Investigation into Royal Mail’s quality of service performance in 2024/25

[TrueBlueTerrier]

https://www.ofcom.org.uk/post/royal-mai ... -in-202425

Ofcom has today issued Royal Mail with a Decision, finding that it contravened DUSP condition 1.9.1 by failing to meet the national First and Second Class performance targets during 2024/25. We have also decided to impose a financial penalty on Royal Mail for this breach.

Ofcom has discretion to adjust Royal Mail’s measure of performance to take into account the impact of events which Ofcom considers to be exceptional, and which affected its performance. For this investigation, we do not consider any exceptional events in the 2024/25 period to have had an impact large enough to explain Royal Mail’s poor performance or lack of improvement. However, we have uplifted Royal Mail’s performance by 0.3 percentage points to account for red weather events.

This means that, including the confidence interval, Royal Mail:

Achieved 77% against a target of 93%, for First Class mail, meaning 16 percentage points below the First Class target.
Achieved 92.5% against a target of 98.5%, for Second Class mail, meaning 6 percentage points below the Second Class target.
On 12 July, Ofcom announced revised QoS targets which means that, among other changes, the First and Second Class performance targets will be lower from 1 April 2026. While we have taken this into account in our penalty consideration, we note that even if the new targets were in force during the 2024/25 period, Royal Mail’s performance would still have meant that it missed the targets by a considerable margin.

Royal Mail did not do enough in 2024/25 to improve its QoS and Ofcom has imposed a financial penalty of £21 million on Royal Mail as a result. Our view is that this penalty is appropriate and proportionate to incentivise Royal Mail to make significant improvements to its QoS performance so that customers see improved performance and a better service.

The penalty amount includes a 30% discount from the penalty Ofcom would otherwise have imposed. The discount reflects Royal Mail’s admissions of liability and its agreement to settle which has allowed Ofcom to bring this matter to a close swiftly.

The postal service remains important to many people across the UK, enabling communication through letters, cards, and packages, as well as supporting social cohesion. Royal Mail now has an opportunity to rebuild customer trust as it moves towards compliance. Our expectation is that as it does so, Royal Mail will be transparent with customers about how and when it plans to make improvements to QoS and that, once its plans have been communicated, it will follow through on those plans.

More details can be found in our news centre and in the non-confidential version of our Decision which we are also publishing today.

[Mr Rush]

The postal service remains important to many people across the UK, enabling communication through letters, cards, and packages, as well as supporting social cohesion.

Emphasis mine. Is this a subtle suggestion toward introducing a French-style government subsidy should service continue to fail? Because that really would be the worst of both worlds.

[TopperGas]

I think you are reading a lot into that single comment but unless you were hoping to get a redundancy payoff then why would it be the worst of both worlds if RM received a subsidiary so that mail deliveries could continue and so delivery staff would still be employed to deliver mail? As things stands it does seem a mail delivery service on it's own is not financially viable, assuming the annual RM results are genuine figures.

[Mr Rush]

I think you are reading a lot into that single comment

If watering down the QoS targets and alternate day delivery (aka the ODM) and jacking up stamp prices all don't work, then that's Ofcom's last untried proposal.

It is also understood that Ofcom’s review of the universal service may look at reforms to Royal Mail’s delivery targets, the possibility of alternate-day deliveries in line with some other European markets such as Germany and Italy, offering state subsidy to support a six-day service and allowing Royal Mail to increase stamp prices.

Without reform of the regulatory system, or a subsidy, “we are stuck in a vicious spiral leading to heavy losses and an unsustainable service”, says [chairman Keith] Williams