -  told the paper it was essential that the services currently enjoyed by the public can be guaranteed, before the Government rushes into selling off the group.

He added: 'This should include a very careful look at how future price rises will adversely affect businesses as well as people in counties like Northamptonshire.'

Bankers and government ministers are paving the way for a Royal Mail flotation. It is believed it could happen as early as the Autumn

A Business, Innovations and Skills spokesman said the Royal Mail will continue to be the designated universal service provider regardless of its ownership.

They added that any change would not 'trigger a change in the current VAT exemption which applies to first and second class stamps as part of the one price, anywhere service.'

Over the past five years the volume of letters sent every day has fallen by 10 million as people increasingly rely on other methods of communication such as email.

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