Royal Mail could deliver letters just three days a week, says Ofcom

Royal Mail could cut postal deliveries to as few as three days a week and save up to £650 million a year under options put forward to reform the service by the industry regulator.

In a long-awaited report, Ofcom outlined options for overhauling Britain’s universal postal service, warning that it risks becoming “unsustainable” without reform.

The regulator set out two possible proposals, including cutting Royal Mail’s letter delivery service from six days to five, or even three, a week.

It could save Royal Mail £100 million to £200 million if the service was cut to five days and £400 million to £650 million if it was reduced to three, according to Ofcom.

The other option is to extend how long it takes letters to be delivered, meaning that it would take three or more days for most letters to arrive, but with a more expensive next-day delivery service available when required.

This could save the company £150 million to £650 million.

It comes amid calls from Royal Mail to ditch Saturday letter deliveries due to slumping demand and as it battles to turn itself around after suffering hefty financial losses.

The group has warned it may need a Government subsidy to survive.

Ofcom chief executive Dame Melanie Dawes said Britain’s universal postal service was “getting out of date and will become unsustainable if we don’t take action”.

She said: “Postal workers are part of the fabric of our society and are critical to communities up and down the country.

“But we’re sending half as many letters as we did in 2011, and receiving many more parcels.”

But Ofcom stressed that downgrading Royal Mail’s delivery targets “was not an option”.

“Under any scenario, Royal Mail must modernise its network, become more efficient and improve its service levels,” the regulator said.

Ofcom now wants to spark a “national debate” on the future of the UK’s postal service, with a consultation on the proposals open until April 3.

It plans to provide an update in the summer.

Under its universal service obligation (USO), Royal Mail must deliver letters six days a week to all 32 million addresses in the UK for the price of a stamp.

The firm, which is owned by International Distributions Services (IDS), recorded a £419 million loss in its previous financial year, while it was also fined £5.6 million last year for failing to meet its delivery targets.

Ofcom estimates that delivering the universal service cost Royal Mail £325 million to £675 million in 2021-22.

IDS said on Wednesday that reform was “urgently needed”.

Martin Seidenberg, group chief executive of IDS, said: “We have been calling on Government and Ofcom to tackle this issue for four years, and the lack of action means that we are now facing a much more serious situation.”

Ofcom does not have the power to scrap Saturday letter deliveries and ministers have been quick to dismiss any suggestion that the Government would sanction such a move.

Postal affairs minister Kevin Hollinrake said the Government was committed to a six-day service from Royal Mail.

He told Times Radio: “The Prime Minister has been very clear on this, six-day delivery is really important for many people in this country, many of our citizens, but also for many of our businesses.”

CWU general secretary Dave Ward said: “We are not resistant to change, but we will not sign up to a three-day universal service obligation, which would destroy Royal Mail as we know and would impact thousands of jobs.”

He also claimed Ofcom had produced the report without asking for input from frontline workers or the union.

Ofcom’s director of post, Marina Gibbs, said “this is the time” for unions and other parties to get in touch with their views.

She told the PA news agency the option of extending delivery times was “more within our gift” as it can make that change within its own regulation, but insisted it did not have a “front-runner” proposal.