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Royal Mail has accelerated plans to axe Saturday letter deliveries by asking the Government to consider changing postal laws to allow a five-day-a-week operation.
The postal monopoly, which has a legal requirement under its “Universal Service Obligation” to deliver letters six-days-a-week, is seeking permission for “an early move to five day letter delivery”.
Ending weekend deliveries would save the company £225m a year. It would also allow Royal Mail to focus on a seven-day-a-week parcel operation so that it can better compete with tech-savvy rivals such as Amazon, it said.
As fewer people send letters and parcel deliveries boom on the back of growing sales of goods online, Royal Mail is trying to push through a host of changes to the way it operates.
It comes as the service is in the middle of its worst industrial dispute since privatisation nine years ago. Bosses have been locked in a row with the powerful Communication Workers Union (CWU), which represents 115,000 Royal Mail staff.
The CWU is resisting proposals to change working practices and automate the business to cut costs. Union chiefs have also so far rejected a new pay deal worth up to a 9pc rise over the next two years.
Announcing the company’s half-year results on Thursday, chairman Keith Williams said: “The difference between the performances of our two companies could not be more stark.
“GLS has adapted well to inflationary pressures across its geographies. However, we have been standing at a crossroads with CWU in the UK for several months. We are now heading in a clear direction in light of the substantial losses in Royal Mail.”
Royal Mail UK operations posted a £219m loss in the six months to September 2022 compared with its overseas business that turned £162m operating profit.
Ending Saturday letter deliveries is expected to provoke a backlash within Westminster, with backbench MPs on both sides of the political aisle likely to oppose plans to reform the service.
Talks between the postal bosses and the union, scheduled to end on Wednesday, have been extended in the hope of striking a deal to avert further strikes.
The next industrial action is scheduled for Nov 24, 25, 30 and Dec 1.
Dave Ward, CWU general secretary, claimed that Royal Mail had racked up big losses because of “gross mismanagement”.
He added: “Senior leadership of Royal Mail have been treating employees, union representatives or future investors with a lack of integrity and transparency.”
Simon Thompson, Royal Mail chief executive said: “We have always been clear we need change to survive. We have started turning the business around and will do whatever it takes. We have worked hard to deploy our contingency plans to minimise disruption to customers and impact on revenue.
“Our infrastructure plans are on time and we are now making the operational changes to turn Royal Mail into a thriving business that will provide great service for our customers at a competitive price and long term job security for our people.
“We would prefer to reach an agreement with the CWU, but in any case we are moving ahead with changes to transform our business.”
Threat of strikes comes as a hammer blow to retailers
Ebay bosses are pleading with Royal Mail and trade union leaders to agree a deal so that strikes can be avoided over the Black Friday weekend.
Three out of five companies that use eBay to sell their goods fear that they will miss sales targets during the vital Christmas trading period because of industrial action, according to polling by the US tech giant.
The so-called “golden quarter” during the run-up to Christmas is crucial to retailers and is when many make the majority of their annual profits.
The Royal Mail strikes have dragged on for months with several days of walkouts.
The threat of strikes hitting parcel deliveries comes as a hammer blow to retailers that are already battling depressed consumer sentiment amid the cost-of-living crisis.
Polling by eBay of small businesses that sell their goods on its website showed nine in 10 respondents felt the strikes will have a negative impact on their business.
Meanwhile, 58pc of people think that they will now miss sales targets between now and the end of the year as business confidence plunges.
Murray Lambell, head of eBay UK, said: “Astronomical energy prices, rising interest rates, and the blowback from political unrest has made it incredibly challenging for small businesses to operate right now. Adding industrial action, which is causing widespread disruption to deliveries and sales, at the most important time of year for trading, risks being the nail in the coffin for many small businesses.”
“We understand the complexities of this dispute, but the cost of this to Britain’s small business community cannot be overlooked. We will do everything we can to support our sellers through this difficult time, but we need an urgent resolution if we are to ensure the survival of thousands of small businesses this Christmas.”
Hannah Daragon runs her own online games business using eBay. She said: “I am already thinking of reducing selling and possibly just closing for the next two months. We sell party games online and have a fulfilment operation that runs exclusively with the Royal Mail.
“For us these strikes are catastrophic, as the way we are set up we can’t move our operations to any other carrier. So every single day they strike, we lose money. And as we sell time sensitive products – for birthdays and other seasonal events – if people can’t get them in time, they simply won’t order with us.”
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