Tag: UK

A rise in stamp prices would come on top of five increases in first-class stamp costs in less then three years, including a 30p increase to £1.65 last month. …reports Asian Lite News

The company that owns Royal Mail is considering job cuts and price rises on stamps and parcels as it blamed the Labour government’s first budget in 14 years for adding £120m to its costs. 

International Distribution Services (IDS) said the government’s decision to raise employers’ national insurance contributions (NICs) compounded challenges for the business as it faces one of the most turbulent periods in the history of its 508-year-old subsidiary, the Royal Mail. 

The group, which is the subject of a takeover bid, took a £134m writedown on the value of Royal Mail and said the NICs changes would cost the business about £120m a year from 2025-26. Royal Mail is one of the UK’s largest employers, with 130,000 staff. 

Martin Seidenberg, its chief executive, said: “We’re seeing quite a massive burden coming our way in terms of the national insurance increase. We are looking at a bunch of measures, and it’s just too early to say what we’re going to do exactly. 

“I cannot rule out any price increases, but it’s not just about consumer stamps. We are looking at all products … that includes parcels and also business mail.” 

Seidenberg said job cuts were also on the table. “We are looking at all options. But anything that does impact our people would be a last resort, but we’re working through the details of the impact,” he added. 

A rise in stamp prices would come on top of five increases in first-class stamp costs in less then three years, including a 30p increase to £1.65 last month. 

Seidenberg was speaking as IDS posted half-year results that showed a significant improvement, with overall operating losses of £26m massively reduced from the £243m deficit recorded at this point last year. 

IDS reported a 10% rise in revenues to £6.4bn in the 26 weeks to the end of September. It said it had achieved an adjusted operating profit of £61m when stripping out one-off factors. 

“We are delivering on the changes we can control, but the cost environment is worsening just at the time when we need to invest,” said Seidenberg. 

The company said the impending increase to costs bolstered its case for reform of the universal service obligation (USO), the rules governing when and how often Royal Mail must deliver in the UK. The company is required to deliver post from Monday to Saturday nationwide under the terms of the USO. 

Amid a long-running series of industrial disputes with the company, the Communication Workers Union has so far opposed cost-cutting plans to pare back it services. However, Royal Mail has put forward a plan to reduce second-class deliveries to alternate weekdays. 

These disputes were among the factors contributing to the company plunging to a £1bn loss in the year to March 2023. 

Soon after, the company lost its 360-year monopoly on the delivery of parcels from Post Office sites, while it has also faced heavy criticism for failing to deliver 80% of first-class letters on time. 

This year, IDS agreed to a £3.6bn takeover offer from the Czech billionaire Daniel Křetínský, prompting the government to examine the potential impact on UK infrastructure from the deal and scrutinise any national security risks. Křetínský is still awaiting the government’s verdict, though IDS bosses said on Thursday that they expected the deal to complete by March next year. 

Křetínský has vowed to slash costs at the company and restore it to a sound financial footing, in a protracted takeover saga that started in April. 

Meanwhile, Royal Mail has been accused of being “shortsighted” and risking a drop in the number of charity Christmas cards sent this year as it increases stamp prices for the fifth time in less than three years. 

The price of a first-class stamp will rise by 30p on Monday, to £1.65, far outstripping the rate of inflation. Second-class stamps will remain at 85p. 

The increase adds to a 10p rise in the cost of first- and second-class stamps in April, which took them to £1.35 and 85p respectively. 

The rise in stamp prices has triggered fears that the amount of money reaching charities through greetings cards will be curbed this Christmas. 

Christine Ansell, the chief executive of the charity card specialist Cards for Good Causes, said: “We already know that the general public’s funds are vastly reduced due to the cost of living crisis, so making it more difficult to send greetings cards quickly and affordably will mean shoppers are less likely to spend with us this Christmas.” 

Cards for Good Causes is a non-profit trading subsidiary of the 1959 Group of Charities, an organisation includes Cancer Research UK, Barnardo’s and the British Heart Foundation. Its cards are sold online and at Christmas pop-up stores, and it has raised £22m for charities over the last decade. 

The price increase will have a “direct impact” on the funds Ansell’s charity is able to raise, and take an emotional toll on the recipients of greetings cards – many of whom are elderly and socially isolated, she said. 

She added: “Posties are unsung heroes in a society like ours where loneliness is on the rise, and receiving a handwritten card can be the equivalent of a hug for those experiencing social isolation. Royal Mail is being very shortsighted – an affordable, reliable postal service is essential for the UK’s financial and emotional wellbeing, and a lifeline for the socially isolated.” 

Last month, Citizens Advice called on the communications regulator, Ofcom, to hold Royal Mail to account and stop “letting the company get away with setting rocketing prices in the wake of half a decade of missed delivery targets”. 

Royal Mail has been missing delivery targets and is lobbying Ofcom to be allowed to reduce second-class deliveries to alternate weekdays to save costs. 

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The deal was announced by the government alongside an update to the warm homes plan, which provides money for people looking to make their homes more energy-efficient….reports Asian Lite News

Energy suppliers will spend £500m helping customers with their energy bills this winter, after the government helped broker a deal involving 12 of the biggest companies in the UK. Suppliers will spend the money in a variety of ways, including putting credit on some customers’ bills, writing off the debts of others and putting credit on prepayment meters. 

Ministers are hoping the deal will help to soften the impact of the decision to cut winter fuel payments for 10 million pensioners, which the government admitted on Tuesday would push 100,000 more people into relative poverty by the end of the decade. 

The deal was announced by the government alongside an update to the warm homes plan, which provides money for people looking to make their homes more energy-efficient. Sources say that together the schemes will amount to £1bn in support to bring down household energy bills. 

A government source said: “We recognise bills are too high and people are struggling. The long-term plan is to move to clean power by 2030, which will take away the rollercoaster of bills going up and down in response to supply shocks. But in the transition to that there is still stuff we can do to help with bills.” 

Dhara Vyas, the chief executive of the industry group Energy UK said: “We are looking at another difficult winter for a lot of people and we are aware that bills are high and also that debt is increasing. I am really pleased that the industry has made more available than ever before.” 

Ministers continue to face pressure over the cost of living, with consumer price inflation having risen to 2.3% last month, above the Bank of England’s 2% target. Ofgem, the energy regulator, is expected on Friday to raise the quarterly industry price cap for January. Cornwall Insight, the energy consultancy, has said it expects Ofgem to announce that the average household’s energy bills will rise by 1% from £1,717 to £1,736 on 1 January. 

Labour promised in opposition that its energy plans would bring bills down by £300 by the end of the decade, but has said relatively little about that pledge since entering government. Modelling released by the Department for Work and Pensions on Monday showed that the cuts to winter fuel payments would push 50,000 more pensioners into relative poverty next year, and an additional 50,000 by the end of the decade. The payments were due to start being made into pensioners’ bank accounts this month. 

Energy suppliers announce measures to help customers manage through the winter every year, but government sources said they had pushed them to go further this time. They said it was the first time the industry body, Energy UK, had helped the government to coordinate winter support on this scale. 

Some of the money, much of which is due to come from the big six suppliers, will go to charities helping more vulnerable customers. 

Sources also said the energy price cap would prevent companies from putting other customers’ bills up to help pay for the support packages. Instead, some are understood to be financing the move through reserves, loan facilities or smaller profit margins. 

The government has also announced more details of its warm homes plan, under which households will be able to claim £7,500 to buy a heat pump to replace their existing boiler. Changes to the scheme will also mean households no longer have to apply for planning permission to install one.

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The announcement was described by the shadow defence secretary, James Cartlidge, as “cuts instead of a pathway to 2.5%” and “a black day for the Royal Marines”….reports Asian Lite News

The defence secretary, John Healey, has announced he will scrap £500m of British navy vessels and army drones as part of cost-saving measures in what was described as a “black day” for the new government. 

Two former Royal Navy flagships, a frigate and two support tankers will be decommissioned, with the savings reinvested into the defence budget. Healey blamed the move on a “dire inheritance” left by the previous Tory administration. 

The announcement was described by the shadow defence secretary, James Cartlidge, as “cuts instead of a pathway to 2.5%” and “a black day for the Royal Marines”. 

The government said it would raise UK defence spending to 2.5% of GDP, but is yet to provide an end date for the initiative. As part of the measures, the assault ships HMS Albion and HMS Bulwark will be decommissioned. 

Julian Lewis, the chair of the intelligence and security committee, asked the defence secretary: “Does he agree with me that we have no way of knowing whether the absence of that capability for the next decade won’t be an incentive to somebody to try something like the Falklands in the future?” 

Healey responded: “On HMS Albion and HMS Bulwark, he is right. Both ships were not due to go out of service for nine and 10 years respectively, but neither, given the state they’re in, the decisions taken previously by the last government, were set to sail again. In other words, they’d, in practice, been taken out of service, but ministers had not been willing to admit this.” 

Healey claimed that amphibious capability would be provided by remaining ships and the £9m a year that would be saved would be focused on the development of support ships that promised “greater capability” and “a broader range of ability for the future”. 

The cuts will also have an impact on the provision of helicopters, with the 14 oldest chinook transport aircraft removed early from service and the Puma’s lifespan not being extended beyond March 2025. 

Healey said: “This acceleration of their retirement will apply to the 14 oldest helicopters in the fleet of more than 50. Some of those are more than 35 years old, and it means that these oldest 14 will be retired at the point where they are due to enter a costly maintenance package – that will not happen. It means that we can speed up the transition to the new, much more capable chinooks that will arrive, and it also means that we can save money for defence that we can redeploy to other purposes.” 

Healey informed MPs that he had spoken with his Ukrainian counterpart, Rustem Umerov, in Kyiv on Tuesday and they had discussed the UK’s plan to provide support. 

He said: “We’ve seen over recent weeks significant change in the action and in the rhetoric on Ukraine, and Ukraine’s action on the battlefield speaks for itself. We as a nation and as a government are doubling down on our support for Ukraine and determined to do more. I discussed this with Minister Umerov in a call yesterday [Tuesday] where he talked about the robust response that Ukraine is making to recent Russian escalations. That’s the escalation in the attacks on Ukrainian cities and children, the escalation in attacks on their energy system and the escalation with deploying 10,000 North Korean troops in combat positions on the frontline. We discussed also our plans as the UK to support them throughout 2025. I remain committed to keeping parliament as fully informed as possible and [the shadow defence secretary] and the house I think will understand the reasons why at this point, I’m not able to go into any further operational details.” 

The army fleet of 47 Watchkeeper drones is also being culled, even though they have only been in service for six years. A UK defence source said that it would allow the MoD to exploit the more modern technology used in Ukraine. 

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If it continues to rise in the coming months, Labour will be forced to defend itself against Tory claims that government policy is at least partly responsible. …reports Asian Lite News

Any lingering hope that the Bank of England might deliver a pre-Christmas interest rate cut next month has evaporated, after official data showed inflation jumping to 2.3% in October. 

If it continues to rise in the coming months, Labour will be forced to defend itself against Tory claims that government policy is at least partly responsible. 

The CPI measure had been expected to creep up, after dipping to 1.7% in September, but 2.3% was stronger than predicted. September was the first time inflation had fallen below the Bank’s 2% target since July 2021, and looks likely to be the last for a while. Not surprisingly, the Conservatives are keen to hammer home the message that any increase from now on is down to Labour. 

As the shadow chancellor, Mel Stride, put it in response to Wednesday’s figures: “Labour’s budget will push up inflation and mortgage rates.” It is a bold strategy from the party that gave us Liz Truss, as Labour will remind voters at every opportunity. 

Much of the explanation for last month’s jump in inflation lies in energy prices, with Ofgem’s quarterly price cap rising from October – in contrast with the same period last year, when utility bills were falling rapidly from the peak hit following Russia’s invasion of Ukraine. Electricity prices rose by 7.7% in October, the ONS said, having fallen by 7.5% last year. Gas prices increased by 11.7% in October, having fallen 7% last year. 

But there may be some truth in the coming months in the argument that the government has given inflation a (modest) boost. The Office for Budget Responsibility (OBR) has suggested Rachel Reeves’s budget package could increase inflation by about 0.5%, including through stronger growth, resulting from higher-than-expected government spending. 

The Bank’s governor, Andrew Bailey, has also made clear that he and his MPC colleagues would be closely monitoring how the policy changes were likely to affect the path of GDP and inflation. 

Retailers have said they expect to increase prices as they absorb the costs of rising employer national insurance contributions, the biggest money-raiser in the budget, which starts next April.  

Against that backdrop, economists now confidently expect the Bank’s monetary policy committee (MPC) to wait until the new year before going further, after cutting rates to 4.75% earlier this month. 

Donald Trump’s arrival in the White House is also giving policymakers pause: if he presses ahead with across-the-board tariffs, the short-term impact at least is likely to be inflationary. 

Responding to the inflation data on Wednesday, the chief secretary to the Treasury, Darren Jones, emphasised that the government knew there was still “more to do”, pointing to measures including the significant increase in the “national living wage”, due in April. 

The increase in CPI was not unexpected; but as the UK enters a cold snap, with energy bills on the rise, the government will be conscious that cash-strapped households are still feeling the pinch. 

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