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The boss of Royal Mail faced a fierce backlash from MPs last night after he admitted the firm was failing its legal duty to deliver letters on Saturdays.
In a bruising encounter with the Commons business committee, chief executive Simon Thompson yesterday said the firm had fallen short of its universal service obligation (USO).
This legally requires Royal Mail to deliver letters to UK households six days a week and parcels five days a week.
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In a bruising encounter with the Commons business committee, Royal Mail chief exec Simon Thompson (pictured) said the firm had fallen short of its universal service obligation
‘You’ve not been delivering on your USO of delivering letters six days a week for some time. That’s right isn’t it?’ said committee chair Darren Jones.
Thompson replied: ‘Yes I think that’s right.’ He added that the company was ‘definitely not achieving USO’ but did not state whether he believed there had been a systemic failure at Royal Mail.
He also denied that it is company policy to prioritise parcels over letters.
When asked last month by MPs if postal workers had been told to prioritise parcels over letters, Thompson had said: ‘No, that is absolutely not true.’
But yesterday, in response to evidence from posties across the country, he said parcels are prioritised over letters during industrial action.
‘It’s not our policy but in [the] realities of industrial action we have to apply a different policy,’ he said.
The committee also questioned Keith Williams, the chair of Royal Mail’s parent company International Distributions Services (IDS), about why fulfilling the USO was not part of the group’s long-term incentive plan, the conditions for which executives receive bonuses and share awards.
Williams said the USO was not included as the incentives were tied to ‘the transformation of the business’ but stressed letters were still ‘very important’ to Royal Mail.
But Jones accused him of choosing to ‘write-off and exclude’ letter deliveries and the USO from the long-term performance plan for the firm.
Royal Mail has previously pushed for Saturday letter deliveries to be scrapped as the number of posted letters has declined sharply over the years.
It is estimated that the group could save as much as £250million per year if the change was made.
The tense committee hearing came as Royal Mail continues to be locked in a bitter dispute with workers over pay and plans to modernise the business to make it more competitive with rivals.
And the row showed no signs of ending following a vote by the Communication Workers Union (CWU) – which represents around 115,000 Royal Mail workers – to go on strike again.
It follows 18 days of walkouts last year, which the company said had cost it £200million.
The company has warned that if it is unable to transform the business, it could split IDS in two.
This would separate Royal Mail from its more successful international arm GLS.
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