Postal changes worry small firms

Smaller businesses are concerned that changes to the Royal Mail's postage rates this month will increase costs and mean more administration.

Currently, the cost of sending mail is based purely on the weight of the item being sent, but from August 21 when Pricing in Proportion (PIP) is introduced, the size, length, thickness and weight of the item will all be taken into account when considering the cost of postage.

The mail will be divided and priced according to three categories: letters (maximum thickness 5mm) will cost 32p; larger letters, such as magazines (maximum thickness 25mm) will cost 44p; and packets (anything bigger than a large letter) will cost between £1 and £4.74.

The Royal Mail claims that more than 80 per cent of all mail will cost the same or less to send. However, a survey by the Forum of Private Business (FPB) claims that small businesses do not think the changes will reduce their costs.

FPB's research analyst Andy Mowlah said: "It's rather ironic that this new system is designed in part to cut costs yet 60 per cent of respondents thought it would actually increase them."

Mr Mowlah said the administrative cost of the new system would also be a burden: "Sixty per cent of respondents thought the new system would mean extra time spent in administration, while half didn't realise they may have to purchase a new franking machine."