Royal Mail face more regulation and stamp prices could be controlled
It looks like Royal Mail are going to be controlled even more, which will thrill them, no doubt. It seems that they're going to have to accept further controls on stamp prices, thanks to an inquiry which has been announced by Ofcom.
The watchdog are going to do a thorough review of how they regulate the Royal Mail, in a bid to ensure that the company maintains their obligation to deliver to every bit of the country. That'd be the thing that's called 'universal service'.
This all came about after Whistl decided that they would no longer be part of the delivery market. Ofcom are concerned that, without competition, Royal Mail might not be as stringent when it comes to making itself as efficient as it should be. With no competition, they might get complacent and offer a lousy service.
So one of the things being looked at, is the introduction of additional controls on Royal Mail's prices. Now, the cost of a second class stamp is already limited by the rate of inflation, but for first class stamps, there's no such cap. Ofcom have previously given Royal Mail a lot of freedoms, but now that they're financially stronger and operating as a public company (after the government sold most of it off), things have changed.
Ofcom said: "The review will ensure regulation remains appropriate and sufficient to secure the universal postal service, given the recent withdrawal by Whistl from the ‘direct delivery’ letters market, which has resulted in Royal Mail no longer being subject to national competition."
"Ofcom will consider ... whether Royal Mail’s wholesale and retail prices are both affordable and sufficient to cover the costs of the universal service and whether Royal Mail’s commercial flexibility remains appropriate in the changing market. And, if not, whether wholesale or retail charge controls might be appropriate."