‘Unexpected’ Royal Mail price hikes are forcing Manchester City Council to overhaul its mail-handling system and rule out sending first-class post.
The decision was agreed yesterday after price rises were estimated to increase mail-handling bills by £200,000 – a sum not planned for in the council’s budget.
The new prices came into effect in April, with 30% increases in the cost of stamps, 20% for posting large letters first-class and 19% for second-class.
A first-class stamp now costs 60p and a second-class stamp 50p, an increase of 14p per stamp.
Cllr Carl Ollerhead sits on the Finance Scrutiny Committee which discussed a report on the issue.
He said: “A second-class stamp in Manchester, mainly if not all the time, arrives at the same time as a first-class stamp so instantly that was identified as one way to save money.”
On top of the switch to second-class the council is also planning to reform the way it processes mail.
One aspect of the plan is to centralise outgoing post by purchasing a ‘Hybrid Mail System’ costing £200,000 over a four year period.
The new electronic system is estimated to deliver savings of around £257,000 a year to the council’s current outgoing mail costs of £1.6million.
Cllr Ollerhead said: “The report today presented quite a positive outlook, and if delivered it could actually save us money and cut carbon emissions
“It’s going to help the council in difficult times. We’re scrimping for every penny because of the £120million of budget cuts from central government.
Although the council has no alternative plan if costs are greater than anticipated, Cllr Ollerhead believes savings from the new system will cover even worse case scenarios.
He said: “There’s no contingency plan that has been presented to us, however if you look at the savings and the offset of the new machinery in actual fact even if prices increase further I think it gives us a good cushion.”
Other measures to reduce the impact of the price rises include an emphasis on digital communication, and the phasing out of stamps and Franking machines.
The timescale of the overhaul is unclear at present as council officers are still finalising the finer details of the plan.