Ofcom launches Royal Mail performance probe

Yesterday, Royal Mail announced that it did not meet its performance targets in 2022/23, which included a period of industrial dispute and 18 days of strike action.

Its target is to deliver 93% of First Class mail within one working day, but Royal Mail achieved just 73.7%.

For Second Class mail, the target is 98.5% to be delivered within three working days of collection. Royal Mail delivered 90.7% of Second Class post in that timeframe.

The postal operator is also tasked with completing 99.9% of delivery routes on the days when deliveries are required.

However, it only completed 89.35% of routes.

Last year Ofcom told Royal Mail that it could not continue to use the impact of Covid-19 as an excuse for poor delivery performance.

The Universal Service Obligation (USO) means that Royal Mail must provide a six-days-a-week, one-price-goes-anywhere postal service to the 32m UK addresses.

This is overseen and monitored by Ofcom.

“Ofcom takes quality of service very seriously. In deciding whether the company is in breach of its obligations, we will consider if there were any exceptional events – beyond the company’s control – that may have explained why it missed its targets.

“If it does not provide a satisfactory explanation and we determine that Royal Mail has failed to comply with its obligations, we may consider whether to impose a financial penalty,” the regulator stated.

This morning (16 May), Radio 4’s Today programme ran a special segment on the damaging impact of Royal Mail’s under-performance, including NHS appointment letters arriving after the appointment date, delayed NHS test results, and other issues involving important communications such as court papers and speeding fines.

Tim Colman, director of HR outsourcing specialist Abacus HR, said the firm had been forced to turn to costly courier services.

“Letters are vitally important for an HR business, as they are for so many small businesses. Tribunal papers always come by post they are not sent by email. Those are taking much longer to arrive, and the situation has degraded to the point now where we don’t rely on Royal Mail at all.”

The firm now uses a courier service for outgoing mail.

“This is not unique to my small business. I’m very active in the Federation of Small Businesses and recently spoke to a number of other FSB members in the Basingstoke area, and the reports from all of them were that postal services are sporadic,” he stated.

Citizens Advice director of policy Matthew Upton called for a wider Ofcom probe.

“We’ve been saying for years that Ofcom needs to take tougher action against Royal Mail. In many years it feels to us like they’ve had almost a licence to fail. This is systemic. They have missed their targets for four out of the last five years. It has to be a multi-year investigation,” he said.

“They need to look at some of these worrying trends of de-prioritising letters in favour of parcels. If that’s the case it’s not on, and Ofcom need to get to the bottom of it and be willing to fine Royal Mail if that’s what’s required.”

MP Darren Jones, chair of the Business & Trade Committee where outgoing Royal Mail CEO Simon Thompson, who resigned last week, was forced to appear twice a disastrous first appearance, also weighed in.

He said: “Ofcom need to do two things: they need to look back and they need to look forward.

They need to decide whether Royal Mail proactively decided to not deliver their letters. It seemed pretty clear to us the outgoing CEO verbally cascaded through the business instructions to postal workers to not worry about the letters. That’s a fundamental breach.

“Everyone needs to get around the table and work out how to make this business viable for the future. It could be that this business model does not work.

“The incoming CEO therefore has a huge job on his or her hands. The outgoing CEO Simon Thompson clearly failed miserably at bringing his people with him with an effective strategy for the business. The new CEO must get that right.”

MPs on the committee had already referred Royal Mail to Ofcom due to its performance.

CWU general secretary Dave Ward accused Royal Mail management of alienating the workforce.

He said: “They are creating unachievable workloads for postal workers, and they are ripping out hours and have developed a culture of imposing change… so it has completely alienated the workforce.”

In a statement, Royal Mail said: “We are disappointed with our Quality of Service performance and restoring our service to the high standards our customers expect is our top priority.  We will participate fully with Ofcom’s investigation.”

Royal Mail parent group International Distributions Services will announce its results on 18 May.