GCA Lobbying Updates March 2023
March was a busy month, not only with preparations for one of the key dates in our calendar, Mother’s Day, but with increased activity around the Royal Mail issue, including the announcement of stamp price increases.
March 3rd – Royal Mail announces further above-inflation price increase
Royal Mail’s announcement on 3rd March of a further, above inflation increase in the price of a 1st class stamp to £1.10, with a 2nd class stamp rising to 75p was hugely disappointing. Particularly following on from a period of strikes that have had such a detrimental effect on Letters delivery, significantly reducing the amount of mail posted during the peak Christmas period of 2022.
The GCA has already taken this up with Government and is in touch with Royal Mail and other stakeholders.
GCA raises price issue and general Royal Mail situation with Minister
GCA CEO Amanda Fergusson attended a meeting of the IRC (Independent Retailers Confederation), with fellow members of the group sharing the GCA’s concerns about Royal Mail and also taking action. This meeting was attended by Kevin Hollinrake MP, Parliamentary Under Secretary of State (Minister for Small Business, Consumers and Labour Markets)
The Minister highlighted his own small business background and the commitment he has to supporting business. Amanda opened by giving an insight into the world leading UK greeting card industry, comprised of small and medium sized businesses and referred to the letter exchange in November, where the GCA had outlined the greeting card industry’s concerns about the ongoing Royal Mail strikes and the proposed move to 5 day a week delivery. The Minister responded saying that government understood the importance of Royal Mail’s service and their support for the USO .
Amanda then spoke about the impact strikes on the industry, and consumers, over Christmas, moving on to the news about the further price rises announced last week and its impact. Saying “many of our members are suggesting that it could be construed that Royal Mail are raising prices to artificially stifle demand, because they see this as the easiest way to get products removed from price caps and therefore maximise profits over the medium term. They are therefore wondering if perhaps the regulator could have done more to safeguard the postal service and avoid this situation. We ask government to consider the benefits to the country of a more robust stance in relation to these price rises”.
In response, the Minister stated that the USO is not negotiable, and Royal Mail have not made the case that the current model is unsustainable. He also talked about regulation around second-class stamps which limits the Royal Mail’s ability to increase the price. He finished by saying that he “understands the [greeting card] industries concern and the points made”, and he’s “going to take it away”.
Other subjects discussed included energy, business rates, recruitment, and employment and financial services for independent retailers.
The Minister has committed to quarterly meetings with the IRC, the next meeting is in June, please do contact us with any business examples or issues you’d like Amanda to raise at the next meeting.
March 7th – GCA writes to Secretary of State Kevin Hollinrake highlighting industry concern
Following the meeting Amanda wrote to the Minister, on behalf of the industry. The full letter can be downloaded below.
It could be construed that Royal Mail’s new management team have embarked on a deliberate strategy to raise Letter prices, safe in the knowledge UK consumers have no alternative, until First Class post, in particular, becomes unsustainable. This entirely engineered outcome could then be used to say ‘demand no longer exists’, freeing Royal Mail from further USO obligations, and increasing Royal Mail’s profits at the expense of the British public.
It is against this context that many of our members are wondering if the regulator could have done more to safeguard against this situation. We ask government to consider the benefits to the country of a more robust stance in relation to these price rises.
Amanda Fergusson, ceo GCA
March 29th – Response from Secretary of State
The Secretary of State responded on 29th March, saying that
….as a private business, Royal Mail’s management sets the prices for its services. The Government does not have a role in the company’s day-to-day commercial or operational decisions. In setting its prices however, Royal Mail must work within the regulatory framework set by Ofcom, the independent regulator”
Kevin Hollingrake MP, Parliamentary Under Secretary of State to the GCA
Under Secretary of State Kevin Hollinrake MP’s letter to GCA’s Amanda Fergusson 29th March 2023
For full report see PGBuzz
GCA responds to Parliamentary committee’s direction of Ofcom to investigate Royal Mail and the USO
On 17th March, ahead of Mother’s Day, the GCA issued a press release in response to a government report that Royal Mail has deprioritised delivery of letters as a matter of company policy.
The Business, Energy and Industrial Strategy (BEIS) Select Committee, led by Darren Jones MP, had called for Ofcom to investigate Royal Mail.
[Royal Mail] has systemically failed to deliver against parts of its USO. The evidence suggests that this practice has taken place not just during periods of industrial action but since the start of the pandemic, if not earlier.
We therefore call on Ofcom to undertake an enforcement investigation into Royal Mail’s delivery of the USO and to report to this committee by the end of 2023.
House of Commons BEIS Committee 17th March 2023
The BEIS Commons Select Committee called Royal Mail CEO Simon Thompson in for questioning on the issues relating to Royal Mail’s current performance under the USO. The BEIS Committee also called on government to engage with Royal Mail, following the outcome of Ofcom’s enforcement investigation “to secure the future of the Universal Service Obligation and Royal Mail; and to provide an initial report to this committee no later than the end of 2024“.
The GCA responded to this, with the lead on the GCA Royal Mail sub-committee, GCA Council Member and co-owner of Cardology, David Falkner, commenting that the GCA looks forward to contributing to the subsequent government report and reviewing the findings of Ofcom’s investigation.
With Mother’s Day around the corner, [the] publication of the Business, Energy and Industrial Strategy Committee’s report into recent postal service performance is a timely reminder of how much we Brits rely on sending cards to retain the emotional connections so important to our lives
David Falkner, GCA Council Member and co-owner of Cardology
The GCA also welcomes the committee’s call to Royal Mail’s board to reflect on its decision to exclude the delivery of the USO from the long-term pay and incentive structure for its senior managers, a recommendation the industry association believes is vital to the public interest.
Download the press release below and see PGBuzz for the full report.
Members, please do contact us to share your thoughts, if you have additional concerns or would like to discuss anything further. Please contact Amanda at amanda@gca.cards
Further Information
GCA ensures industry voice heard – a summary of the issues and why we need to be concerned as an industry
Royal Mail and Ofcom Updates 2022- Feb 23 – GCA lobbying activity and correspondence.
For details on Royal Mail move to QR-coded stamps in July 2023.
