Royal Mail hopes to end Saturday letter deliveries as Ofcom sees advice on potential £225m savings

Royal Mail hopes to end Saturday letter deliveries as Ofcom sees advice on potential £225m savings

5 Sep    Finance News, News

Royal Mail is hoping to end Saturday letter deliveries after the postal regulator called for evidence on how its services might change as the popularity of paper post continues to fall.

Ofcom, which has previously estimated Royal Mail could save up to £225m annually by dropping Saturday delivery and conducted research that found consumers were “largely indifferent” to the idea, is beginning a process to establish how services “might need to evolve to better reflect the changing needs of postal users”.

In November, Royal Mail asked the government to let it stop Saturday deliveries, saying letter volumes had fallen by 60% since their peak of 20bn annually in 2004-05 to 7bn in 2022-23.

Royal Mail, which made a £419m loss last year, has said it may have to make widespread job cuts this year if it cannot restructure its business.

In June, the government, which has to grant permission for any changes to Royal Mail’s universal service obligation (USO) introduced at privatisation in 2013, said it had “no plans” to change them.

“The universal service has been unchanged since the implementation of the current framework under the Postal Services Act 2011,” Ofcom said on Tuesday.

“However, consumer demand for postal services has changed substantially, and continues to do so. So, Ofcom is gathering evidence on how the universal service might need to evolve to more closely meet consumer needs.”

Ofcom said it would set out detailed evidence later this year, including “potential options for change in the future and how these might be managed to ensure smooth transition to any future arrangements”.

Royal Mail said the USO, which requires it to deliver letters to all 32m UK addresses six days a week on a one-price-goes-anywhere basis, is “outdated and in need of urgent reform”.

A spokesperson said: “We welcome that Ofcom is looking at options for the future of the USO and the recognition that it needs to evolve to reflect the changing needs of postal users.

“Being required to provide a service that customers have said they no longer need, at significant cost to Royal Mail, increases the threat to the sustainability of the USO.

“We want to work with all stakeholders including Ofcom, government, our unions and our customers to enable change quickly and to protect the long-term sustainability of the one-price-goes-anywhere universal ervice.”

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