Royal Mail could be allowed to scrap second-class letter deliveries on Saturdays, amid pressure from the company on the industry regulator to shake up postal service rules.
The UK communications regulator Ofcom said it would “assess” whether certain changes to second-class letter delivery would meet postal users’ needs, before a formal consultation due early next year.
It is part of the watchdog’s wider review of the universal service obligation (USO), the remit held by Royal Mail to deliver nationwide at one price six days a week.
“The evidence we have gathered so far also suggests people want a next-day service available six days a week for when they need to send the occasional urgent letter or card,” Ofcom said. “However, people acknowledge that most letters are not urgent.”
Ofcom said if second-class letters continued to be delivered within three working days, but, not on Saturdays, it would enable Royal Mail to “improve reliability, make substantial efficiency savings, and redeploy its existing resources to growth areas such as parcels”.
The watchdog is not proposing any changes to first-class deliveries at Royal Mail, which is in the process of being bought by the Czech billionaire Daniel Křetínský. His group’s £3.57bn takeover is being scrutinised by the government for national security risks.
Royal Mail has been urging changes the system amid declining letter volumes and increased competition in the parcels industry. It began lobbying for reform four years ago. Last year, the government rejected its request to drop Saturday deliveries.
Ofcom has previously estimated that the cost of delivering the USO is between £325m and £675m a year. It has forecast that reducing the number of delivery days could cut costs by £650m.
Royal Mail has asked the industry regulator to let it reduce deliveries of second-class letters to just two or three days a week, cutting nearly 1,000 jobs and saving £300m a year in the process.
It proposed paring back the daily Monday-to-Saturday second-class service to “every other weekday”.
On Thursday, Ofcom said it would carry out further in-depth research among postal users to explore whether this option meets their needs.
Royal Mail delivered less than 80% of first-class post on time in the three months to 30 June. It also delivered only 94.1% of second-class post on time.
Ofcom insisted its proposals would not be a “free pass for Royal Mail”, saying “under any scenario, it must invest in its network, become more efficient and improve its service levels”.
Martin Seidenberg, the chief executive of Royal Mail owner International Distribution Services, said: “Letter volumes have fallen from their peak of 20bn to just 6.7bn a year today meaning the average household now receives just four letters a week. Yet whilst most countries have adapted their universal service requirements to reflect the new reality, in the UK the minimum requirements have not changed.
“The universal service faces a very real and urgent financial sustainability challenge. Change cannot come soon enough.”
Tom MacInnes, the interim director of policy at Citizens Advice, said: “With Royal Mail failing to meet its targets for nearly half a decade, the current (USO) clearly doesn’t protect consumers as it should.
“Reforms to the USO need to address this. They can’t just be a disguise for cuts that prioritise saving Royal Mail money over providing a good standard of service. We agree that improving reliability and affordability is essential. But cutting deliveries won’t automatically lead to the more reliable service people need.”
Publishers and small businesses have voiced concerns over the proposed overhaul of the postal system, and warned against potential “panicked” cuts.
