Royal Mail set to axe part of Saturday service under string of new reforms

5 September 2024, 10:32

Royal Mail is poised to axe part of its Saturday delivery service as part of a series of proposed reforms.

First-class letters would continue to be delivered six days a week under changes to be put to consultation by Ofcom, which said there was strong support for the “fundamental principles of universality, affordability and uniform pricing”.

Ofcom said a review this year of the so-called universal service obligation (USO) had acknowledged changes were needed if the service was to remain “sustainable, affordable and reliable”.

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Under the plans being considered, second class deliveries would not be made on Saturdays and would only be on alternate weekdays, but delivery times would remain unchanged at up to three working days.

Ofcom said no decision had been made and it continues to review the changes, with aims to publish a consultation in early 2025 and make a decision in the summer of next year.

Royal Mail has urged the Government and Ofcom to review its obligations, arguing that it is no longer workable or cost-effective, given the decline in addressed letter post.

It has proposed ditching Saturday deliveries for second class post and cutting the service to every other weekday in its submission to Ofcom in April.

Lindsey Fussell, Ofcom’s group director for networks and communications, said: “If we decide to propose changes to the universal service next year, we want to make sure we achieve the best outcome for consumers.

“So we’re now looking at whether we can get the universal service back on an even keel in a way that meets people’s needs.

“But this won’t be a free pass for Royal Mail – under any scenario, it must invest in its network, become more efficient and improve its service levels.”

Royal Mail owner International Distribution Services (IDS), which agreed a £3.57 billion takeover by Czech billionaire Daniel Kretinsky in May, said “change cannot come soon enough” to the UK’s postal service.

Martin Seidenberg, group chief executive of IDS, said: “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.”

The Royal Mail’s universal service obligation (USO) stipulates that it must deliver letters six days a week to all 32 million addresses in the UK for the price of a stamp, no matter where the letters are going.

When Ofcom first said it was considering cutting postal delivery days, it sparked an outcry, with ministers quick to dismiss any suggestion that the Government would sanction the scrapping of Saturday deliveries.

The six-day-a-week service is part of the universal service requirement stipulated by law under the Postal Services Act 2011.

But the current plans being looked at would not need a change in legislation, given Royal Mail would still be delivering first-class post six days a week.

Royal Mail said its proposals earlier this year to reduce all non-first-class letter deliveries – including second class and bulk business mail – would save it up to £300 million a year.

The group also said its plans would lead to “fewer than 1,000” voluntary redundancies with daily delivery routes cut by between 7,000-9,000 within two years.

Amanda Fergusson, chief executive of the Greeting Card Association (GCA), said: “We are concerned that (Ofcom’s) proposed timetable today takes us one step closer to the dismantling of a postal service that’s affordable and reliable.

“Our members have been clear that moving to a second class delivery service that’s limited to three days a week will mean customers buying and sending cards will have little idea when they’ll arrive.

“Those members, and the consumers they serve, rely on a postal service that’s reliable, affordable and national – they’ve already told us loud and clear they’re not getting it.

“Any changes to the USO ( universal service obligation) must prioritise the needs of small businesses and consumers – not Royal Mail profitability.”