Scrapping letter deliveries on Saturdays could save Royal Mail hundreds of millions of pounds a year as it battles to stem ballooning losses and modernise

Scrapping letter deliveries on Saturdays could save Royal Mail hundreds of millions of pounds a year as it battles to stem ballooning losses and modernise.

According to calculations seen by the Mail, the delivery group could see as much as £250m saved if deliveries were cut to five days a week, much higher than previous estimates of £125m-£225m made by the regulator Ofcom in 2020.

It potentially could slash the company’s projected annual losses for this year, which are expected to be between £350m to £450m, by more than half.

Such a saving could also provide enough financial wiggle room to increase pay for its staff as well as lower stamp prices, according to sources familiar with the matter.

Royal Mail is currently legally required to deliver letters to every address in the UK six days a week under what is known as the Universal Service Obligation (USO).

© Provided by This Is Money
Cutting back: Royal Mail could see as much as £250m saved if deliveries were cut to five days a week

But the company has been pushing for this to be cut to five days as the number of posted letters has fallen.

‘It is clear that when letter volumes have declined by more than 60 per cent, to be financially sustainable the USO requires major reform now,’ a Royal Mail spokesman said.

They added: ‘This change is critical. Being required to provide a service that customers have said they no longer need, at significant structural cost to Royal Mail, increases the threat to the sustainability of the Universal Service.’

Royal Mail points to the 2020 Ofcom report which concluded reducing letter deliveries to five days a week would meet the needs of 97 per cent of users.

But the Government has refused to reduce the USO, with business minister Kevin Hollinrake saying in December there were ‘no current plans’ to allow any changes.

Any alterations to the USO would need to be made through legislation and agreed by Parliament.

Some publishing groups have also warned scrapping Saturday deliveries could have a catastrophic effect on magazine publishers, many of which send out new editions on Fridays and Saturdays.

The push to reduce comes as Royal Mail scrambles to become more competitive against the likes of Amazon.

But its plans have been hampered by a long-running pay dispute which saw thousands of posties walk out on strike for 18 days last year.