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The UK’s postal regulator has proposed easing the Royal Mail’s obligations, allowing the company to make fewer deliveries as the group prepares for new ownership under Czech billionaire Daniel Křetínský.
The planned changes would allow Royal Mail to make second-class deliveries on alternate weekdays rather than six days a week at present, and reduce its requirement to deliver first-class mail on the following day from 93 per cent to 90 per cent.
Ofcom admitted that the “world has changed”, with people in the UK “sending a third of the letters we were 20 years ago”.
“We need to reform the postal service to protect its future and ensure it delivers for the whole of the UK,” said Ofcom’s networks director Natalie Black.
The regulator’s proposals, which will be put out for public consultation until April, come after intense lobbying from Royal Mail’s owner International Distribution Services.
The lossmaking group had been seeking regulatory approval for the changes, which also include ending second-class letter delivery on Saturday.
Royal Mail’s chief executive Emma Gilthorpe welcomed the proposals, saying Ofcom’s analysis showed that “it is no longer financially sustainable to maintain a network built for 20bn letters when we are now only delivering 6.7bn”.
Ofcom’s plans come about a month after the government approved the sale of Royal Mail to Křetínský in a £5.3bn deal that will pave the way for the once state-owned postal monopoly to pass into foreign ownership.
Křetínský had cautioned that Royal Mail was facing a “deadly downward spiral” as it sought to defend its position while navigating rising competition in the parcels market.
The company must adhere to the “universal service obligation”, under which Royal Mail is the only delivery group required to deliver letters anywhere in the country, at the same cost every day besides Sunday.
As part of Křetínský’s deal, he committed to respecting the universal service obligation for as long as he controls Royal Mail.
Royal Mail had been fined £10.5mn in December for failing to meet its delivery targets.
The regulator also called on Royal Mail to “invest in its network” and bolster efficiency and service across both parcel and letter delivery.
The Post Office, which is separate to Royal Mail, said that its postmasters and customers “do not want to see a reduction in the universal service obligation”.
It added: “The UK is the only country in the world where the delivery arm is separate from the physical retail shop and the proposals announced today put more pressure on postmasters who are already facing tough trading conditions.”
