Ofcom is laying down options to reform Royal Mail’s services, which could make it easier for the company to axe Saturday mail deliveries.
Next week, the regulatory body is expected to release a consultation paper over the future of the Universal Service Obligation (USO) which stipulates that Royal Mail must deliver to every UK address six days a week.
Possibilities include changing first and second-class delivery deadlines in line with Germany and Italy, or allowing Royal Mail to increase prices of stamps.
The regulator said: “Consumer demand for postal services has changed substantially, and it continues to do so.”
But scrapping Saturday deliveries and moving to a five-day USO would require parliamentary approval.
Royal Mail has long argued for an overhaul of its regulatory framework, which it says was designed for a system that once delivered 20 billion letters a year – not the seven billion it does now.
If trends continue, it is estimated the service will drop to delivering four billion letters annually within five years.
The consultation document will be open-ended in its approach to ideas, all aimed at making the service more sustainable and will be published on Wednesday.
A 90-day call for input is expected to follow, with formal proposals expected to be set out later this year.
In a letter to MPs this week, Martin Seidenberg, chief executive of Royal Mail’s parent company, International Distributions Services (IDS), wrote: “Delivering the current Universal Service requirements – in a financially sustainable way – is increasingly difficult, if not impossible, to achieve as the mix and number of parcels and letters changes.”
Since its privatisation by the coalition government in 2013, the Royal Mail has endured a series of industrial disputes and parted company with chief executives.
Its recent delivery performance has been criticised by MPs, and last year it was fined £5.6m by Ofcom for failing to meet first- and second-class delivery targets during the 2022-23 financial year.
Under the current USO, Royal Mail is expected to deliver 93% of first-class mail within one working day of collection, and 98.5% of second-class mail within three working days of collection.
Ofcom said in November that the company had “breached its obligations by failing to meet its targets by a significant and unexplained margin”.
