Will Royal Mail plan ever be delivered?

Saturdays will never be the same again. How will anyone survive without the reassuring thud of junk mail landing on the doormat: another offer to re-roof the house, perhaps, or one of those delightful catalogues, full of must-have buys like elasticated-waist trousers or glow-in-the-dark plastic owls?

For most people, the posties’ Saturday delivery is the highlight of their weekend. Or at least you’d think it was, given the song and dance Ofcom is making over a belated proposal, in this digital age, to end one tiny bit of the Royal Mail’s “universal service obligation”, the commitment to deliver second-class letters on Saturdays.

If the idea sounds familiar, that’s because it is. The regulator came up with much the same plan in January as part of “two primary options” to revamp the service, so it “more closely aligns with people’s needs”. By April, the Royal Mail owner, International Distribution Services — itself the subject of a £3.6 billion cash bid from the Czech billionaire Daniel Kretinsky — had fleshed out the details of one of them: three deliveries of second-class letters on alternative weekdays, with the existing six-days-a-week service retained for first class. All en route, too, to saving “up to £300 million per year”.

And now up has popped Ofcom with the same scheme all over again. Yes, in the meantime it’s been doing “in-depth consumer research”, receiving 2,348 responses from consumer groups, businesses, MPs and even members of the public. So, key question? Is it now ready to implement the plan, what with it not even needing primary legislation? Don’t be daft. Ofcom will be embarking on even more in-depth consumer research, “with a view to publishing a decision in summer 2025”. What is this, some sort of Ofcom job creation scheme?

Indeed, it’s hard to see how this sort of snail-pace delivery tallies with the aim of the regulator’s networks chief, Lindsey Fussell, to “get the universal service back on an even keel”. While she’s fusselling around, Royal Mail lost £348 million last year, on top of the £419 million the previous one. True, the posties strike clearly didn’t help. But Ofcom has also taken far too long to wake up to the cost of regulatory delay.

Martin Seidenberg, Royal Mail’s boss, may be talking his book with his cry that “change cannot come soon enough”, saying “most countries have adapted their universal service” for today’s email and WhatsApp age. Yet, arguably, Ofcom’s faffing about has already cost both consumers and investors.

Royal Mail has been running a cost-heavy network geared up for a peak 20 billion letters a year when today’s demand is for 6.7 billion — and forecast to fall to four billion over the next four years. Providing the USO costs “£325 million to £675 million a year” on Ofcom maths: an outsized sum when demand from today’s home-shopping consumer is not for letters but parcels and investment in more flexible delivery. On top, amid the losses, service has gone backwards: the reason Ofcom fined the group £5.6 million for missing USO targets in 2022-23 and is “investigating” similar failures last year.

As for shareholders, the costs of the USO contributed to a flagging share price: the cue for Kretinsky to pounce with his bid at 370p a share. To boot, if the government clears his offer, it’ll be him who is in line for the USO cost savings of £300 million a year. Thank Ofcom’s shilly-shallying around for that.

Energising news

Hot air from Ed Miliband has long been a recognised threat to global warming. Still, the energy secretary could yet be more on the money than usual with his claim that this week’s green energy auction was a “significant step forward” in “bringing Britain energy independence and lower bills”.

Awards for 131 mainly wind farm and solar projects ticked the “energy independence” box. But lower bills? Under the contracts-for-difference regime, generators receive a guaranteed strike price, receiving top-up payments if wholesale electricity prices fall below it and repaying the excess if they’re higher. And the government backed this auction with £1.55 billion of potential top-up payments a year.

Pay that out and bills would go up. So the latest from Cornwall Insight, the research outfit, is relatively reassuring. It reckons the auction will add a mere “£4.59 to a typical household energy bill by 2030-31”. Yes, as Miliband may spot, that’s up, not down.

And, of course, it’s only a forecast — based on estimates that the wholesale electricity price will average £72 per megawatt-hour in 2030-31, at which price cheaper onshore wind and solar will be paying into the scheme. Cornwall’s view? That, even if the auction will “cost consumers a small amount”, they’ll see “fewer price fluctuations” as Britain weans itself off “volatile international energy markets” — on balance, a positive.

True, none of this explains how Rachel Reeves, the chancellor, plans to deliver her vague promise to “help families save up to £300 off energy bills”. But that’s another story.

From top to bottom

Not such a Topshop now. Rewind to 2005 and the retail chain was a key bit of Sir Philip “Effing” Green’s Arcadia: the conduit for a £1.2 billion dividend payment to his offshore wife, the Monaco-based yacht decorator Lady Green. Then came the Kate Moss years — before the brand went a bit glug-glug, sold to Asos in 2021 as part of a £265 million deal, also including Miss Selfridge.

And now? Topshop’s just been sold again, this time for just £135 million, with Asos retaining a 22.5 per cent stake, as part of the online fashionista’s debt refinancing.

Nowadays, selling the brand is what makes waves: Asos shares bobbed up 18 per cent to 434p.