Royal Mail told it MUST keep Saturday post: Ministers block plan to axe deliveries despite the firm’s widening losses
Royal Mail’s plans to axe Saturday deliveries have been blocked by ministers despite the firm’s widening losses and concerns about the spiralling price of first-class stamps.
Business minister Kevin Hollinrake has told the 507-year-old company that the Government has no plans to review its universal service obligation (USO), which requires it to deliver six days a week.
Hollinrake said in a letter to MPs on the business select committee: ‘Postal services have long played a key role in our society.
Saturday post: The Government said there were no plans to review Royal Mail’s universal service obligation, which requires deliveries six days a week
The ability to send and receive letters and parcels is important both socially and economically.
This is particularly true for consumers who might be more vulnerable, such as those who are geographically or digitally isolated from their friends and family.’
It came after Keith Williams, chairman of Royal Mail’s parent company International Distributions Services (IDS), said ‘urgent’ changes were needed to the USO to keep the firm afloat.
It says the public no longer needs a six-day-a- week service as fewer letters are being sent.
About 7bn letters were sent last year – down from 20bn in 2004.
And estimates suggest Royal Mail could save as much as £250million per year if deliveries were cut to five days.
Williams has warned that if the Government does not budge, Royal Mail would be forced to make ‘considerable’ increases to the cost of a first-class stamp.
Royal Mail broke the £1 barrier for the first time in April, raising the price from 95p to £1.10.
Royal Mail lost £1.04billion for the 12 months to March 26, having made a profit of £250million the previous year.
It said: ‘It is clear that when letter volumes have declined by more than 60 per cent since their peak, in order to be financially sustainable, the Universal Service requires urgent reform.’
‘Czech Sphinx’ swoops again
Royal Mail’s largest investor has again raised his stake in the business.
Billionaire Daniel Kretinsky, dubbed the ‘Czech Sphinx’, increased his holding in parent company International Distributions Services to 26.2 per cent from 25 per cent through his vehicle Vesa Equity.
The move takes the value of his stake to about £493million and is the third time that Kretinsky has increased his stake this year during which Royal Mail has been battered by strikes.
But the tycoon has so far played down any rumours that he is planning to make a takeover bid for the business.