UK postal users will have extra protections against long delivery delays, under reforms to the universal service announced this week (10th July) by Ofcom, which will enable Royal Mail to improve reliability and support a sustainable service.
Why reform is needed
Since 2011, Royal Mail has been required under the universal service obligation to deliver First and Second Class letters six days a week. But in that time, the number of letters sent each year has more than halved. With fewer letters being delivered to each house on a given round, the cost of delivering each letter has increased, and Royal Mail has lost hundreds of millions of pounds in recent years.
Urgent reform is needed for the universal service to survive. To put the service on a more sustainable footing, to prevent people from paying higher prices than necessary, and to push Royal Mail to improve reliability, Ofcom has today made changes to the obligations imposed on the company. This follows public consultation with thousands of people and organisations including consumer groups, unions, small businesses, public services, Royal Mail and the wider postal industry, as well as postal users directly – from right across the UK.
We have also launched a review of pricing and affordability, which will consider concerns that many people and organisations have raised about stamp prices. We plan to consult on this next year.
Natalie Black, Ofcom’s Group Director for Networks and Communications, said: “These changes are in the best interests of consumers and businesses, as urgent reform of the postal service is necessary to give it the best chance of survival.
“But changing Royal Mail’s obligations alone won’t guarantee a better service – the company now has to play its part and implement this effectively. We’ll be making sure Royal Mail is clear with its customers about what’s happening, and passes the benefits of these changes on to them. “As part of this process, we’ve been listening to concerns about increases in stamp prices. So we’ve launched a review of affordability and plan to publicly consult on this next year.” What reform will deliver - Our research suggests that affordability and reliability are more important to people than speed of delivery, but they value having a next-day service available for when they need to send the occasional urgent item. Royal Mail will therefore continue to be required to deliver First Class letters the next working day, Monday to Saturday, and there will continue to be a cap on the price of a Second Class stamp. However, people have told us that most letters are not urgent, and they do not need six days a week delivery for the majority of letters. So, from 28 July, we will allow Royal Mail to deliver Second Class letters on alternate weekdays – still within three working days of collection – Monday to Friday.
We estimate Royal Mail could realise annual net cost savings of between £250m and £425m with successful implementation of this change, enabling it to invest more in improving its delivery performance. We have told Royal Mail to hold regular meetings with consumer bodies and industry groups to hear about the experiences of people and businesses as it implements these changes. Our research also shows that small reductions in Royal Mail’s delivery targets would continue to meet people’s needs. Maintaining the current targets – which are more stretching than comparable European countries – would carry higher costs which would need to be recovered through higher prices. So, we are making small changes to Royal Mail’s existing delivery targets – for First Class mail from 93% to 90% delivered next-day, and for Second Class mail from 98.5% to 95% delivered within three days. These new targets are high by international standards. However, many people have experienced long delays where letters have taken weeks to arrive. To address this issue, we have set Royal Mail new enforceable backstop targets so that 99% of mail has to be delivered no more than two days late.
