Royal Mail fined £21m for late letter deliveries

Royal Mail has been hit with a £21m fine after delivering almost one in four first-class letters late.

Industry regulator Ofcom handed down the penalty – the largest ever for late deliveries – after the postal service fell short of its targets for both first and second-class post.

Under the Royal Mail Universal Service Obligation (USO), it is required to deliver 93pc of first-class letters within one working day of collection and 98.5pc of second-class letters within three working days.

However, in the year to the end of March, it delivered just 77pc of first-class mail and 92.5pc of second-class mail on time.

If Royal Mail misses its targets, Ofcom can consider evidence of any exceptional circumstance beyond the company’s control, such as extreme weather events, and whether it would have hit its targets had those events not occurred.

But the regulator found that even when accounting for two storms in December and January, Royal Mail still fell short of its targets.

As a result, Ofcom ruled that the company had failed to provide an acceptable level of service without justification. The watchdog said it had taken insufficient and ineffective steps to prevent this failure, which was likely to have affected millions of customers who did not receive the service they paid for.

Ian Strawhorne, Ofcom’s director of enforcement, said: “Millions of important letters are arriving late, and people aren’t getting what they pay for when they buy a stamp. These persistent failures are unacceptable, and customers expect and deserve better.

“Royal Mail must rebuild consumers’ confidence as a matter of urgency. And that means making actual significant improvements, not more empty promises.

“We’ve told the company to publicly outline how it will deliver this change, and we expect to see meaningful progress soon. If this doesn’t happen, fines are likely to continue.”

The £21m fine, which will be passed on to the Treasury, was initially set at £30m but was reduced by 30pc to reflect Royal Mail’s admission of liability and agreement to settle the case.

It follows a £10.5m fine last year and a £5.6m penalty in 2023, taking the total cost of Royal Mail’s poor service to more than £36m over the previous three years.

Postal service under pressure

Ofcom has been ramping up the pressure on Royal Mail to improve its service. The company had produced an improvement plan for the latest year, aiming to achieve 85pc for first-class mail and 97pc for second-class mail by March 2025.

The regulator said it was “unacceptable” that this improvement had not materialised and told bosses they must publish a credible plan to deliver “significant and continuous improvement”.

Ofcom has given the green light for a watering down of Royal Mail’s universal service obligation following heavy lobbying from the company.

Under the new system, which is currently being trialled, second-class letter deliveries on Saturday will be scrapped, with the company instead offering an alternate weekday service.

Delivery targets will also be lowered to 90pc and and 95pc for first-class and second-class post, respectively.

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A Royal Mail spokesman said: “We acknowledge the decision made by Ofcom today, and we will continue to work hard to deliver further sustained improvements to our quality of service.

“Where we have piloted universal service changes, we can see that our model is working, with improvements in deliveries. This will help us deliver a modern, reliable and more financially sustainable postal service that meets the needs of today’s postal users.”

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