Manchester City Council
Finance Scrutiny Committee
Item 7
21 June 2012
Manchester City Council
Report for Information
Report To:
Finance Scrutiny Committee – 21 June 2012
Subject:
Increase in postal charges from Royal Mail
Report Of:
Sara Tomkins, Assistant Chief Executive (Communications,
Customer & ICT)
Summary
This report outlines the key implications of the increase in postal charges from Royal
Mail, effective 30 April 2012 and the key findings to date from the ‘mail and print’
review and current actions that will assist the Council in reducing its reliance on
physical post and mitigate the post cost increases.
Recommendations
To note the report.
Wards Affected:
All
Contact Officers:
Name:
Position:
Telephone:
E-mail:
Sara Tomkins
Assistant Chief Executive, Communications, Customer & ICT
0161 234 3706
[email protected]
Name:
Position:
Telephone:
E-mail:
Paul Williams
Head of Communications
0161 234 3300
[email protected]
Background documents (available for public inspection):
The following documents disclose important facts on which the report is based and
have been relied upon in preparing the report. Copies of the background documents
are available up to 4 years after the date of the meeting. If you would like a copy
please contact one of the contact officers above.
-
Post and Print Standards (November 2011)
Corporate Mail Project – High Level vision for print and mail (December
2011)
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Manchester City Council
Finance Scrutiny Committee
Item 7
21 June 2012
1.0
Introduction
1.1.
The Council currently spends over £1.6m handling over 4.5 million items of
outgoing mail per year. The biggest cost is from Royal Mail. Royal Mail have
changed their business product offering and have increased prices in all
areas, particularly private mail i.e. stamps.
1.1
Royal Mail first and second class stamp prices increased by 14p from 30th
April 2012 to 60p and 50p respectively. Prices rose from 46p and 36p, an
increase of over 30%, while the cost of posting large letters increased from
75p to 90p for first class and 58p to 69p for second class, an increase of 20%
and 19% respectively.
1.2
Business Mail tariffs and the products Royal Mail offer have also been
affected. All Council tariffs have increased. Around 50% of our volume falls
within the ‘Cleanmail’ category. Appendix one provides a definition of mail
classification terminology. Depending on the daily volume, new unit prices of
24.7p – 26.7p versus 22.7p – 24.5p (2nd class) will apply. This is an increase
of 8.9%. Other ‘transactional’ post products are classed as Business PPI mail,
which for 2nd class has increased in a similar way. Depending on the daily
volume, new unit prices of 28.7p – 31.0p versus 25.9p – 28.0p (2nd class) will
apply. This is an increase of 10.7%. And some Royal Mail products have
disappeared altogether, meaning we automatically move to a more expensive
option. ‘Walksort’ is an example of this.
1.3
The Central Mailroom has been integrated into the Communications
Directorate to sit alongside the transactional print business traditionally held
within M-four Print. This aims to drive efficiencies and promote best practice.
In addition, directorate mail budgets are being centralised this financial year
with a +15% adjustment to ensure that the central mail budget can
accommodate increases from Royal Mail. Elections and Revenues and
Benefits are currently exempt whilst further analysis of their postage activity is
reviewed.
1.4
In addition, an internal mail and print review and behaviour change
programme, aligned to the ‘new ways of working’ is underway. This is in order
to change how employees post mail and to influence how they print from the
Multi Function Devices (MFD’s), in order to drive print and mail volumes down
and increase the amount we email. This aims to assist the Council in
achieving its target of reducing its carbon footprint by 41% by 2020.
2.0
How postage costs will be reduced
2.1
Manchester City Council needs to make changes as the Royal Mail price
increases will cost the Council a further £200k which is currently not budgeted.
2.2
We are able to significantly reduce our postage costs by following the
principles set out below:
2.2.1 2nd Class as Standard - Second-class mail will be used at all times. Use of
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Manchester City Council
Finance Scrutiny Committee
Item 7
21 June 2012
first class, special delivery, recorded delivery and international delivery
services is only to be used in exceptional circumstances. Test exercises have
identified that there is generally no delivery date difference within Manchester
in sending mail 1st or 2nd class.
2.2.2 Address Envelopes Correctly - Standardising and addressing mail in a correct
and consistent format is a better way of ensuring that mail is received quickly
and is machine readable. All Council employees and members have been
requested to address mail typed as shown below.
2.2.3 Reduce Stamps and Franking Machines - Where possible, mail will be sent via
the Corporate Print and Mail unit. This ensures mail is processed from a
central point as the higher the volume the better related discounts are made
available. Even for small volumes this can make a difference. Franking
machines are being phased out and will only be used if there is a business
case agreed with Corporate Procurement. The 30%+ price increase for
stamps and at a cost almost three times more expensive than using the
Central Mailroom is evidence enough to limit extensive use of stamps. All
stamp purchases through SAP now need approval from the Print Manager at
m-four to help educate and further ensure the use of stamps is phased out.
These increased costs will be highlighted directly with cost centre managers
throughout the Council.
2.3
In addition to the behaviour change examples listed, the Council is reviewing
the purchase of a ‘Hybrid Mail’ system to make further savings on postage
revenue. An ‘invest to save’ business case is being prepared to acquire a new
system to automate the printing of mail by re-directing it to the more cost
effective printers at the Central Mailroom. The team prints, collates and sorts
the mail and through intelligent routing ensures the mail is of a quality to
maximise the volume related discounts the Council can achieve from Royal
Mail. The diagram below explains this but in essence you will write and
address a letter electronically and e-post it, the mail room will then print, fold
and envelope this automatically and efficiently. The Council’s mail for that day
will then be collated to utilise the cheapest available postal options.
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Manchester City Council
Finance Scrutiny Committee
Item 7
21 June 2012
2.4
Digital by Default. The future mail strategy is based around how mail can be
delivered digitally and move to online communication options where possible.
One example is to move to e-payslips. This work is in progress along with the
necessary SAP upgrade and should be implemented next year. The CRM link
to the hybrid mail system will also help to reduce postage costs as the
database of residents who would prefer to receive their correspondence from
us digitally grows.
3.0
Carbon Footprint
3.1
An additional benefit of reducing our reliance on print, external post and its
delivery, is that it lowers our carbon footprint and will help the Council achieve
its reduction targets.
4.0
Conclusion
4.1
In summary, the Council is mitigating postal increases by:
- Sending all mail 2nd class, unless it is an exceptional case and specified
as urgent.
- Outgoing mail to be addressed in a consistent and standard way in
order to achieve optimum Royal Mail postage rates.
- Stamps and franking machines kept to a minimum with the majority of
external post being directed through the central print and mail service.
- Adoption of a ‘hybrid mail’ system to automatically divert all outgoing
post to the central print and mail service to enable digital channel shift
and maximum volume discounts on physical mail.
- Encourage better use of digital possibilities e.g. documents should be
scanned and emailed instead of posted.
4.2
Improvement and efficiency savings from the hybrid mail project are still being
evaluated and estimated however we are confident the above strategies to
drive print and mail improvements will neutralise the impact of any Royal Mail
price increases.
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Manchester City Council
Finance Scrutiny Committee
Appendix - Item 7
21 June 2012
Terminology of mail products currently used:
CLEANMAIL – this is the main business post product the Council use. This product
has now been changed. Going forward, Cleanmail and Walksort, the product that
gave Manchester City Council the most discount, will now be covered by Business
Mail Low and High Sort (the cost will depend on whether or not the mail is machine
readable).
FRANKED – the Council still needs to have access to a limited number of franking
machines. The cost increase has been put in at 15% as some pieces of franked post
are handwritten.
LARGE LETTER – is still required and as long as the business mail guidelines are
followed, should attract the lower price increases.
STAMPS – are still used in certain areas where post needs to go out after the
Central Mailroom has done its pick-up. However, central control through SAP
purchasing is being utilised to monitor and control requirements.
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