Royal Mail is set to be allowed to deliver second-class letters only on alternate weekdays and not on Saturdays under proposals to shake-up postal service rules announced the industry regulator.
Ofcom said cutting second class letters to every other week day, but still within three working days of collection and with a price cap, while maintaining first-class letters six days a week, would still meet the public’s needs.
Its provisional recommendations also included cutting Royal Mail’s delivery targets, for first class mail from 93% to 90% delivered the next day, and for second class mail from 98.5% to 95% delivered within three days.
Ofcom’s consultation on the proposed changes will run until 10 April, and it expects to publish its decision in the summer.
The proposals come after pressure from the company on the regulator to overhaul the universal service obligation, the remit held by Royal Mail to deliver nationwide at one price six days a week.
Last year Royal Mail’s owner, International Distributions Services, called for the daily Monday-to-Saturday second-class service to be pared back to “every other weekday”.
Ofcom said it estimated the changes would enable Royal Mail to save between £250m and £425m each year, at a time when the £3.6bn takeover of IDS by the Czech billionaire Daniel Křetínský’s EP Group nears completion.
In recent times, the 509-year-old postal company has struggled to make deliveries on time, although it said earlier in January that a boost to parcel deliveries over the Christmas period put it on track to return to annual profit.
The regulator has also warned Royal Mail that it needs to invest in its network, become more efficient and improve service levels at a time when people are sending ever fewer letters.
Ofcom said its research showed that most letters are not urgent, and that affordability and reliability were now more important to consumers than the speed of delivery.
Natalie Black, Ofcom’s group director for networks and communications, said: “We’re safeguarding what matters most to people – first-class mail six days a week at the same price throughout the UK, and a price cap on second-class stamps.”
EP Group’s takeover is expected to be completed by the end of March, after it was approved by the UK government last month.
Emma Gilthorpe, the chief executive of Royal Mail, said: “Ofcom has recognised the urgent need for change so that the future of the universal service can be protected for all.
“It is no longer financially sustainable to maintain a network built for 20bn letters when we are now only delivering 6.7bn. Reform is crucial to support a modern, sustainable, and reliable postal service for our customers, our company and our people.”
