Royal Mail Reform Could Change Letter Speed Delivery or Days

A Royal Mail sign is pictured outside a post delivery office in London on Aug. 26, 2022. (Maja Smiejkowska/Reuters)

UK postal services regulator Ofcom has called for an overhaul of Royal Mail, amid concerns over the sustainability of the service’s long-term future.

Ofcom has proposed to modernise the Royal Mail and its obligations, which the regulator said haven’t changed since 2011. It noted that Britons now send fewer letters and receive more parcels.

Considering the halved volume of letters and the significant cost to Royal Mail of delivering universal service, Ofcom warned that the service will become financially non-viable in the future.

Ofcom’s Chief Executive Dame Melanie Dawes said that the postal services is “getting out of date” and “will become unsustainable” if no action is taken.

To address the risk, Ofcom has set out two options of reform: reducing the number of letter delivery days and change the speed of delivery.

Under the proposals, letters could be only delivered to households and businesses five, or even three times a week. This would require a change in primary legislation.

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The second option is to slow down letter deliveries, meaning that most letters would take up to three days or longer to arrive. The next-day service will still be available for any urgent letters, Ofcom said.

Dame Melanie said the reform options were set out to stir a “national discussion about the future of universal post.” Ofcom will consult on its proposals until April 3 and will provide an update in the summer.

Costs and Savings

In the meantime, Dame Melanie, assured that prices will remain “affordable” by retaining the cap on the price of second-class letter. The last time Ofcom set a cap on stamp prices was in 2019.

If letter deliveries are reduced to five days, the Royal Mail could save £100-200 million, with the figure going up to £400—650 million in a three-day reduction scenario.

Ofcom added that if the large majority of letters were delivered within three days, the net cost savings for the service would be £150—650 million.

For the proposed changes to the letter delivery days to be implemented, lawmakers would need to change the Postal Services Act 2011. The government has, however, signalled that it wasn’t in favour of changes to the Royal Mail’s six-day service.

Speaking to lawmakers on Wednesday, Prime Minister Rishi Sunak said: “I agree about the importance of the Royal Mail universal service obligation. We remain absolutely committed to ensuring it remains as it is. ”

Need for Change

The owner of Royal Mail, International Distributions Services (IDS), has called for an urgent reform of the service.

“We have been calling on Government and Ofcom to tackle this issue for four years, and the lack of action means that we are now facing a much more serious situation. Whilst other countries have grasped the opportunity to change, the UK is being left behind,” said Martin Seidenberg, group chief executive of IDS.

The Communication Workers Union (CWU) has questioned Ofcom’s credibility and said that the regulator “didn’t take any notice of the union or any postal worker in doing this report.”

“This is the regulator openly pursuing the failed agenda of the former Royal Mail Group senior leadership–all of whom have now left the company,” a CWU spokesperson said in a statement.

The union announced it will “produce an alternative and independent view on the future of postal services in the UK.”

Royal Mail saw a series of strikes by its workers in 2022 and 2023. The industrial action was prompted by a dispute over pay between the staff and the executive leadership of the company. The strikes ended in July 2023 with a three-year pay deal, accepted by the workers.

In the 2022/2023 financial year, the Royal Mail was fined £5.6 million by Ofcom for failing to meet its First and Second Class delivery targets. Even after adjusting its performance for the impact of industrial action, extreme weather and the Stansted runway closure, the company had still failed to meet its targets, the regulator explained.

Ofcom said it was a “wake-up call” for the company that “must take its responsibilities more seriously.”

PA contributed to this report.