Royal Mail service reduction plea rejected by government despite 'financial ruin' warning

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Royal Mail previously requested to stop delivering post on Saturdays amid financial worries

A request by Royal Mail, owned by International Distributions Services PLC (LSE:IDS), to stop delivering post on Saturdays has been rejected by the government.

Simon Thompson, Royal Mail chief executive, wrote to then-business secretary Kwasi Kwarteng in May, asking the government to remove its legal requirement to deliver post on Saturdays, but was turned down, according to The Times.

In the correspondence between Royal Mail and the government seen by the Times, Kwarteng outlined that the company’s case for change did not meet statutory requirements.

Royal Mail has reportedly renewed its calls after the changes at the top of the government.

His request comes amid financial woes for the company, which this week posted losses of £219mln for the six months to September.

Citing the need for significant operational change, Thompson said Royal Mail faces “financial ruin” if the government does not grant it the ability to reform its services, according to the Times.

Following Royal Mail’s privatisation in 2013 it has been legally obliged to carry out deliveries six days a week at fixed prices regardless of where the post is going, as part of the ‘Universal Service Obligation’.

The company is trying to slash costs and improve efficiency, which is partly behind the strikes that are set to disrupt operations in coming weeks, with the board pushing for a renegotiation of agreements with its main trade union and, after months of fruitless talks, recently served notice on a number of historic agreements and policies.

The Communication Workers Union has hit out at the moves it called the ‘Uberisation’ of contracts, leading to 115,000 staff set to be involved in more walkouts, the first of which starts next Thursday.

“We’ll be doing what we can to keep services running, but we are sorry this planned strike action is likely to cause you some disruption,” Royal Mail said on its website.

It added: “We have been able to recover services quickly after recent CWU strike action.”