Saturday post ‘under review’ as struggling Royal Mail looks to cut costs

In a letter to the Business Select Committee in June, he wrote: “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.”

Ofcom will publish evidence later in the year on how demand is changing, the costs of delivering universal service and potential alternatives, although it will not make the final call on whether Saturday services should continue.

Any change to the obligations, which include a requirement to deliver to every address in the UK at an affordable, uniform price, must be voted through by MPs.

Scrapping Saturday deliveries and upgrading parcel services to seven days a week is a key part of Royal Mail’s plans to turn around its struggling operations in the UK.

Ofcom has estimated that the change would save Royal Mail up to £225m annually.

Royal Mail slumped to a £1bn loss last year as it grappled with a wave of disruptive strike action.

The company is already under investigation by Ofcom after delivering more than one in four first class letters late last year – its worst performance on record.

Earlier this year, the Telegraph revealed the emergence of “postal deserts”, with some neighbourhoods receiving post as infrequently as once a fortnight.

Salvaging postal services and rebuilding relations with unions will be key tasks facing Martin Seidenberg, who took over as chief executive of Royal Mail last month following the departure of Simon Thompson after just two years in the role.

A Royal Mail spokesman said: “The Universal Service Obligation (USO) – which currently requires Royal Mail to deliver letters to all 32 million UK addresses six days a week – is outdated and in need of urgent reform. So we welcome that Ofcom is looking at options for the future of the USO and the recognition that it needs to evolve to reflect the changing needs of postal users.

“Being required to provide a service that customers have said they no longer need, at significant cost to Royal Mail, increases the threat to the sustainability of the USO. We want to work with all stakeholders including Ofcom, Government, our unions and our customers to enable change quickly and to protect the long-term sustainability of the one-price-goes-anywhere Universal Service.”

A government spokesman said: “As the independent regulator, Ofcom is reviewing the future of the universal postal service in response to changing consumer demand.

“There are no current plans to change the statutory minimum requirements, but we will carefully consider any advice that Ofcom puts forward to meet the needs of consumers.”

Why Royal Mail’s decline spells the end of Saturday letter deliveries

By James Warrington

When Martin Seidenberg took over as chief executive of Royal Mail last month, his task was clear: to redefine the postal service for an era without letters.

Just weeks into the job, the 50-year-old German can claim an early victory after regulator Ofcom announced a sweeping review of Royal Mail’s requirement to deliver letters from Monday to Saturday.

While power to change the postal rules – known as universal service obligations (USO) – ultimately lies with Parliament, the review is a major breakthrough for the company, which has been campaigning for an overhaul for three years.

The issue has so far been met with political resistance, as ministers are reluctant to wield the axe on a service that remains important to a minority of Brits.

But Royal Mail’s worsening financial position has forced the regulator to step in. Moreover, as the threat of further strikes and potential nationalisation under a Labour government looms, ministers may be left with no choice but to abandon Saturday letters to save the historic institution.

At the heart of the tussle is a sharp decline in letter writing. Letter volumes have tumbled by 60pc from a peak of 20bn in 2005 to just 7bn last year, according to Royal Mail. That is despite the number of addresses rising by 4m over the same period.

The company has argued that Saturday deliveries are becoming more expensive to maintain. In turn, it has warned of significant increases in the price of first class stamps to balance the books.