Royal Mail is being asked to take action if Saturday mail is stopped

Sir Vince Cable says Royal Mail will need to invest in improving its services if Saturday mail is scrapped.

The former business minister, who led the group’s privatization under the coalition government in 2013, said the company’s performance “clearly needs to be improved”.

Postal regulator Ofcom announced last week that it would review Royal Mail’s legal obligation to deliver letters Monday to Saturday, known as the Universal Service Obligation (USO).

The announcement sparked uproar, although Ofcom said most individuals and businesses would not be affected.

Cable insisted that if it cut Saturday deliveries, it should redirect the money back into the company. “If Ofcom lets them off the hook in terms of Saturday delivery, given their overall performance, they won’t be able to easily pocket the savings,” he said.

While he acknowledged it was a “difficult” situation for the company, he added that Royal Mail should be required to provide a detailed strategy for what would follow a change in the USO.

“Royal Mail can’t just get away with fewer obligations.” “That shouldn’t be allowed to happen,” he said.

The row 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.

This came amid an ongoing Ofcom investigation into his performance, which could result in a hefty fine.

Royal Mail has been pushing for years to scrap six-day delivery as falling use of letters hurts revenue. Last year around 7 billion people were sent abroad, compared to 20 billion in 2004.

An analysis by The Mail on Sunday has found that Royal Mail’s letters business generated revenue of £4.8 billion in the first year of privatization in 2013 – enough to cover the year’s wage costs.

But a decade later, text messaging and email have significantly reduced the number of letters sent while costs have increased. In the year to March, the company’s letters business generated sales of just £3.5bn, enough to cover just two-thirds of wages.

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

It is estimated that five-day-a-week delivery would save £250 million a year, but efforts to scrap Saturday mail have been repeatedly blocked by the government.