Ofcom to set out possible Royal Mail reforms – and Saturday deliveries could end - The Guardian

Royal Mail could be allowed to end Saturday postal deliveries as part of Ofcom’s review into how the service may need to be reformed.

Next week, Ofcom will publish a document outlining “potential options for the future of the universal postal service”.

A spokesperson for Ofcom said it would set out evidence and options on “how the universal postal service might need to evolve to more closely meet consumer needs”.

They added: “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.”

In November, Royal Mail reported half-year losses of £319m.

Ofcom began examining options to alter the universal service obligation (USO) in September.

According to Ofcom, the USO requires Royal Mail to deliver letters six days a week (Monday to Saturday) and parcels five days a week (Monday to Friday) to every address in the UK, “at affordable prices that are uniform throughout the UK”.

Royal Mail has blamed the USO for rising stamp prices and has been calling for urgent reform, one of which would be to reduce postal deliveries to five days a week – Monday to Friday only.

However, last summer the government denied its request to stop delivering post on Saturdays – a move which would have needed approval by MPs.

Previously, Ofcom has said the move could save between £125m and £225m a year.

Announcing the review, Ofcom said: “The last few years have demonstrated the importance of postal services, but the way people use them is changing, and we expect these trends to continue.”

It added that the number of letters sent and received had declined 46% over the last decade, as people and businesses moved to digital alternatives. With the decline in the number of letters delivered each day it said “the cost of delivery is increasing”.

This week, Martin Seidenberg, the chief executive of Royal Mail’s owners, International Distribution Services, said in its trading statement: “With Ofcom due to publish options for the future of the universal service imminently, now is the time for urgent action.

“We are doing all we can to transform, but it is simply not sustainable to maintain a delivery network built for 20bn letters when we are now only delivering 7bn.”

In a letter from Seidenberg to Liam Byrne, the chair of the business and trade select committee, on 9 January he wrote: “Delivering the current universal service requirements – in a financially sustainable way – is increasingly difficult, if not impossible, to achieve as the mix and number of parcels and letters changes.”

He added: “It is simply not sustainable to maintain a delivery network that was built for 20bn letters when we are now delivering only 7bn.”

He suggested ways to “tackle this problem” including “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.”

Last November, Ofcom fined Royal Mail £5.6m for failing to meet its first- and second-class delivery targets in the 2022-23 financial year.

The regulator said at the time that Royal Mail missed the targets by a “significant and unexplained margin”, causing “considerable harm” to its customers.

The company delivered more than a quarter of first-class post late. Only 74% of post arrived on time in the 2022-23 financial year, far below its statutory target of 93%.

It also missed its target for second-class mail, delivering 91% on time compared with a target of 98.5%.

Royal Mail has been contacted for comment.

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2024-01-20 17:13:00Z
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