Not content with the cost of a first class letter being almost prohibitive at £1.65, it will be increasing the cost to £1.70. Fortunately, second class postage, as it is regulated, is only rising 2p from 85p to 87p.

The latest rises will simply exacerbate the issue of declining mail volumes, as the more the price is raised, the less people use the post. Online services are now starting to proliferate and most major institutions now nudge their customers to dealing with them online, meaning no more paper bills in the post.

The rises, whilst expected, come as another blow to those who regularly use the postal system as currently second class post can take between two and ten days to be delivered, even when the recipient is a few miles away. First class post is often delayed and Royal Mail are regularly being fined for missing their standard delivery targets.

To deal with this, Royal Mail are looking to vary the conditions of the Universal Service Obligation and drop at least one of their deliveries. Whilst this is meeting with residence amongst consumer groups, it would simply be an official recognition of what has already become ‘de facto’ standard practice. Many homes simply don’t receive mail on certain days of the week and some, just on one or two specific days.

At 87p, second class post still represents good value, given the cost of running a nation-wide postal system, but further rises will make the service even less appealing and the end result could well be the same as Denmark, who will officially cease all mail services in the country at the end of 2025.

So, price rise or no, use it or lose it is the message for all fans of second class stamps!

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Today’s increase in the price of first-class stamps is the second price rise in a year, with a first-class stamp in September 2023 costing £1.10, today it has gone up to £1.65 following a shift to £1.35 in April of this year.

Of course, most people these days tend to use second-class stamps if possible as they understand that adding a first-class stamp does nothing to improve its speed of delivery to certain parts of the country.

As an example, sitting today in the North West of England, we’ve had no post through the door since last Thursday, meaning three days without any mail deliveries. Given that we typically get over a dozen pieces of mail every week, it’s a rock solid certainty that somewhere at our local sorting office there’s a small pile of letters waiting to be delivered.

Like many other households, we understand the issue. Royal Mail have dropped or consolidated rounds (known in the trade as ‘dropping a frame’) which means that often, our pastiche cannot physically complete the whole round in a day. When post does arrive, which is likely to be tomorrow, it’s almost guaranteed that the postmarked items will have Friday’s date on them, irrespective of whether they were sent first or second class.

A recent online commentator suggested that someone take Royal Mail to court under the trades description act, as their ability to deliver a letter the following day now seems in question for anyone outside of the major conurbations.

Either way, the price rises today for first-class stamps to £1.65 for a standard letter and first-class large letter jumps up 50p to £2.60. When the second-class equivalents are so much cheaper it makes you wonder if first-class post in the U.K. is sustainable moving forward.

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Standard letters will still be able to be sent second class at 75p, but large letters will be increasing from £1.15 to £1.55, a whopping 34.5% rise. Funny, that wasn’t highlighted anywhere in the press release.

We have all seemingly become so inured to the inevitable price rises in everything we buy that have forgotten that Royal Mail normally only raises their prices once a year, yet this is the second one in six months. In doing so, they have effectively admitted that they don’t want people to use the first-class service, by pricing it so far apart from the second-class service. No wonder, as the current first-class service is nothing of the sort and in most cases, indistinguishable from the second-class service. When there is no guarantee of next-day delivery, why would you pay almost twice to price for the service?

Anywhere you look online there are stories from individuals who have missed hospital appointments, received late birthday cards, and raised disputes with online sellers for non-delivery, all because Royal Mail cannot provide the next-day delivery service promised by the first-class service. Throughout all of this, they simply point to dropping mail volumes, increased costs, and the onerous restrictions of the Universal Service Obligation. Fine, but where are the solutions?

The reality is that the UK postal system is in disarray and raising stamp prices in nothing short of rearranging the deckchairs whilst the boat sinks. As Royal Mail is still effectively hamstrung by Government obligations, whilst being a privately owned business, the recipe for disaster is already in place. How long before the entire system for delivering mail reaches a crisis point and someone actually does something to sort this?

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The headline, picked up by the National Press, was all around the ability to track and trace post with these new stamps and, inevitably, that by scanning the barcode users can get unique videos, starting with Shaun the Sheep.

What they all appear to have missed is the bigger financial story surrounding this, namely that this is a massive revenue protection grab by Royal Mail to shore up its Balance Sheet.

Royal Mail has known for years that they are losing money due to people either using fake stamps or reusing stamps that have been through the post but have not been cancelled. In the case of the former, there is a steady flow of these into the UK, mainly from the Far East, where they have managed to forge the simple Machin stamps in their millions. Despite the introduction of security measures such as codes on the stamps and even on the backing paper, forgeries still flood in. What has been missed by all the reports is that these new barcode stamps stop this trade at a stroke.

The second category of reuse of stamps has been an issue for many years. Currently, you can buy large quantities of these stamps on eBay for relatively little money. It’s not difficult to separate self-adhesive stamps from their backing paper and then reaffix them to a new envelope, effectively giving you free postage. Why they are uncancelled is (or at least should be) a source of embarrassment to Royal Mail.

As far back as back 1840, when the Penny Black was introduced, there was a clear instruction that when the stamp was affixed on an envelope it had to be cancelled. At first, this was with a hand canceller but then later, in the early 1900s, machinery was introduced to do this automatically and to cope with the massive increase in postal volumes. It used to be that all stamps ended up cancelled once used but today, so much of the mail gets missed by the machinery that vast quantities of these stamps end up on the secondary markets. Their solution, to date, has been to issue posties with marker pens and ask them to scribble through any stamps that are uncancelled before they are delivered. Of course, this simply hasn’t worked.

Which brings us to the real thrust of yesterday’s announcement. The press release from Royal Mail quotes their Chief Commercial Officer, Nick Landon as saying “Introducing unique barcodes on our postage stamps allows us to connect the physical letter with the digital world and opens up the possibilities for a range of new innovative services in future.” Whilst this may be true, what he omitted to say is that it is simply phase one of a two-part strategy to reclaim revenues and scrub out a massive unrecorded hole in their balance sheet.

The problem stems from the fact that our present monarch has been on the throne for an extraordinarily long time. Queen Elizabeth II acceded to the throne in February 1952 and was crowned monarch in 1953. This makes 2022 her 70^th year of service and her Platinum Jubilee. During this period, the only major change from a postal revenue point of view was decimalisation in 1970. When this happened, all stamps bearing the old pounds, shillings, and pence were demonetised and decimal values were introduced.

What people don’t always realise is that decimal stamps issued in 1970 are still able to be used today as valid postage.  These stamps shown below were issued in June 1970 are all still valid for use on mail today.

What has always been an inconvenient fact for Royal Mail is that each year, they sell more stamps than are used in the post. This means that at the end of each year, there is a theoretical liability to Royal Mail from these stamps still being in existence. If, for example, they sell a million pounds worth of stamps and just half a million pounds worth are used on posting items, then the other half a million pounds is yet to be used. Of course, as stamps have no ‘use by’ date then they can safely be used whenever you like, if they are in decimal currency and have not been demonetized. And to date, Royal Mail has not demonetized any stamps since the old pre-decimal stamps in 1970. This means that they are currently carrying a theoretical liability for over 50 years of unused stamps.

In practice, it’s unlikely that everyone will suddenly dig out millions of pounds worth of old stamps from collections, cupboards and drawers and use them on posting items. If they did, then RM would have to accept them and effectively not receive any revenue today for providing their service, the payment having been made in advance, many years earlier.

The introduction of barcoded stamps and the subsequent demonetization of all existing Machin and Christmas stamps removes millions of pounds of liabilities from the market and from the balance sheet. Royal Mail has said they will be introducing a ‘Swap Out’ scheme allowing people with these stamps to send them in and receive new, barcoded versions in their place. The swap scheme will open on 31^st March 2022 and whilst they have not publicly commented on how many they expect to receive, I’ve already seen comments from some stamp dealers suggesting that they may use this as an opportunity to offload vast stocks they hold, meaning Royal Mail will have to exchange hundreds of thousands of pounds worth of stamps.

But as I say, this is simply phase one of the strategy and although it removes the biggest source of revenue loss, the forgery or reuse of Machin stamps, there remains the issue of all the other commemorative stamps issued since 1970 which are also valid for postage. Which brings us to phase two, which will happen independently of any decision Royal Mail may make.

When a monarch dies, the stamps of that reign are typically still available for use during the subsequent reign, but only for a limited period. With decimalization in 1970 came the opportunity to render all previous GB stamps invalid and as such, all stamps from George VI, Edward VIII, and George V were demonetised. When our present monarch passes, the opportunity to demonetize will present itself once again and I expect this to be phase two of the plan to remove revenue liability. In fact, I forecast that unlike the transition from George VI to QEII, where the stamps of his reign were still valid for a further eighteen years, the validity period after our Queen dies will be less than five years.

Of course, time will tell whether this is correct or not but given the speed of change in the postal market and the rise of digital services, the quicker Royal Mail reduces this liability the better from their point of view.

So, where does this leave the humble 2nd class stamp? Well, as of yesterday there were two new stamps made available for second class services, the standard 2^nd class stamp and the 2^nd class large, both shown below.

These stamps are now available for use alongside existing 2nd class stamps and for the next year, they will be used concurrently. At the moment, the cost of a second class stamp is still 66p as we write this in February 2022, but if you look at the history of 2nd class stamp prices, you will realise that they are probably due to rise soon. Royal Mail has already announced changes to their Access General Large Letter services and Wholesale Parcels services from 4 April 2022 so don’t be surprised if we soon hear of a rise in second class postal rates.

I suppose we should congratulate the team at Royal Mail for what is, frankly a masterstroke. In a very short space of time, they will be removing liabilities, stopping forgery, and hopefully, improving their ability to track where the post is at any time. Of course, if you look back, you can see that post used to be delivered same day in certain parts of the UK, all stamps were being cancelled so there was no reuse and post generally didn’t go missing. So apart from blocking the forgers, we seem to be back to where we were twenty years ago.

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The obligation means that it recognises Royal Mail as the designated provider of the Universal Postal Service in the UK and it means that they must provide a six-day a week, one price goes anywhere postal service to 30 million UK addresses. This obligation is overseen and monitored by Ofcom.

What are the Minimum Universal Service requirements?

The Postal Services Act 2011 sets out the minimum requirements the Universal Service Provider must deliver, in this case, Royal Mail. These statutory obligations can only be altered with the consent of the UK Parliament. The minimum requirements for all postal items not subject to exemption (including those whose weight does not exceed 20 kilograms or whose dimensions fall outside the minimum and maximum dimensions) are as follows:

1. Delivery of letters or parcels (including those posted outside the UK)

• At least one delivery of letters every Monday to Saturday to every address in the UK.
• At least one delivery of other parcels every Monday to Friday to every address in the UK.

2. Collection of letters or parcels (including those for onward transmission outside the UK)

• At least one collection of letters every Monday to Saturday from every access point in the UK used for receiving letters and parcels for onward transmission
• At least one collection of other parcels every Monday to Friday from every access point in the UK used for that purpose.

3. Service at affordable prices at a uniform public tariff

• Postal services – (including conveying, receiving, collecting, sorting, and delivering) at an affordable, uniform public tariff across the UK; and to places outside the UK.

4. A registered items service at a uniform UK-wide, affordable public tariff.
5. An insured items service at a uniform UK-wide affordable public tariff.
6. A free-of-charge postal service to blind or partially sighted people.
7. Free carriage of legislative petitions and addresses.
8. Redirection, Post restante and Retention services

For the purposes of this blog, the key element we focus on is point 3, the provision of an affordable service at a uniform rate. This means that for a single price you can send a letter or parcel anywhere around the UK, with no premium added for distance.

Where did the obligation start?

The obligation started with the introduction of The Uniform Penny Post in 1840, an event engineered by Roland Hill (later ennobled as Sir Roland Hill) and marked by the introduction of the world’s first postage stamp, the Penny Black. It was part of Britain’s official postal service, which to this point had been fragmented and inconsistent. The reforms were meant to eradicate abuse and corruption in a new government-run initiative. With these changes, it became more accessible for British citizens because now you had to pay only one penny per letter delivered anywhere within Great Britain or Ireland no matter how far apart they are from each other. This single act is credited with doing more for the improvement of literacy across the UK than anything else.

How does the obligation work in practice?

As Royal Mail has an extensive network of distribution and sorting offices around the country and a reliable and well-organised logistics team, then mail can travel, quite literally, from Lands End to John O’Groats in a single day.

In practice this means that two letters, posted the same day, one with a first class stamp and the other with a second class stamp, can often travel in the same mailbag from the post box to the sorting office, then from the sorting office to the distribution hub and from there onto the destination sorting office, local PO and eventually the address. And of course, this means that despite a big price difference between first class at 85p and second class at 66p*, the reality is that they receive pretty much the same treatment.

How is the Universal Service Obligation measured?

Royal Mail is required to publish quarterly Quality of Service reports against delivery targets set and reviewed by the postal industry regulator Ofcom. These targets are to ensure that Royal Mail continues to meet the obligations and are broken into two specific targets:

First Class mail – a minimum of 93 percent delivered the next working day

Second Class mail – a minimum of 98.5 percent delivered within three working days.

Royal Mail naturally, therefore, has demanding quality of service standards that they must meet to deliver the Universal Service obligation of collecting and delivering mail six days a week at a uniform price across the UK. Their performance is independently measured by a market research agency, Kantar, with the methodology employed and the results obtained separately verified by auditors appointed by the regulator Ofcom.

Is there a future for second class stamps?

At the moment, the answer appears to be yes. It all boils down to the interpretation of point three again, “service at affordable prices at a uniform public tariff” and how this might be seen. Looking back to Rowland Hill’s original reform, it was essential to make letter writing and sending inexpensive as it helped commerce and literacy.

Today, much of the traditional letter writing has been replaced by email, and whilst this is quick and convenient, and in many cases free, it has limitations. The obligation still, however, means that there needs to be a single ‘affordable’ option, and whilst a lower value option is on the menu, they can continue to argue that relative to the higher option, it is affordable. This strange logic may well apply for some time to come and ensure the longevity of a second class stamp service.

*these prices are correct as of September 2021

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When it comes to the price of postage stamps in the UK, there has long been an ongoing debate regarding what makes 1st Class Royal Mail Stamp worth more than its lesser sibling: 2nd class stamp. While both have different prices and features, many people would say that such a difference is negligible or even non-existent at best. Let’s take a look at what might be a viable reason for the current price gap between these two services.

1st & 2nd Class Stamp Pricing

When it comes to the price of postage, a 2nd class stamp is undeniably better value. A first-class letter costs 85p while a second-class one runs 66p – both stamps are relatively good values when compared to rates in Europe and America and of course, this differential continues for both small and large parcels at 1st and 2nd class rates.

When comparing the costs to mail a letter domestically and internationally, it varies wildly depending on which country you are in. As an example, USPS I the United States of America is much cheaper than their EU counterparts. Typically, it only costs $1.15 USD for 1st class postage in America while rates range between €0.85-€2 ($1-$3) in Europe depending on what you are mailing (such as an A5 envelope or “large letters”).

The gap between current 1st and 2nd class stamp prices is quite large, with second class stamps costing 66p and 1st class stamps 85p (correct in September 2021). Historically, this differential has never been so large and increasingly it seems unjustified, but what it is based on?

Postal Delivery Services

According to Royal Mail, a letter will reach its destination within the UK with a 1st class stamp on it in one working day. A 2nd class stamp on your letter means that you can expect to receive it between two and three days, but most of the time, letters arrive at their destinations by the second workday after they were mailed out.

It’s only when you look closer at the process Royal Mail follows that you can see the differences, or lack of them. If you were to post two identical envelopes in a post box today, one with first class stamps on it and the other with a second class stamp on it, the chances are they would both arrive the next day.

The reason for this is that on collection, they are both put into the same bag, they are both sent to the sorting office where they are separated, albeit briefly, by their first and second class status. But then they are bundled together for onward distribution to the next delivery hub. So, a letter from London to Glasgow would make its way from the London Sorting office to the Glasgow Sorting office typically by road or rail. They don’t run separate trucks or trains for first and second class, it’s all bundled together, so both letters are going to the same place in the same bag.

When they arrive at the destination sorting office they are sorted into the rounds for postmen and women and sent out for delivery, hence they may well arrive together, despite being different postage rates.

Of course, this doesn’t happen all the time, there are obviously exceptions and times when second class will sit for an additional day on a sorting office floor. But not often. The postal service in the UK is quite efficient and they aim to clear all mail the day it arrives.

Is 1^st class postage worth it?

If you search online you will find that much is made of the fact that it is possible to claim up to £20 in compensation from Royal Mail it an item is lost in the pot and send first class. What they always miss, however, is that the same compensation exists if you’ve sent the item second class.

Sure, there are hurdles to jump through to claim for a lost item, not least of which a minimum 10 day hiatus whilst they wait to see if it turns up, but after that their compensation process is fairly straightforward.

Royal Mail makes a feature of the compensation on their website saying:

• Aims to deliver the next working day including Saturdays
• Includes compensation cover up to £20*
• Prices start at 85p for letters up to 100g
• Same price for all UK addresses

When you compare it to the 2^nd Class stamp list there’s not a great deal of difference:

• Delivery in two to three working days including Saturdays
• Includes compensation cover up to £20*
• Prices start at 66p for letters up to 100g
• Same price for all UK addresses

As you can see, the main difference is simply speed, but in today’s online and interconnected world, just how important is this, and given the nature of the distribution network, is it worth the premium?

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Even more swingeing is the rise in the price of a first-class stamp, which has gone up from 76p to 85p, a huge jump of 12%.

At the same time, they bemoan the ‘drop in mail volumes’ as driving the prices up.

Those of us who watch this carefully and indeed, talk regularly with local Roayl Mail staff, know all too well the pressures they are under. Forced to spend most of their time delivering parcels rather than letters, the rise of home deliveries during the pandemic of 2020 has seen postal workers stuck for space at the depots (parcels take up more space) and struggling to keep up with the subsequent parcel deliveries.

Given the competition they face in the parcel delivery space, it’s not hard to see why they would want to increase prices.

But here’s a thought, radical though it may be.

Increasing mail prices will simply further discourage people from sending mail. Eventually, it becomes so expensive that Royal Mail might seek to remove the Universal Obligation to deliver throughout the UK at a single price, and that would be a catastrophe.

So, why don’t we do the opposite, and reduce the price of letters? As mail volumes are declining, the percentage of their revenues will hardly take a huge hit. And by reducing prices and combining it with some clever marketing, you might just establish a service that people would increasingly use, is affordable and works for the entire country, rather than pricing it just for the well off, which is the way it is heading.

As I say, just a thought…

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The change is part of the annual price rise which Royal Mail applies to its service offerings in the UK and is placed alongside the rise of a first call stamp from 67p to 70p.

Despite the rise, the cost of mail in the UK still lags behind that charged in other parts of the world. Second class postage particularly, is still good value when compared to countries like Australia and Germany.

There are also corresponding rises in stamp prices across the boards and the following is a table of the current standard rates for postage in the UK.

Royal Mail 1st Class and 2nd Class Stamp Prices 2019

Includes compensation up to £20

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11.7bn letters were sent 2016-2017, a 5% decrease from the previous year, which is a larger decrease than the 4% decrease of previous years. This has caused a decrease in profit for Royal Mail of 221 thousand, another potential factor for the increase in stamp prices. However, it must be considered whether the increase in cost to the user is causing the decline in postage. Whilst price increases can be used to cover the loss of less customers, Royal Mail must identify the point at which consumers will refuse their service due to too high prices.

Another factor in the decline is the rise of the internet age. It has never been easier to send a message instantly across the world which could take an unknown amount of time by snail mail. Perhaps the future of post will lie only with parcels, with letters being mainly composed of legal documents and other such important paperwork of which a physical copy is needed. However, many companies now employ metered mail such as franking as a way to cut costs.

It is also important to consider the demographic of postal and internet users; typically, younger people prefer email and older people are more used to letters. As our population becomes an aging one, could we see a reversal, and thus an increase in postal usage? Also note that people are more trusting towards companies they can pinpoint, a reason why every company has to list its address.

Will the postal service go the way of the high street? Nowadays there are complaints on the lack of physical shop, a product of our love of internet shopping. A similar effect could occur with our treasured postal service; this opening could open the way for private companies to expand into the market.

Stamps bought before the change will still be useable without the need for extra stamps to increase their value.

1st class stamps have also risen in price by 2p. to 67p. These prices should remain stable until March 2019.

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