Yahoo Finance Royal Mail could be given green light to axe Saturday post
Royal Mail could scrap Saturday postal deliveries under new options being drawn up by the watchdog.
Ofcom will reportedly unveil a consultation paper on Wednesday which may include an option that ends Royal Mail’s legal obligation to deliver post six days a week.
Reforms to the universal service obligation (USO) could also include overhauling first- and second-class delivery targets, and charging higher stamp prices, according to Sky News sources.
Under current targets, Royal Mail is expected to deliver 93pc of first-class post within one day of collection, and 98.5pc of second class post within three working days.
The company was found to have breached this requirement in November, and was fined £5.6m by the regulator.
At the time, Ofcom said the company had “caused considerable harm to customers, and Royal Mail took insufficient steps to try and prevent this failure”.
Last month a Telegraph survey revealed that almost half of Royal Mail customers had experienced delays in 2023.
Forty-eight per cent of respondents said the service had deteriorated over the past year – and one in 20 said a first-class delivery had taken over a week or more.
Royal Mail has been lobbying to change the USO but the Government rejected a request from the service to move to a weekday-only system last year. Royal Mail estimated the move could save the company hundreds of millions of pounds a year.
Martin Seidenberg, chief executive of IDS, which owns Royal Mail, said last year that the service’s network was “unsustainable” now that it was delivering billions fewer letters a year.
He added: “My top priority is improving quality. We are transforming our business every day but we can’t do it all on our own.
“We also need the regulator and the Government to do their bit.”
Writing to MPs, Mr Seidenberg said it was “increasingly difficult, if not impossible” to continue to remain financially sustainable while delivering under the current requirements.
“The bar set by the regulations is unrealistic given the market realities,” he said.
Methods of addressing the challenges facing the company could include “significantly increasing prices, seeking a government subsidy, and/or reforming the Universal Service so that it is more reflective of the customer needs and market realities of today, not the needs of the past,” he added.
The Ofcom document is not expected to contain conclusions or recommendations, and any changes to Royal Mail’s USO recommended by the regulator would require a vote from MPs.
It would however suggest ways Royal Mail, which was privatised in 2013 under the coalition government, could sustain itself. Formal recommendations are expected to follow later in the year.
Scrapping Saturday deliveries would deal a blow to publishers who would no longer be able to circulate weekend magazines.
The UK Greeting Card Association said it would “robustly counter” any move to water down the Royal Mail’s current obligations.
Royal Mail has seen four chief executives leave in just as many years amid bitter disputes with unions. Last year, Simon Thompson announced his departure just two years after taking the role.
Thompson had endured brutal criticism throughout his tenure, not least from his predecessor Rico Back, who questioned his experience and handling of strike action.
MPs on the business committee accused the former Apple and Ocado executive of “incompetence or cluelessness” in January last year.
Months later, Royal Mail’s parent company International Distributions Services reported losses of £169m in the first half of the financial year, as it struggled with a falling demand for letters, staff strikes, and redundancy payouts.
An investigation by the Sunday Times also alleged that postal workers were prioritising the delivery of parcels over less profitable letters.
An Ofcom spokesman said: “Next week we will set out evidence and options on how the universal postal service might need to evolve to more closely meet consumer needs.
“We will be inviting views on this, not consulting on specific proposals.
“It would ultimately be for the UK Government and Parliament to determine whether any changes are needed to the minimum requirements of the Universal Service.”
A Department for Business and Trade spokesman said: “As the independent regulator, Ofcom is reviewing the future of the universal postal service in response to changing consumer demand.
“While there are no current plans to change the statutory minimum requirements, we will carefully consider any advice that Ofcom puts forward to meet the needs of consumers.”
