Ofcom: Royal Mail could reduce letter delivery in bid to modernise

Royal Mail could reduce letter delivery days from the current six per week to as few as three.

The proposal arises amid concerns that the postal service is becoming outdated, a report by the regulator, Ofcom has said.

Royal Mail, privatised between 2013 and 2015, has a legal duty to maintain a universal service. This service currently includes deliveries six days a week, from Monday to Saturday.

However, a sharp decline in letter volumes – halved since 2011 – along with an increase in parcel deliveries, has led the organisation to consider significant reforms.

Dame Melanie Dawes, Chief Executive of Ofcom, highlighted the need for urgent action. She stated that the postal service will become unsustainable without reforms.

She announced that these options for overhaul are open for national discussion, with an update expected in the summer.

Ofcom’s analysis indicates that reducing delivery days to five could save Royal Mail between £100m and £200m. A reduction to three days could save between £400m and £650m.

However, such reforms would require changes to the current legislation by the UK government and parliament.

Facing a £319m loss in the first half of the current financial year, Royal Mail, now part of International Distribution Services plc, has been calling for urgent reform since 2020.

The company prefers to reduce weekly delivery from six days to five, specifically from Monday to Friday.

Ofcom’s research shows that people expect value for their money.

But due to Royal Mail’s recent poor performance, which resulted in a £5.6m fine from Ofcom last year, customers are not receiving a reliable service.

The UK is not alone in facing challenges with its postal service.

According to Ofcom, universal postal service obligations across Europe and beyond have been, or are being, reformed.

Other countries have reduced delivery frequency or extended delivery times for letters. These include Sweden in 2018, Belgium twice since 2020, and Norway and Denmark twice each since 2016.

Dame Melanie Dawes, Ofcom’s Chief Executive, said:

“Postal workers are integral to our society and are vital to communities across the country. But we’re sending half as many letters as we did in 2011, and receiving many more parcels. The universal service hasn’t changed since then, it’s getting out of date and will become unsustainable if we don’t act.

“So, we’ve outlined reform options to initiate a national discussion about the future of universal post. Meanwhile, we’re ensuring affordability by capping the price of Second Class stamps.”

Martin Seidenberg, Group Chief Executive Officer, said: “Ofcom’s report demonstrates that reform is urgently needed to protect the future of the one-price-goes-anywhere Universal Service. We are doing everything in our power to transform, but it is not sustainable to maintain a network built for 20 billion letters when we are now only delivering seven billion.

“We have been calling on Government and Ofcom to tackle this issue for four years, and the lack of action means that we are now facing a much more serious situation.

“Whilst other countries have grasped the opportunity to change, the UK is being left behind. There has been a lot of discussion about dropping Saturday letter deliveries in the UK, but as other countries have shown, there are a range of options to consider.

“A modern and sustainable postal service is crucial for our people, our company and the customers we serve. We want to engage with all stakeholders as part of the process to find an outcome that will allow us to compete and adapt to today’s realities.”

Ofcom has called for a ‘national debate’ on the future of the UK’s postal service and is inviting input from interested parties by 3 April 2024.

The regulator plans to hold events in the coming months to discuss the evidence and options, involving a variety of people and organisations with different viewpoints.