Royal Mail urged to shape up if Saturday post is axed

Royal Mail must invest in improving services if it scraps Saturday post, according to Sir Vince Cable.

The former Business Secretary, who led the group’s privatisation in 2013 under the Coalition Government, said the company’s performance ‘clearly has to improve’.

The postal watchdog, Ofcom, said last week that it would review Royal Mail’s legal requirement to deliver letters from Monday to Saturday, known as the universal service obligation (USO). 

The announcement prompted uproar, though Ofcom said most individuals and firms would be unaffected.

Cable insisted that if it cut deliveries on Saturdays, it should divert the money back into the company. ‘If Ofcom are going to let them off the hook in terms of Saturday delivery, they can’t just pocket the savings given their overall performance,’ he said.

While he admitted it was a ‘tricky’ situation for the business, the former Lib Dem leader added that Royal Mail should be required to lay out a detailed strategy that would follow a change to the USO.

‘Royal Mail can’t just walk away with fewer obligations. That can’t be allowed to happen,’ he said.

The argument over the future of Saturday post was reignited after figures last week showed the company was on track to miss its delivery targets for the seventh year in a row.

It came amid an ongoing Ofcom probe into its performance that could result in a hefty fine. 

Royal Mail has been pushing for years to scrap six-day deliveries as the falling use of letters has hit revenues. Around 7 billion were sent last year, down from 20 billion in 2004.

Analysis by The Mail on Sunday has revealed that in its first year of privatisation in 2013, Royal Mail’s letter business raked in revenues of £4.8 billion – enough to cover its wage costs for the year.

But a decade later, text messages and emails have severely cut the number of letters sent, while costs have risen. In the year to March, the firm’s letter business made revenues of only £3.5 billion, enough to cover only two-thirds of wages.

Royal Mail has previously pointed to research carried out by Ofcom in 2020 that showed providing a letter service on weekdays only would meet the needs of 97 per cent of consumers, and small and medium-sized businesses.

It is estimated that delivering five days a week would save it £250 million a year, but efforts to scrap Saturday post have been repeatedly blocked by the Government.