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New Machins for PiP

Six new Machins were issued on August 1, 2006 to prepare for Pricing in Proportion (PiP), the new pricing scheme that followed on August 21. Three of those stamps are pictured here, and details are given below.

1st gold standard PiP Machin 2nd blue large PiP Machin 14p salmon Machin

Description Color Phosphor Printer Service
1st Letter Gold 2 bands De La Rue First class (standard) letters to 100g (first step)
2nd Letter Light Blue 1 center band De La Rue Second class (standard) letters to 100g (first step)
1st Large Letter Gold 2 bands De La Rue First class large letters to 100g (first step)
2nd Large Letter Light Blue 2 bands De La Rue Second class large letters to 100g (first step)
12p Dark Turquoise 2 bands De La Rue Make-up rate between first class letters and large letters
14p Salmon Pink 2 bands De La Rue Make-up rate between second class letters and large letters

The NVI (non-value indicated or non-denominated) Machins have been redesigned. The stamps for letters (sometimes called standard letters) are the same size as regular Machins but the Queen’s portrait has been made smaller to leave room for the large service indicator at top left. The stamps for large letters are a new size for British definitives, horizontally-oriented and measuring 30mm x 24mm, compared to the normal vertically-oriented 20mm x 24mm. The Queen’s portrait is a bit larger than it is on the smaller NVI. The numeral is also larger, although, surprisingly, the letters “ND” are the same size as “ST” on the smaller stamp. The word “Large” appears at lower left, under the service indicator.

The denominated Machins have the usual size and design. All of the sheet stamps issued on August 1 were printed by De La Rue, who also prints all other Machins. The new NVI’s were designed by the firm CDT.

The new NVI’s are being issued in all formats. In addition to the regular, water-activated stamps in sheets, there are booklets, coils, and self-adhesive business sheets. The coils also have water-activated gum; the booklets and business sheets are self-adhesive. The booklets are printed by Walsall; printers of the other formats have not yet been announced. The booklet containing four second-class stamps for large letters is shown below.

2nd class PiP booklet inside
2nd class PiP booklet cover

The table below shows the issue dates that have occurred or been announced as of this writing.

  1st Letter 2nd Letter 1st Large Letter 2nd Large Letter
Regular sheet
of 200 (letter) or
100 (large letter)
August 1 August 1 August 1 August 1
Booklet of 4     August 15 August 15
Booklet of 6 September 12
(Note 1)
Booklet of 12 September 12 September 12    
Business sheet of 100 September 12 September 12    
Business sheet of 50     June 5, 2007 June 5, 2007
Coil of 500 November 14 August 15    
Coil of 1000 October 3 October 3    

NOTE 1: This booklet will be replaced on October 2 with a revised version that has a label promoting stamp collecting on the inside front cover.

The fact that these NVI’s are being issued in all formats indicates that the older NVI’s with the traditional (dare I call it that?) Machin design are being phased out, although they would remain valid for postal use. I’ve seen no announcement of this, but it seems apparent. The new first-class NVI will also appear in the prestige booklet accompanying the Victoria Cross issue on September 12.

It is only logical to ask whether Royal Mail might replace all the Machins with this new design featuring the large numerals. We will just have to wait and see. (Posted September 22, 2006. Updated several times, most recently March 24, 2007 with the dates for the business sheets of 50.) top

Royal Mail’s new scheme is a PiP

PiP On August 21, 2006, Royal Mail will introduce a new pricing method for postage. Called “Pricing in Proportion (PiP),” it considers both the weight and size of an item in calculating the cost to mail the item.

Royal Mail calls this pricing structure both more logical and more reflective of true costs. Postcomm, the organization that regulates Royal Mail’s prices and approved this change, is calling this the “biggest shake up to the postal system since the Penny Black.”

The rates shown here are the actual rates that will take effect.

Inland mail will be divided into three categories: letters, large letters, and packets.

Letters have a maximum size of 240mm x 165mm, thickness of 5mm, and weight of 100g. (That translates to about 10 inches by 7 inches by 1/5 inch and weight of 3 1/2 ounces for us Americans.) This includes most regular letters, postcards, bills and greeting cards. [Note: Royal Mail uses the term “letters”, but many people are describing this size as “standard letters” to distinguish them from “large letters.”]

Letters will cost 32p for first-class service and 23p for second-class. These rates are equivalent to the ones that took effect on April 3, 2006 for letters of any size weighing less than 60g, so it represents a rate decrease for letters between 60g and 100g that meet the size limits.

Weight Range First Class PiP Second Class PiP
0-100g 32p 23p

Large letters have a maximum size of 353mm x 250mm and thickness of 25mm (about 14 inches by 10 inches by 1 inch). There are four weight groups, and rates are shown below. The maximum weight is 750g (about 1 pound, 11 ounces). Included in this category are envelopes with unfolded letter-size paper (in Great Britain these are called A4 size, roughly 8in x 12in), large greeting cards, most brochures, CDs and DVDs, and some catalogs and magazines.

Weight Range First Class PiP Second Class PiP
0-100g 44p 37p
101-250g 65p 55p
251-500g 90p 75p
501-750g £1.31p £1.09

Packets are items bigger than large letters and weighing up to 1 kilogram (2.2 pounds). There are six weight groups shown in the table below. Included in this category are books, parts and samples, VHS cassettes, prints and posters. Prices for weight above 1 kg are available for certain products.

Weight Range First Class PiP Second Class PiP
0-100g £1.00 84p
101-250g £1.27 £1.09
251-500g £1.70 £1.39
501-750g £2.20 £1.77
751-1kg £2.70 £2.12
1kg-1.25kg £4.74 not available
each add’l 250g 85p not available

Presumably, items that are too heavy for their size category will be sent at the next higher category; for example, a letter that weighs over 100g will be sent as a large letter.

Shortly before the introduction of Pricing in Proportion, Royal Mail will launch a major communication program designed to educate its customers about the changes. As part of this program, paper template guides will be delivered to every household in the U.K. and will also be available for download from the web. Business customers may also request a cardboard version of the template guide.

Royal Mail says this change is necessary to align its rates more closely with its costs. Large items cost more to handle than small ones, even if the large items weigh little. Large items take up more space in mailbags and vans. If the item is too large to fit in a recipient’s letterbox, it will have to be taken back to the post office and the customer notified to pick it up.

Thickness also plays a part in determining cost. The thickness of 5mm is the limit for the majority of the mail sorting machines used by Royal Mail. Workstations in mail centers and delivery offices can handle items up to 25mm thick. Items thicker than 25mm must be processed by hand.

Further, this change is necessary for Royal Mail to compete with private businesses that were allowed to enter the market for letter mail delivery services starting January 1, 2006.

This change is designed to be revenue-neutral, that is, it does not create an overall increase in revenue. According to Royal Mail, 70% of mailed items will cost the same as before, and among the other 30%, some will cost more and others less. For individual customers sending stamped mail, the change will affect an estimated 20% of items.

Eventually, international mail will also convert to the same scheme with the concurrent elimination of the two different zones. Further details will be announced later.

Obviously, this change will hit some mailers harder than others. Royal Mail has agreed to mitigate the effects of the increase on businesses that spend more than £100,000 a year in postage costs and whose overall cost increases more than 50%. The mitigation is in the form of a rebate of 40% of the increase in the first year and 20% in the second year.

Lorna Clarkson, Director of Commercial Policy and Pricing at Royal Mail, said:

This new system will be fairer for customers, as well as more accurately reflect the costs to our business. This change is taking place after a long consultation process involving thousands of our customers.

We need to be able to set our prices to cover our costs and to generate revenue to invest in our company and our people. A fair and flexible pricing system is key to Royal Mail being able to maintain the services on which we all depend as consumers.

This takes us one step closer to a fair and flexible pricing system that will allow us to compete for the profitable business mail that will safeguard the one-price-goes-anywhere service that is Royal Mail’s unique strength.

However, much more needs to be done. Royal Mail will be fighting very hard to achieve fair, fully cost reflective prices in the current price control negotiations with Postcomm.

Some press reports indicate that Royal Mail considers this change “too little, too late.”

Royal Mail reported a loss of £235 million on stamped mail in the 2004-2005 fiscal year. That equates to 5p on every item of first-class mail and 8p on each item of second-class mail.

An earlier, similar proposed program was called “Size-based Pricing,” but this was not approved by the regulatory group Postcomm after consultation with mailers. The second proposal came with a new name, reflecting the fact that prices were in proportion to Royal Mail’s costs.

Stamp collectors will have some new stamps as a result of this program. Standard Machins will be issued in 12p and 14p denominations. Twelve pence is the difference between the basic first-class rate for a letter and a large letter, and 14p is the difference between the second-class rates for letters and large letters. There will also be new non-denominated (NVI) stamps for the basic rates for first- and second-class letters and large letters. These will have a completely new design, although they will include the Machin head.

UPDATE: Linn’s Stamp News reports that the USPS plans to implement size-based pricing in the rate increase expected to take effect in May, 2007. Details are not yet finalized, but mailed items that cannot be processed by USPS machinery will cost more to mail. (Posted February 5, 2006. Updated October 7, 2006.) top

New Machins and Regionals for rate increase

The April 3 rate increase requires several new definitive stamps. The new stamps will be issued March 28 and are described below.

Description Color Phosphor Printer Service
37p Machin Olive Green 1 center band De La Rue Second class 60g to 100g (second step)
44p Machin Ultramarine 2 bands De La Rue Europe airmail postcards and letters to 20g (first step)
49p Machin Rust 2 bands De La Rue First class 60g to 100g (second step)
72p Machin Red 1 center band De La Rue Worldwide airmail 20g to 40g (second step)
44p Pictorial Regionals Multicolor 2 bands De La Rue Europe airmail postcards and letters to 20g (first step)
72p Pictorial Regionals Multicolor 2 bands De La Rue Worldwide airmail 20g to 40g (second step)

49p Machin The basic (first weight step) UK first and second class rates (letters to 60g), which are now 32p and 23p respectively, will continue to be paid by non-denominated (non-value indicated or NVI) definitives. The make-up amount of 9p between those two rates continues to be paid by the 9p orange issued last year.

The second weight step (up to 40g) for airmail letters to Europe, now 64p, and the third weight step (up to 40g) for worldwide airmail letters to Zone 2, now £1.19, continue to be paid by the international one-stop stamps. The first weight step (letters up to 10g and postcards) for worldwide airmail, now 50p, is also paid by a one-stop (formerly universal) stamp and by the 50p sand Machin that remains on sale to act as a general makeup value.

All of the new stamps will be printed by gravure except the Northern Ireland regional stamps, which will continue to be printed by lithography because that is the best method to reproduce those designs.

UPDATE: With the introduction of Pricing in Proportion (see below) on August 21, ordinary letters will have only one weight step, 0 - 100 grams. The 37p and 49p stamps that pay the second weight step as noted above (60 - 100 grams) will no longer be needed. The 49p Machin will be taken off general sale on that date, though it remains on philatelic sale. The 37p stamp pays the new first weight step for second-class large letters. Although there will be a non-denominated stamp for this service, the 37p will remain on general sale until the current stock is sold out. (Subsequently, Royal Mail announced that it will be withdrawn from general sale on December 30, 2006, though it remains on on philatelic sale.)

(Posted February 11, 2006. Last updated February 16, 2007.) top

Rate increase planned for April

Some of us look forward to April showers that bring May flowers, but I doubt that British postal patrons look forward to April rate increases. However, like it or not, this April brings new postal rates, just like last year.

This year’s change takes affect on April 3. The table below shows the basic rates.

Service Old Rate New Rate
First class, first step up to 60g 30p 32p
First class, second step up to 100g 46p 49p
Second class, first step up to 60g 21p 23p
Second class, second step up to 100g 35p 37p
Europe airmail, first step up to 20g and postcards 42p 44p
Europe airmail, second step up to 40g 60p 64p
Worldwide airmail, first step up to 10g and postcards 47p 50p
Worldwide airmail, second step up to 20g 68p 72p
Worldwide airmail, third step to Zone 1 up to 40g £1.05 £1.12
Worldwide airmail, third step to Zone 2 up to 40g £1.12 £1.19
Worldwide surface mail first step up to 20g and postcards 40p 42p
Worldwide surface mail second step up to 60g 68p 72p

Rates shown in bold will be paid by new stamps.

Fees for special services like Special Delivery will also go up.

Royal Mail’s announcement notes that the U.K. market is now open to full competition (as of January 1, 2006), and so prices must be more closely aligned to the true cost of handling mail. At the current rates, Royal Mail currently loses 5p on every first-class stamped letter and 8p on each second-class stamped letter.

Royal Mail was unhappy with this rate increase. It does not like the overall pricing scheme being forced on it by Postcomm, the postal regulatory body.

Royal Mail believes Postcomm is not giving it enough revenue to make the needed £2 billion investment to modernize its business and the additional funds it needs to handle the pension fund deficit. Also, Royal Mail wants to keep its “one-price-goes-anywhere universal service” in the face of pressure to alter its pricing methodology.

Speaking of new methodology, however, it is important to note that these rates will be short-lived. On August 21, the new Pricing in Proportion scheme will go into effect. This is intended not to change the overall amount of revenue earned by Royal Mail, but some mail will cost more and other mail less.

One last thing. I never noticed this before, but the Royal Mail web site notes that since January 1, 2004, senders are entitled to compensation for lost, damaged or delayed mail as long as the sender has gotten a free certificate of posting at the post office at the time of mailing.

For first-class mail, which is supposed to be delivered overnight, compensation of 12 first-class stamps is provided if the item is delivered six or more working days after posting. If the sender provides “additional evidence of delay” (no description of that is given), the compensation rises to £5 in cash, and then to £10 if the delivery is eleven or more days after posting.

Second-class mail is supposed to be delivered in three working days. so the cutoff for the 12 first-class stamps or £5 with additional evidence is seven working days, with the bump to £10 at thirteen days.

For both classes of mail, lost items are compensated with a minimum of 12 first-class stamps. However, if the item contained something valuable, compensation is at the market price of the item up to a maximum of £30. This must be claimed within 12 months of sending, and there’s no indication of whether proof of the value of the item is required. (Posted February 5, 2006. Revised March 24, 2006.) top

Royal Mail’s Rough Year

This year is shaping up as a momentous, and difficult, one for Royal Mail. James Skinner, proprietor of B. Alan, Ltd. and editor of the Connoisseur Catalogue, a specialized Machin catalogue, writes about it in the January 2006 Newsletter of the Machin Collectors Club.

Of greatest significance is the relaxation of the mail-carrying monopoly that Royal Mail held, combined with the restraints placed on Royal Mail by Postcomm, the Postal Services Commission, a separate organization that regulates all companies involved in handling and delivering mail (something like the Postal Rate Commission in the U.S.).

Postcomm has kept a lid on postage rates. Royal Mail would like to increase revenue in order to modernize its facilities and eliminate the deficit in its pension fund, but Postcomm has not given Royal Mail the ability to do that. Royal Mail says that without making such investments, it will not be able to continue the one-price-goes-anywhere service that has been a mainstay of British postal service since 1840. Royal Mail also suggests that no competitor would be able to offer that service either.

Among Royal Mail’s problems is the partial deregulation of mail that was enacted with the “Access” program. This program allows companies (of which there are now 15) to collect mail from large customers, sort it, and give it to Royal Mail to perform the final stage of delivery. It’s not hard to see that Royal Mail has the costliest part of this service, and the rates set for it by Postcomm have been favorable for the competitors and too low for Royal Mail. The amount of Access mail grew from 13 million letters in 2003 to one billion in 2004; that would not have happened without bargain rates. Other postal administrations in Europe have similar programs, but they can set their own rates, which are higher.

As 2006 starts, mail delivery is now completely deregulated. According to an article in Linn’s Stamp News, 14 firms are now licensed to deliver mail in the U.K. However, only Royal Mail must provide mail service for every address. Its competitors are expected to concentrate on the more-profitable business mail rather than personal mail.

In addition, the volume of normal mail handled by Royal Mail is dropping for the first time in a quarter century. First class mail dropped 4.2% and Mailsort (what we call bulk mail) dropped 7.1%. Royal Mail blames this on Britain’s weak economy.

Another pending threat to Royal Mail is the VAT, or value added tax. Most if not all of the other European Union countries levy that tax on postal services, and there is pressure from the EU for Britain to follow suit. If Britain does, mail users will face a price increase of 17.5% without gaining any benefits for it. It is likely that this will cause a decline in mail volume and therefore Royal Mail revenue.

Finally, later this year Royal Mail will introduce Pricing in Proportion, a new way to calculate postal rates. While Royal Mail views this as a benefit, allowing it to align revenue and costs more closely, the transition to this new scheme may be difficult.

Skinner concludes, with tongue firmly in cheek, that Royal Mail has “a fun packed year ahead of it.” Those of us who collect British stamp will be watching with great interest. (Posted February 11, 2006) top

Last update: March 24, 2007   Macintosh!
Copyright © 2006 by Larry Rosenblum