Ofcom makes progress on possible USO reform

The regulator set out two primary options for modernisation of the USO at the beginning of the year, and has now assessed the responses and feedback that was gathered subsequently.

Today (5 September) Ofcom said that it would now assess whether a possible solution would involve Second Class letters being delivered within three working days, but not on Saturdays.

First Class deliveries on six days a week would be unchanged.

Such a move could potentially save Royal Mail £300m a year.

“We have heard from thousands of people and organisations, including consumer groups, unions, businesses, public services, Royal Mail and the wider postal industry, as well as from postal users directly, from right across the UK,” Ofcom stated.

“Our research shows that affordability is the most important feature to people when it comes to letter deliveries. We will therefore continue to ensure there is an affordable option available for consumers, on a ‘one price goes anywhere’ basis.”

Respondents also raised concern about Royal Mail’s quality of service performance, which has fallen short of targets in recent years.

In the three months from 1 April to 30 June, Royal Mail delivered 94.1% of Second Class mail within three working days but just 79.1% of First Class mail within one working day.

Under the current rules Royal Mail’s performance targets are to deliver 93% of First Class mail within one working day, and 98.5% of Second Class post within three working days of collection.

From a printing and mailing industry perspective, Ofcom also noted that many bulk mailers valued reliability over speed and were “increasingly choosing slower delivery speeds” of within five days.

Ofcom will now undertake a full assessment of the proposed reforms and potential impacts.

A consultation is slated for publication early next year, followed by a decision statement in summer 2025.

Royal Mail set out is own wish list for USO reform in April, which included delivering Second Class and all non-First Class letters every other weekday.

In a response to the latest Ofcom publication Martin Seidenberg, CEO of Royal Mail parent International Distributions Services, reiterated the drastic decline in letter volumes in recent years.

“Our proposal for the future of the Universal Service has been developed after speaking to thousands of people across the country and is designed to protect what matters most for customers.  It can be achieved through regulatory change with no need for new legislation.

“The Universal Service faces a very real and urgent financial sustainability challenge. Change cannot come soon enough. We look forward to continuing to engage with all our stakeholders to secure a financially sustainable Universal Service for many years to come.”

Ofcom’s new report on the future of the universal postal service can be downloaded here.