Introduction: Royal Mail cleared to scrap second-class post on Saturdays
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Britain’s postal operator is being relieved of the obligation to deliver second-class letters six days a week, as part of reforms to the service that will also relax its delivery targets.
Regulator Ofcom has announced that from 28 July, it will allow Royal Mail to deliver Second Class letters on alternate weekdays, but no longer on Saturdays – but still within three working days of collection.
Ofcom says it is making the change to allow the UK’s universal postal service – guaranteeing delivery to anywhere in the country at a fixed price – “to survive”.
It points out that, since 2011, Royal Mail has been required under the universal service obligation to deliver First and Second Class letters six days a week. But the number of letters sent each year has more than halved over that time.
Natalie Black, Ofcom’s Group Director for Networks and Communications, said:
“These changes are in the best interests of consumers and businesses, as urgent reform of the postal service is necessary to give it the best chance of survival.
“But changing Royal Mail’s obligations alone won’t guarantee a better service – the company now has to play its part and implement this effectively. We’ll be making sure Royal Mail is clear with its customers about what’s happening, and passes the benefits of these changes on to them.
Royal Mail is now owned by Czech billionaire Daniel Křetínský, who took over its parent company International Distribution Services (IDS) last December.
Ofcom estimates that changing second-class delivery days could create annual net cost savings of between £250m and £425m, allowing Royal Mail to “invest more in improving its delivery performance.”
It will still be required to deliver First Class letters the next working day, Monday to Saturday, and there will continue to be a cap on the price of a Second Class stamp.
In another fillip for Royal Mail, though, Ofcom is making its delivery targets less demanding. It will now only have to deliver 90% of First Class mail on the next day, down from 93%.
The Second Class mail target is being weakened too, from 98.5% to 95% of letters delivered within three days. Removing Saturday from the roster of delivery days means some letters will take longer to arrive.
Ofcom inists these new targets are high by international standards, pointing out that Germany’s three-day target is 95%, Spain’s is 93%, and Norway’s and Poland’s are 85%.
The old targets have certainly proved tricky for Royal Mail – it has been repeatedly fined for missing them, with almost a quarter of first-class mail arriving late in the year to March.
The agenda
Key events
Royal Mail: It’s good news for customers
Royal Mail has welcomed Ofcom’s decision to relax the universal service obligation (perhaps unsurprising, at it could save the company £425m!).
Martin Seidenberg, group chief executive officer at International Distribution Services, says:
“It is good news for customers across the UK as it supports the delivery of a reliable, efficient and financially sustainable Universal Service.
“It follows extensive consultation with thousands of people and businesses to ensure that the postal service better reflects their needs and the realities of how customers send and receive mail today.”
Citizens Advice: Ofcom has missed a major opportunity
Ofcom needs to hold Royal Mail to account to improve postal deliveries, says Tom MacInnes, director of policy at Citizens Advice.
MacInnes explains:
“Royal Mail has a woeful track record of failing to meet delivery targets, all the while ramping up postage costs. Today, Ofcom missed a major opportunity to bring about meaningful change.
“Pushing ahead with plans to slash services and relax delivery targets in the name of savings won’t automatically make letter deliveries more reliable or improve standards.
“While Ofcom says it recognises the importance of affordability and reliability for consumers, we need to see those words backed by action, forcing Royal Mail to do what it should’ve been doing all along – giving paying customers a service that delivers.”
Ofcom to review stamp prices
Ofcom has also launched a review of pricing and affordability of the postal service.
This will look at concerns over stamp prices, which have been steadily climbing.
Natalie Black, Ofcom’s Group Director for Networks and Communications, explains:
“As part of this process, we’ve been listening to concerns about increases in stamp prices. So we’ve launched a review of affordability and plan to publicly consult on this next year.”
Back in April, Royal Mail increased the cost of first- and second-class stamps for the sixth time in just over three years. That raised the price of a first-class stamp by 5p, or 3%, to £1.70. The cost of the second-class service rose by 2p, or 2.4%, to 87p.
This graphic shows how the changes to second-class letter post will affect deliveries across the UK:
Introduction: Royal Mail cleared to scrap second-class post on Saturdays
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Britain’s postal operator is being relieved of the obligation to deliver second-class letters six days a week, as part of reforms to the service that will also relax its delivery targets.
Regulator Ofcom has announced that from 28 July, it will allow Royal Mail to deliver Second Class letters on alternate weekdays, but no longer on Saturdays – but still within three working days of collection.
Ofcom says it is making the change to allow the UK’s universal postal service – guaranteeing delivery to anywhere in the country at a fixed price – “to survive”.
It points out that, since 2011, Royal Mail has been required under the universal service obligation to deliver First and Second Class letters six days a week. But the number of letters sent each year has more than halved over that time.
Natalie Black, Ofcom’s Group Director for Networks and Communications, said:
“These changes are in the best interests of consumers and businesses, as urgent reform of the postal service is necessary to give it the best chance of survival.
“But changing Royal Mail’s obligations alone won’t guarantee a better service – the company now has to play its part and implement this effectively. We’ll be making sure Royal Mail is clear with its customers about what’s happening, and passes the benefits of these changes on to them.
Royal Mail is now owned by Czech billionaire Daniel Křetínský, who took over its parent company International Distribution Services (IDS) last December.
Ofcom estimates that changing second-class delivery days could create annual net cost savings of between £250m and £425m, allowing Royal Mail to “invest more in improving its delivery performance.”
It will still be required to deliver First Class letters the next working day, Monday to Saturday, and there will continue to be a cap on the price of a Second Class stamp.
In another fillip for Royal Mail, though, Ofcom is making its delivery targets less demanding. It will now only have to deliver 90% of First Class mail on the next day, down from 93%.
The Second Class mail target is being weakened too, from 98.5% to 95% of letters delivered within three days. Removing Saturday from the roster of delivery days means some letters will take longer to arrive.
Ofcom inists these new targets are high by international standards, pointing out that Germany’s three-day target is 95%, Spain’s is 93%, and Norway’s and Poland’s are 85%.
The old targets have certainly proved tricky for Royal Mail – it has been repeatedly fined for missing them, with almost a quarter of first-class mail arriving late in the year to March.
