Ofcom post plan will hit small businesses

SNP Business and Enterprise spokesperson Mike Weir has warned that small businesses could be hard hit by proposed post pricing changes after Ofcom, the regulator, confirmed in a letter to the MP that its proposals could mean that the universal service obligation will be limited to second class services only.

Mr Weir said:

“These are regressive proposals which will hit small businesses and rural areas hardest and undermine the same cost everywhere system that has been the bedrock of the Royal Mail service since the introduction of the penny post in 1840.

“Under their current proposals Ofcom are to define the universal service as the current second class service, and even there the price is to rise substantially.

“They confirm that they ‘will be consulting on which services are included within the universal postal service, but it will include a service for packets and parcels which will be available to small businesses’. It is clear, however, that small businesses will no longer be certain to have access to a first class service which is essential, especially for those in rural areas.

“Worse still it is clear that Royal Mail will be able to charge what it likes for the first class service, which could make it completely uneconomic for small businesses, especially since Royal Mail will be under no obligation to charge the same first class price throughout the country leaving it open for them to charge higher prices to deliver to more rural or remote locations.

“Such a situation will also make it much more difficult for small businesses to set up and operate in more rural location setting back attempts to grow such businesses to get us out of the current economic mess.”

Note:

Ofcom's consultation on 'Securing the Universal Service Obligation'closed on 5 January. As part of a consultation on the future of the universal service obligation Ofcom are proposing to give Royal Mail full commercial freedom to determine contracts with large companies and other postal providers as to what they will charge for the final delivery of items.

Ofcom suggest there should be no cap on prices for the vast majority of Royal Mail's services, including business post, bulk mail, and large letters and parcels sent second class.

Mr Weir has expressed concern that this could lead to higher prices in rural and remote areas and has raised the matter at a meeting with Ofcom.