The price of a first class stamp could rise above £1 for the first time in history unless the government ends the requirement for Royal Mail to deliver on Saturdays, the company has warned.
First class stamps rose by 10p in March to 95p but the delivery service has warned it will need further price hikes to stay in business if the six-day post mandate remains in place.
Grant Shapps, the business secretary, told a House of Commons committee this week that there were no plans to axe Saturday rounds.
Royal Mail wants to make the change as people send fewer letters. The service, sold by the government between 2013 and 2015, is also competing in a more diverse market with rivals including Amazon and Evri.
Keith Williams, Royal Mail chair, said the company was facing the choice of a “considerable” increase in stamp prices in order to be able to keep up its current service.
Speaking to The Daily Telegraph, he said: “The cost to us is driven in part by [the fact that the] volume of letters has declined.
“You're delivering the same number of letters over six days when you could be doing it over five. So that is forcing up stamp prices.”
Asked how much first-class stamps would have to rise if Saturday letters continued, Mr Williams said: “It's considerable.
“The quid pro quo here is actually stamp prices.”
Mr Williams pointed to research by Royal Mail regulator Ofcom that found 97 per cent of people were happy with a five-day postal service.
At a business select committee meeting on Tuesday, Mr Shapps said the matter of Royal Mail’s six-day schedule was a matter for Ofcom. “It is not an issue directly for ministers at this time and if it were, then it would have to go through Parliament, so it would be an issue for all of us,” he said.
But, he added, “there are no plans to switch from six-day delivery.”
Asked about the remarks by Mr Williams, a Royal Mail spokesperson, said: “No decisions have yet been made on future stamp prices.”
Royal Mail staff are striking on 23 and 24 December in a dispute over pay and working conditions. Members of the Communication Workers Union rejected a 2 per cent pay offer.
Postal workers in the union previously walked out on 9, 11, 14 and 15 December.
