Royal Mail misses delivery targets as fears grow over future of post
Royal Mail is under a fresh investigation by the regulator Ofcom after admitting it failed to deliver less than three quarters of first-class post on time in the last year.
In its yearly financial results on Friday, Royal Mailâs parent company, International Distribution Services (IDS) said only 74.5 per cent of first-class mail was delivered within one working day.
Regulator Ofcomâs rules state 93 per cent of first-class mail must be delivered within the timeframe, excluding Christmas.
It also failed to meet its delivery targets for second-class mail. It said it delivered 92.4 per cent of second class mail within three working days â below the mandatory 98.5 per cent.
Ofcom said: âIf it does not provide a satisfactory explanation and we determine Royal Mail has failed to comply with its obligations, we will consider whether to impose a financial penalty.â
Last year, Ofcom fined Royal Mail ÂŁ5.6m after it failed to meet the delivery targets in 2022-23. It was also fined ÂŁ1.5m for missing targets in 2018-19. It also missed delivery targets during the pandemic but the regulator chose not to fine it.
Royal Mailâs figures, delayed by auditor problems, were released after markets closed on Friday.
Morgan Wild, at Citizens Advice, said: âRoyal Mail has failed to meet its targets for the last four years. With questions now raised about both the future ownership of Royal Mail and its obligations to consumers, itâs more important than ever Ofcom sorts this out.
âWeâre seriously worried about the future of our postal service. Despite routine investigations by Ofcom and fines for Royal Mail, these penalties are simply becoming the cost of doing business. Theyâre certainly not resulting in the much-needed improvement of its service.
âWhatâs more, in the current review of Royal Mailâs Universal Service Obligation (USO) weâve seen very little commitment from either Royal Mail or Ofcom to tackle this properly. Instead, all proposals pave the way for a slower and more expensive postal service, which consumers will bear the cost of.
âOfcom and the Government must spell out how the revised USO will deliver for the millions who rely on it, not just for Royal Mailâs prospective new owners.â
The USO currently requires Royal Mail to deliver letters to every address in the UK, six days a week, at a uniform price, and parcels five days a week.
The chief executive of IDS said the financial results showed Royal Mailâs losses narrowed to ÂŁ348m â from ÂŁ419m for the year ending 31 March.
Martin Seidenberg said: âWe have improved quality, won back customers lost during industrial action, controlled costs and delivered Christmas for our customers.â
The results come as IDS is the subject of a potential buy-out offer from Czech billionaire Daniel Kretinsky. IDS directors say they are âmindedâ to accept the bid which values the company at ÂŁ3.5bn.
IDS has asked Ofcom to reform the USO, warning that it is financially unsustainable to continue with it.
Business Secretary Kemi Badenoch said earlier this month that Royal Mailâs universal service obligation will need to be protected in any sale of the firm.
IDS said Mr Kretinsky, whose EP Group already owns a 27.5 per cent stake in the firm, had agreed to offer a set of âcontractual undertakingsâ to protect key public interest factors recognising Royal Mailâs status as a major part of national infrastructure under the proposal.
This included commitments to Royal Mailâs plans to keep six-day-a-week first class letter deliveries under the universal service, protect workersâ rights and keep Royal Mail branding, together with its UK headquarters and tax residence.
IDS has said Mr Kretinsky has agreed to offer a set of âcontractual undertakingsâ to protect key public interest factors including recognising Royal Mailâs status as a major part of national infrastructure.