Royal Mail could see its services overhauled as part of a proposal put forward by Ofcom in an effort to “reflect what people need and protect [the] future” of the postal service.
Specifically, the regulator is suggesting the postal company should scrap second class letter deliveries on Saturdays and reduce the service to be on alternate weekdays, while also lowering Royal Mail’s delivery targets.
Natalie Black, Ofcom’s group director for Networks and Communications, broke down why reform at Royal Mail is needed to ensure the company is providing a quality service to Britons
She explained: “The world has changed – we’re sending a third of the letters we were 20 years ago. We need to reform the postal service to protect its future and ensure it delivers for the whole of the UK.
“But we’re safeguarding what matters most to people – First Class mail six days a week at the same price throughout the UK, and a price cap on Second Class stamps.”
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According to Ofcom, “reform” is needed as the way in which households use the postal service has changed substantially with Royal Mail now delivering 6.6 billion letters a year, down from 20 billion two decades ago.
Due to declining volumes, the cost of sending out a letter has has risen because postal workers are walking more routes than ever, while delivering less letters to households.
As a result of this, Royal Mail is losing thousands of pounds and may need to make changes to maintain its universal service while keeping up with customer needs.
Based on research conducted by Ofcom, Britons believe affordability and reliability are currently more important than the speed of delivery of letters.
Furthermore, the regulator said stakeholders have shared that most letters are not urgent. Despite this, 78 per cent of Britons surveyed value having a next-day service available to them for urgent items.
Some 82 per cent of those polled said they want to be able to send something out for delivery for the same price anywhere in the UK
UK households spend on average spend 60p per week on postal services which is 0.11 per cent of their weekly outgoings but nine in ten say it is important to have an affordable option available.
As such, Ofcom has suggested Royal Mail keeps the following services available:
- continuing to cap the price of a Second Class stamp;
- one price goes anywhere throughout the UK; and
- six days a week First Class next-day service.
However, to ensure a universal service, the regulator are proposing to allow Royal Mail to deliver second class letters on alternate weekdays. This would ensure deliveries were still made within three working days of collection – but not on Saturdays.
Based on Ofcom’s polling, only four per cent of customers believe they will be “significantly impacted” by the changes and Royal Mail could see annual net cost savings of between £250million and £425million.
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As well as this, Royal Mail is proposing first class next-day delivery targets to be reduced from 93 per cent to 90 per cent and for second class targets to fall from 98.5 per cent to 95 per cent.
Emma Gilthorpe, the chief executive officer at Royal Mail said: “Ofcom has recognised the urgent need for change so that the future of the Universal Service can be protected for all.
“Our proposal was developed after speaking to thousands of people across the country and is designed to preserve what matters most for our customers – maintaining a one-price-goes-anywhere service to 32 million UK addresses and First Class deliveries six days a week.
“As Ofcom’s analysis shows, it is no longer financially sustainable to maintain a network built for 20 billion letters when we are now only delivering 6.7 billion. Reform is crucial to support a modern, sustainable, and reliable postal service for our customers, our company and our people.”
