What are Royal Mail’s legal obligations and can it stop Saturday post?
Saturday post could become a thing of the past if plans to axe it go ahead.
Ofcom is reportedly expected to publish a consultation paper on the future of the Universal Service Obligation (USO), which includes a requirement for post to be delivered six days a week, after Royal Mail previously asked to scrap Saturday deliveries in a bid to save money.
In November, it said letter volumes had fallen from a peak of 20bn a year in 2004-5 to 7bn in 2022-23 - with it expected to decline even further. It has been suggested that dropping Saturday deliveries could save up to £225m, while Ofcom research reportedly found that consumers were 'largely indifferent' to the idea of not getting post on Saturdays.
According to reports, changes to the USO could include changing first and second class delivery targets, allowing Royal Mail to raise the price of stamps, and moving to alternate-day deliveries.
Last year, Ofcom said while the USO had been unchanged since 2011, consumer demand for postal services had changed "substantially" and was continuing to do so.
But what is the Universal Service Obligation and how could it be scrapped?
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What is the Universal Service Obligation?
The Universal Service Obligation is a government-imposed obligation which sets out the standards and principles for the UK postal service.
The government website describes the universal postal service as the "'one price goes anywhere' principle of affordable postal services to all UK addresses", adding: "It requires Royal Mail (the universal service provider) to deliver letters to every address in the UK, six days a week, at a uniform price, and parcels five days a week."
The USO is regulated by Ofcom but moving it to five days, and therefore scrapping Saturday deliveries, would require parliamentary approval.
The Ofcom website says: "As the postal regulator, Ofcom’s job is to ensure that a universal postal service is provided, taking account of the need for that service to be financially sustainable and efficient. When making regulation, we must make sure we understand postal users’ needs.
"We can also specify additional features of the universal service, such as requiring the choice of a First Class and Second Class service, and setting Royal Mail enforceable targets to deliver a certain proportion of items on time each year."
Under current targets, Royal Mail is expected to deliver 93pc of first-class post within one day of collection, and 98.5pc of second class post within three working days. But in November it was fined £5.6m by Ofcom for breaching this requirement.
Why does Royal Mail want to scrap Saturday deliveries?
Royal Mail says urgent changes need to be made to its regulatory framework, including changing the Universal Service Obligation (USO), potentially including scrapping Saturday deliveries.
The move is expected to save Royal Mail up to £225m a year as the number of letters sent has declined and is on track to continue dropping as people's focus shifts to parcels. Royal Mail's call for a reduction in postal deliveries comes after it posted a £319m loss for the first half of this financial year.
Martin Seidenberg, chief executive of International Distribution Services, which owns Royal Mail, said in its trading statement this week: "With Ofcom due to publish options for the future of the universal service imminently, now is the time for urgent action. We are doing all we can to transform, but it is simply not sustainable to maintain a delivery network built for 20 billion letters when we are now only delivering 7 billion."
Will the government and Ofcom agree to scrapping Saturday post?
Scrapping Saturday deliveries, and therefore changing the USO to five days, requires parliamentary approval.
Last year, the government rejected a request from Royal Mail to move to weekday-only deliveries. Kevin Hollinrake, the business minister at the time, said last June: "We currently have no plans to change the minimum requirements of the universal postal service as set out in the Postal Services Act 2011... including six-day letter deliveries".
This week an Ofcom spokesperson said: "We will be inviting views on this, not consulting on specific proposals. It would ultimately be for the UK government and parliament to determine whether any changes are needed to the minimum requirements of the universal service."
A Department for Business and Trade spokesman told the Telegraph: “As the independent regulator, Ofcom is reviewing the future of the universal postal service in response to changing consumer demand.
“While there are no current plans to change the statutory minimum requirements, we will carefully consider any advice that Ofcom puts forward to meet the needs of consumers.”
