Will Scottish independence deliver cheaper stamps?

This BBC News article discusses the cost savings Royal Mail PLC may experience should Scotland vote for independence on the 18th September 2014.If Scotland became independent the Royal Mail (RM), whose universal service obligation demands that they deliver “at an affordable, uniform tariff across the UK”, would no longer service Scotland and its remote locations, including all the difficult to reach areas such as parts of the Highlands and the 94 inhabited islands. These locations have, in essence, been subsidised by income from Royal Mail's ‘easier to reach’ customers based throughout the UK, all of which pay the same price for their mail.

Some worried that the privatisation of Royal Mail would bring the universal service under threat, but a recent report by the National Audit Office states that RM would be able to sustain the universally priced, 6-day a week service. The BBC article asks if the price of sending mail and parcels will be reduced (as no doubt it could be) but Royal Mail is yet to comment. Consider the marginal cost of sending a letter or a parcel to the Outer Hebrides compared to sending it somewhere on the south coast of England; and factor in the need for air, sea and land transport, compared to just using a van...

It is, however, acknowledged that deliveries to these areas are relatively small in number when compared to the 70 million items posted daily and so the cost changes of an independent Scotland may be negligible. Plus, with current City forecasts predicting pre-tax profits in excess of £500m during 2015, the risk to tax payers being reduced and most of the Royal Mail's ownership now in the hands of private shareholders, it is unlikely that any reduction in costs realised would ever be passed on to customers.

An interesting article with plenty of links to business theory for students to apply their knowledge, analysis and evaluation skills to.