The Royal Mail would be allowed to halve the number of days it delivers letters from the current six to just three under shock new proposals outlined today.
The postal service’s regulator Ofcom also said that delivery times “for most letters” could be extended to “up to three days or longer” to save money.
The “options fore reform” outlined in a consultation document from Ofcom today go far beyond fears that only the Saturday delivery is at risk.
Royal Mail bosses have been lobbying for a downgrading of its “universal service obligations” - which require it to provide a next day First Class delivery service six days a week anywhere in the UK - because it is no longer affordable.
Letter volumes have halved since 2011 and are still falling rapidly.
Ofcom said: “Given the significant cost to Royal Mail of delivering the universal service, there is an increasing risk it will become financially and operationally unsustainable in the long term.”
The two main options flagged up in today’s report are: “Making changes to existing First and Second Class and business products so that most letters are delivered through a service taking up to three days or longer, with a next-day service still available for any urgent letters, “ and reducing the number of letter delivery days in the service from six to five or three.”
The document adds: “We estimate that Royal Mail could achieve a net cost saving of £100m-£200m if letter deliveries were reduced to five days; and £400m-£650m if reduced to three days. If the large majority of letters were delivered within three days, it could achieve net cost savings of £150m-£650m.
Both radical options would require primary legislation and the backing of the Government. They would almost certainly prove deeply unpopular with the public and unions. Rishi Sunak has already ruled out a reduction in the six day service.
Ofcom’s chief executive Dame Melanie Dawes said: “Postal workers are part of the fabric of our society and are critical to communities up and down 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 The universal service hasn’t changed since then, it’s getting out of date and will become unsustainable if we don’t take action.
“So we’ve set out options for reform so there can be a national discussion about the future of universal post. In the meantime, we’re making sure prices will remain affordable by capping the price of Second Class stamps.”
Royal Mail CEO Martin Seidenberg, 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.”
