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The Czech billionaire owner of Royal Mail has agreed to a request from MPs for an independent audit of the postal service amid renewed concerns that parcels are systematically being prioritised over letters.
In a first appearance before parliament, Daniel Kretinsky, whose EP Group clinched the £3.6 billion takeover of Royal Mail’s London-listed owner last year, apologised to the Commons business and trade select committee on Tuesday for late letters and accepted that the quality of service was “not where we want it to be”.
“I’m deeply sorry if we are not delivering the letters on our promise,” he said.
During an at-times combative hearing, which was called over “significant concerns” about the postal service’s performance and failure to hit statutory delivery targets, Kretinsky insisted the quality was not declining and said reform of Royal Mail’s universal service obligation (USO) would help to improve the deliveries.
“We need to implement USO reforms. Without USO reform we have no way how [sic] to fix it,” he said.
The changes, agreed by Ofcom last July, after years of lobbying by Royal Mail, include ending Saturday deliveries of second-class letters. However, they have been held up by protracted negotiations between bosses and the Communication Workers Union (CWU), representing frontline Royal Mail workers.
The committee was told that Royal Mail will publish its plans once those negotiations have concluded on Monday and that progress had been made since recent intervention and tripartite meetings involving ministers.
Kretinsky told the committee he believed Royal Mail “has a future … and this is why I’m here”.
He said he was “driven by the challenge, not by profit” and called on the government to tighten regulation of Royal Mail’s “gig economy” competitors to “level the playing field” and their treatment of couriers.
EP Group, based in Prague, completed the takeover of International Distribution Services last year after agreeing undertakings with ministers and following years of damaging industrial relations that had hit the company’s finances and workforce morale.
The undertakings included creating a so-called golden share for the government, as well as reaching an agreement with the CWU.
The committee is concerned that Royal Mail’s claim of delivering 92.1 per cent of letters on time obscures the fact that only 74.9 per cent of first-class mail was delivered on time so far this year, against a target of 93 per cent.
The MPs have said that this “translates into approximately 126 million first-class letters arriving late over the year, 219 million in total if you include nearly 10 per cent of second-class letters set to arrive late.”
Liam Byrne, the Labour chairman of the committee and a former Treasury minister, said Royal Mail’s failings were having a “real impact on life up and down the country” and is “badly affecting our national life”.
The committee’s focus centred on claims from whistleblowers and information from the CWU that Royal Mail is prioritising its more lucrative parcels business over letters, including NHS letters.
Dave Ward, the general secretary at the CWU, giving evidence to the committee before Kretinsky and Royal Mail bosses, said the postal service had become “chaotic” and that while Royal Mail did not “put out instructions directly” to postal workers to prioritise parcels, this was created through a “pyramid” framework, which tells them which deliveries to prioritise over others.
Kretinsky and Royal Mail bosses denied that it prioritised parcels, but said there were occasions where they needed to be cleared from overcrowded postal offices. They also said that the Royal Mail has introduced a specialised NHS barcode to ensure NHS letters are being delivered faster.
“Categorically this is not any management decision and nobody is incentivised to do that, and we think it’s actually not happening,” Kretinsky said.
He added: “We would of course welcome any specific information where this is happening and we have no problem with [an] independent audit.”
Ward told MPs that USO reform was not a “silver bullet” to improving the Royal Mail service but the union was “willing to reach an agreement on it because it’s part of rebalancing their investment in the future in other areas to grow new revenue streams”.
He added: “At the same time, if they don’t fix the retention crisis, quality of service problems will not just continue, they’ll get worse.”
Ward refused to rule out industrial action and said that if the government did not “hold them to account”, Royal Mail would need renationalising.
Ofcom, which also appeared before the committee, is pressing Royal Mail to make improvements, or face further fines, and to publicly set out its plans to deliver this.
Royal Mail was fined £21 million in October for failing to meet its first and second-class delivery targets in the year to last March. It was the third consecutive annual fine from Ofcom after it found the company in breach of its regulatory obligations in 2024 and 2023.
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