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Greeting card industry shaken after UK postal charges rise to record high

By: The Associated Press

Posted: 03/27/2012 7:54 AM | Comments: 0 | Last Modified: 03/27/2012 7:55 AM

LONDON - Britain's Royal Mail has been freed to charge what it wishes to deliver letters and cards around the U.K., a move that has sent chills through the nation's greeting card industry.

The postal carrier, which the government intends to privatize, was given the freedom Tuesday to set its own prices by the U.K. communications watchdog, Ofcom. The price of a first-class stamp — which will pay for fast-track delivery of a letter to anywhere in the U.K. — would rise from 46 pence to 60 pence ($0.96, €0.72) on April 30.

"That's a biggie," said Sharon Little, speaking for the Greeting Card Association, but she added that the rise in second-class stamps — slower delivery — from 36 pence to 50 pence might have an even bigger impact.

"We think this could affect Christmas quite dramatically," Little said, because many people send cards in large batches which makes the higher price more obvious.

Royal Mail has been steadily losing business to private competitors, with volume falling by 25 per cent in the last six years. The carrier says it has lost 1 billion pounds ($1.6 billion) in the last four years. Its work force has been cut by 50,000 in 10 years.

Moya Greene, Royal Mail's chief executive, said the service's obligation to serve any house in Britain for the same price would be in peril without higher stamp prices.

"This is a very high-quality, cherished service, but it needs to be paid for," Greene said. "The increase will restore our finances and maintain the universal service. We had no alternative but to increase prices."

Billy Hayes, general secretary of the Communication Workers Union warned: "Those people who baulk at the idea of stamp price rises should understand that it comes directly from government decisions to privatize this industry, just as we've seen massive price increases in train travel under privatization."

Little, of the Greeting Card Association, welcomed Royal Mail's decision to offer cut-price books of second-class stamps to people who are on benefits.

The association is urging Royal Mail to expand the program to all senior citizens, or set up a cheaper mailing period a few weeks before Christmas, Little said.

About half of the 1.5 billion cards sold in Britain each year are delivered by Royal Mail, Little added.

Britain issued the world's first adhesive postage stamp, the Penny Black, in 1840. The nation also claims the invention of the commercial Christmas card in 1843.

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