Royal Mail could be set for some of the biggest changes to its services in over a decade, including the scrapping of Saturday deliveries and making amendments to deal with lower volumes of post.
Ofcom, the UK’s communication watchdog, is rumoured to be releasing its review into the future of the universal postal service on Wednesday, with early reports predicting it will lean in favour of the scrapping of Saturday service.
Other rumoured changes include reforms to the first and second-class delivery targets, a potential state subsidy and the freedom to impose higher stamp prices.
Current rules require the postal service to deliver 93% of first-class post within a day of collection and 98.5% of second-class post within three working days.
Royal Mail was found to have “caused considerable harm to customers” last year when it breached these requirements, being fined £5.6 million as punishment.
Launched in September last year, the review aims to explore various options for the service so that it is evolved to meet consumer needs.
“We will be inviting views on this, not consulting on specific proposals,” a spokesperson for Ofcom said.
“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.”
Royal Mail struggles
Royal Mail reported half-year losses of nearly £320 million in the first half of the 2024 financial year.
Boss Martin Seidenberg has called for changes to the universal service agreements or risk turbulence at the postal group.
In a letter to Liam Byrne, the chair of the business and trade select committee, he said: “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.
“It is simply not sustainable to maintain a delivery network that was built for 20bn letters when we are now delivering only 7bn.”
Government opposed
Downing Street looks to be opposed to the potential scrapping of Royal Mail's Saturday deliveries ahead of the review.
"The Prime Minister's strong view is that Saturday deliveries provide flexibility and convenience that are important for businesses and particularly publishers and the Prime Minister would not countenance seeing Saturday deliveries scrapped," a spokesperson for the Prime Minister said.
MPs would be required to vote in favour of any recommendations by Ofcom before they can be implemented.
Greeting card concerns
Another group concerned about the review is the UK’s Greeting Card Association (GCA), which drafted a letter to MPs pleading for the plans to be cancelled.
The GCA wrote to MPs to warn that the Royal Mail is “sleepwalking” its way into “terminal decline”.
David Falkner, boss of Cardology and leading member of the GCA said: “My conclusion is that this is an attempt by Royal Mail to put Saturday and Sunday delivery into a premium service, enabling them to make super-normal returns on a monopoly service.
“To believe that they have suddenly forgotten how to do that because of the pandemic just doesn’t stack up. I feel like we’re sleepwalking into losing something that’s really important to people.”
Royal Mail, which is owned by International Distributions Services PLC (LSE:IDS), is up more than 3% at 262p on Tuesday.