Franking & the Royal Mail Sell-Off

On the 10th July 2013, Business Secretary Vince Cable confirmed that the government will sell Royal Mail through a flotation on the London Stock Exchange. The sale is likely to value the business at £2bn-£3bn.

Mr Cable told MPs that employees would be given 10% of shares for free, and the public will be able to buy shares. There is expected to be a windfall worth more than £2,000 each for the 150,000-strong workforce.

“Now the time has come for the government to step back from Royal Mail,” Mr Cable said.

“It’s been turned round in the last two or three years, and it’s ready now to be a successful commercial business,” he said.

But how does this affect the normal business that is currently using postal services through the franking machine?

The key point is that ccontrary to what is being claimed, after a sale, Royal Mail will still be the UK’s universal service provider. This means services such services such as 2nd class mail will be still be same price regardless of where in the UK the letter is being delivered.

This is important for franking machine users as the difference between using a 2nd Class stamp and a 2nd Class franking machine will still remain large, whilst still maintaining the level of service required. Currently the discount between is 34% and this expected to grow after privatization.

Dr Adam Marshall, from the British Chambers of Commerce commented; “Many services currently delivered by the public sector can be delivered effectively and efficiently by private companies. In the case of Royal Mail, the key is to ensure that privatization delivers value-for-money to the taxpayer, and maintains the universal service obligation that sustains both businesses and individuals alike.”

Also, a boom in parcel delivery helped Royal Mail to more than double its profits last year, after many years of losses. With this in mind, the Royal Mail has changed the dimensions and postal rates for the packets/parcels from the 1st April 2013. It is likely these changes will continue post privatisation market to become more competitive in the home shopping market. Franking machines need to upgrade to a SMART franking machine with product selection to ensure that any changes and automatically applied to their machine so they receive the maximum possible discount.

Andrew Parmenter, Marketing Manager from the Mailing Room commented; “We welcome the news of the future privatisation of the Royal Mail, and in particular that the Universal service obligation will continue. This will ensure that franking machine users will continue to pay the lowest available postal cost for each item they send, both now and post privatisation”

For more information on SMART franking, please contact The Mailing Room on 0800 0192 033 or visit www.themailingroom.com