Ofcom puts off discussion on postal regulation pricing and affordability before March 2027 decision
Ofcom has moved the goalposts on its review of postal regulation pricing and affordability, announcing a delay in publishing the consultation proposals.
The industry watchdog was due to have issued its consultation paper on regulatory proposals for Royal Mail services this month, but on Friday, 13 March, revealed this will now be left to later in the year but must be in time for the decision which has to be by March 2027 – the same date the existing control on second-class stamp prices is due to expire.
The news came as Royal Mail finally got behind the idea of being more encouraging about using its delivery services, with social media posts last week saying people should be sending a Mother’s Day card not texting, and images of cards being posted, which can be seen in the reel below.
Ofcom’s update on Friday came as the watchdog and Royal Mail are gearing up to appear before MPs on Tuesday, 24 March, alongside the Communication Workers’ Union, which represents postal workers, following the Business & Trade Committee’s 16 February demand for answers on the current state of the privatised 510-year-old service.
In the update, Ofcom reiterated the background to the review, explaining Royal Mail “is required as the universal service provider to deliver a range of postal services to homes and businesses at affordable prices which are uniform throughout the UK”, adding: “Postal services remain a vital communications tool for many people and businesses, and we know, from our research on user needs, that an affordable service is particularly important to people.
“At the same time, the number of letters being sent has halved over the past decade and continues to decline, driving up unit costs. The changing market dynamics have weakened Royal Mail’s financial position and threaten the sustainability of the universal postal service.”
Its decision on USO reform “to give it a better chance of survival” was published in July last year, allowing RM to slash the second-class service to every other day, three days one week and two the next with none on Saturdays, claiming the legal obligation to deliver letters six days a week across the UK for the same price could be met through the first-class post.
Above: RM has been promoting card sending in s0cial media posts
However, earlier this month Royal Mail announced yet another price increase from 7 April – which means first-class stamps have risen by 137% in eight increases from 76p in 2020 to the new level of £1.80, with six second-class rises in the same period, up from 65p to 91p.
And Ofcom has now said: “We consider that there remains a material risk to its sustainability. It is in this context that we are carrying a new review of our approach to pricing and affordability.”
Harking back to January 2024 when the previous review of affordability was concluded with the decision to continue imposing a safeguard cap on second-class letter prices “to ensure people retain access to an affordable service, while leaving Royal Mail with pricing flexibility for its other universal services”, Ofcom added: “We decided to put this measure in place for three rather than five years because of evidence that from April 2027 a cap at this level might have a greater impact on the financial sustainability of the universal service.”
Looking at other ways to address the affordability risk, Ofcom and Royal Mail have been exploring how to bring in a target discount scheme for vulnerable customers.
The early thinking and key elements required for an effective scheme were included in the call for input (CFI) in November 2025 on Ofcom’s work to review its approach to pricing and affordability in post, along with other relevant issues and possible regulator responses, and the plan was to publish the consultation proposals by the end of Q4 2025/26.
Above: Concerns raised over the cuts to second class deliveries have led to Ofcom delaying its consultation
There were 31 responses received from organisations including a very strong one from the GCA, 11 responses from individuals and 8,218 responses from the We Own It campaign group.
Ofcom has now said: “Taking into account responses to the CFI, we have reviewed our plans for progressing this work. We note, in particular, references in the CFI responses to the current uncertainty around implementation of changes to the delivery frequency of second-class letters and the associated impact this has on Royal Mail’s plans and performance. We also understand Royal Mail is developing proposals for a targeted discount scheme.”
And the watchdog will now carry out the delayed public consultation later this year but must allow time to then make its decision which has to be published by March 2027 and they said this is: “To allow time for matters to develop before we present regulatory proposals.”
The GCA is continuing to work hard behind the scenes maintaining regular meetings with Royal Mail and Ofcom to put forward the greeting card industry’s standpoint on the importance of assuring a reliable and affordable postal service.
On the other side of the UK postal service, the government has agreed to retain a minimum of 11,500 Post Office branches with the new commitment that more than half must be full-time and full service, with £483million being invested over the next two years to “transform the Post Office into a modern, efficient business while preserving its vital role in communities”, plus a further £37.4m to assist in delivering redress to victims of the Horizon IT scandal and participating in the final stages of the inquiry.
The decision also keeps the existing geographical access criteria of 99% of the UK population being within three miles of a branch, 90% within one mile, and specific rural targets such as 95% of rural residents being within three miles.
The review was launched last year to assess the future of the government-owned Post Office business, and Post Office minister Blair McDougall said: “Post offices at the heart of our communities have delivered invaluable services on High Streets across the country for decades.
“Protecting branches has always been our priority. I am proud to confirm the network will be safeguarded for the future and that the Post Office will have the certainty to implement its transformation plan.”