Looming Rate Hike Angers U.K. DMers
PORPOSED postal rate increases in the United Kingdom have sparked criticism by the direct marketing industry as well as calls for their immediate withdrawal. Urgent lobbying of the government is taking place in an effort to postone the changes. David Robottom, business development director at the U.K. Direct Marketing Association, describes the proposals as “outrageous.”
The post office, which is required to give three months; notice of any rate changes, sent the increases to the U.K. Department for Trade and Industry (DTI) for approval this past December. They have now been circulated via the Post Office Users’ National Council. Higher rates are proposed for first class mail, heavy items and special services. Second class rates would stay the same.
The timing of the hike, in particular, has drawn fire from DMers.
“They are jumping the gun,” says Robottom. At press time, an announcement was imminent regarding the appointment of a new regulator to oversee U.K. postal services. This follows the white paper published last year that gave the post office greater commercial freedom, but made it subject to regulation.
“That is one of the points we have made in writing to Stephen Byers, the DTI minister -the increase should be put on hold until the new regulator is on board,” adds Robottom. He believes the post office is deliberately taking advantage of this opportunity to institute higher prices that might not pass muster in the new regime.
This year will see legislation passed that puts the U.K.’s postal administration on a new footing. It will become a private, limited company, but with the U.K. government its sole shareholder. While the post office is already free to act somewhat more freely, it won’t be subject to regulation until the new bill is passed.
One of the most important issues the incoming regulator likely will have to deal with is postal rates. The U.K. DM industry has long been calling for direct mail rates that reflect a true cost base, and for those rates to be separated from the public tariff. This has been forbidden, but it may be possible under the new setup.
On the other hand, the U.K. post office has argued that it would lose much revenue by taking that route. The DM industry counters that direct mail volume would grow, balancing the losses.
The Direct Marketing Association is seeking to meet with the DTI, but it’s not clear whether there is any mechanism for such a summit.
