Royal Mail could deliver on three days, regulator says

Royal Mail could deliver on three days, regulator says
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Royal Mail could reduce the number of days it delivers letters from six per week to five or even three, under proposals to reform the service.

A report from the regulator said the postal service was “getting out of date” and action needed to be taken.

Ofcom said another option would be extending the number of days it takes for most letters to be delivered.

Royal Mail said its current delivery network was “not sustainable” and that reform was “urgently needed”.

The company, which was split from the Post Office and privatised a decade ago, is legally obliged to deliver a one-price-goes-anywhere universal service, which means it has to deliver letters six days per week, Monday to Saturday, and parcels Monday to Friday.

In recent years, the volume of letters being posted has plummeted, with half the number being sent compared to 2011 levels, while parcel deliveries have become more popular – and more profitable.

Royal Mail’s performance has also deteriorated, with customers regularly not receiving letters about medical appointments and legal documents on time.

Dame Melanie Dawes, Ofcom’s chief executive, said the regulator was sharing options for reforming the service, putting them out for “national discussion”, with an update scheduled for the summer.

“Something’s got to give, or the service is going to be too costly, and either stamp prices will go up or it will become unsustainable,” she told BBC Breakfast.

‘Saturdays sacrosanct’

The government has said it does not support the idea of scrapping postal deliveries on Saturdays.

Kevin Hollinrake, the postal services minister, told the BBC Royal Mail needed to “up their game” and that the government was “happy to have a conversation” about reforms.

But he insisted that Saturday deliveries were “sacrosanct” and that a six-day service would remain.

On Wednesday the prime minister, Rishi Sunak, said the government was “absolutely committed” to ensuring the Royal Mail’s universal service obligations remained as they were.

Ofcom estimated the company could save between £100m and £200m a year if delivery days were cut to five per week, and between £400m and £650m if there were just three postal days.

However, reforming the postal service by cutting delivery days would require the government and parliament to change the current legislation.

An alternative option would be to to reduce the speed of delivery for most letters to within three days. That would save £150 to £650m, Ofcom said, but the regulator said there would still need to be a next-day service available for any urgent letters.

Under Ofcom’s current rules, each year Royal Mail is required to deliver 93% of First Class post within one working day and 98.5% of Second Class within three working days, but in 2022/23 the company only delivered 73.7% of First Class and 90.7% of Second Class mail on time.

Graphic showing universal service obligation

That has left many customers dissatisfied, among them Peter Rimmer, from Ormskirk, Lancashire, who told the BBC he already only seems to get post once a week.

The former communications director, 78, said his post arrives in a bundle from a different postie each time.

Last week a Christmas card arrived that had been posted on the 8 December with the correct address and first class stamp on it. “It’s not a regular service,” he said.

Peter Rimmer with just received Christmas card

Peter Rimmer

Royal Mail has previously made clear it would like to shift from delivering six days a week to five, from Monday to Friday only. The business, which is owned by International Distribution Services plc, posted a £319m loss in the first half of the current financial year.

Martin Seidenberg, Royal Mail’s group chief executive, said a “lack of action” on reforms before, now meant the business faced a “much more serious situation”.

But the Communication Workers Union (CWU), which represent posties, said the union would not sign up to a three-day delivery service, claiming it would “destroy” Royal Mail and “impact thousands of jobs”.

‘No easy pass’

The UK was “not alone” in needing to reform its postal service, Ofcom said. It noted Sweden, Belgium, Norway and Denmark had either reduced delivery days or extended delivery times for letters in recent years.

But Dame Melanie said neither reducing delivery days nor extending delivery times would represent an “easy pass” for the company as it would still have to meet set delivery targets.

Ofcom said the company’s recent poor performance, which led it being fined £5.6m for missing its delivery targets, showed that people were not currently getting a reliable service. The regulator said its research showed people valued affordability and reliability the most when it came to letter postage.

Morgan Wild, interim director of policy at the charity Citizens Advice, said any changes to the universal postal service must prioritise consumers, “not Royal Mail’s bottom line”.

“We agree that improving reliability is essential,” he added. “Cutting services won’t automatically make letter deliveries more reliable, so we must see proposals to tackle the cause of Royal Mail’s persistent failings.”

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Source: bbc.co.uk

By David Ryckman