Royal Mail is on the cusp of being allowed to scrap Saturday deliveries for second class letters in a move proposed by Ofcom, which also suggests reducing broader postal delivery targets. The regulator has provisionally concluded after a consultation that scaling back the second class letter service to alternate weekdays, whilst maintaining six-day-a-week first class services, would still satisfy the needs of postal users.
These changes could result in savings of between £250 million and £425 million annually for Royal Mail, according to Ofcom assessments. The reforms to the universal postal service emerge as Royal Mail undergoes a takeover by Czech tycoon Daniel Kretinsky, with the £3.6 billion deal having received Government approval at the end of the previous year.
Mr Kretinsky has committed to upholding the Universal Service Obligation (USO) post-acquisition. Ofcom has set forth proposals to adjust Royal Mail’s core delivery objectives, including a reduction of the target for next-day delivery of first class mail from 93 per cent to 90 per cent, and a cut for second class mail delivery within three days from 98.5 per cent to 95 per cent.
These adjustments are designed to bring Royal Mail’s performance goals closer to other international and European standards. This news arrives amidst significant penalties imposed on Royal Mail for subpar service, with the company being slapped with fines totalling over £16 million in the last 18 months for not meeting its delivery targets.
Natalie Black, Ofcom’s group director for networks and communications, highlighted the evolving landscape with the statement: “The world has changed – we’re sending a third of the letters we were 20 years ago. We need to reform the postal service to protect its future and ensure it delivers for the whole of the UK.
“But we’re safeguarding what matters most to people – first class mail six days a week at the same price throughout the UK, and a price cap on second class stamps.”
Ofcom’s latest findings suggest that the public doesn’t require a six-day letter delivery service, with annual deliveries plummeting from 20 billion two decades ago to approximately 6.6 billion today, and expected to fall further to four billion in the coming years. The regulator plans to continue consulting on its proposals until April 10, with a final decision anticipated in the summer.
Emma Gilthorpe, CEO of Royal Mail, said: “As Ofcom’s analysis shows, it is no longer financially sustainable to maintain a network built for 20 billion letters when we are now only delivering 6.7 billion. Reform is crucial to support a modern, sustainable, and reliable postal service for our customers, our company and our people.”
The government maintains that a dependable and affordable universal postal service is vital for the UK. When questioned about the Prime Minister’s view on the proposed changes, a spokesperson from Downing Street responded: “This is the start of a 10-week consultation – it would be wrong to pre-empt its conclusion.
“But we’re clear that a reliable and affordable universal postal service is crucial to the UK. It must work for customers, workers and businesses that help drive growth across the country. Parliament has given Ofcom a duty to seek a financially sustainable and efficient universal service obligation, and the priority here must be to ensure that Royal Mail is able to effectively serve its customers in the years to come.”
The Communication Workers Union (CWU) cautioned that any revamp must offer improved working conditions for Royal Mail staff and enhance service.
CWU general secretary Dave Ward warned: “The trials that we have agreed with Royal Mail are strictly conditional on the basis that we see a significant improvement in service reliability for customers, as well as terms and conditions for postal workers being improved. Any failure to abide by these conditions will see our support withdrawn.”
The Post Office voiced disapproval of proposals to scale back the universal postal service. A Post Office spokesperson said: “Our postmasters and customers, particularly those who are vulnerable, do not want to see a reduction in the Universal Service Obligation.”
Harriett Baldwin, shadow business and trade minister, highlighted consumer interests, saying: “Any new agreement that will impact postal deliveries must be made with consumers in mind.”
The Royal Mail’s Universal Service Obligation (USO) mandates six-day-a-week deliveries to all 32 million UK addresses at standard stamp prices – a legal requirement under the Postal Services Act 2011.
When Ofcom initially hinted at reducing postal delivery days, it caused a public uproar. Ministers were swift to reject any notion that the Government would approve the elimination of Saturday deliveries.
However, the current proposals under consideration wouldn’t require legislative changes, as Royal Mail would continue to deliver first-class post six days a week.
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