Royal Mail proposes to halve second-class deliveries

Second-class letters would be delivered only three times a week and bulk business mailings would take three days to reach recipients under sweeping changes to Royal Mail’s obligations the group has proposed to its regulator.

The ideas were part of the legacy mail delivery company’s submission to a review of its obligations being undertaken by Ofcom. The company has said there is an urgent need for reform because of the sharp fall in letter volumes over the past 20 years, which has made many of its basic services uneconomic.

However, the company stepped back from suggesting it should be freed altogether from its obligation to deliver letters six days a week to every address in the UK.

Royal Mail, which was privatised between 2013 and 2015, but is still regulated by Ofcom, is currently obliged to make letter deliveries six days a week everywhere in the UK for the same flat price.

Wednesday’s proposals are the company’s submission under a review by the regulator of the so-called Universal Service Obligation.

Martin Seidenberg, chief executive of Royal Mail’s parent group International Distributions Services, said the drop from 20bn to 7bn over the past 20 years in the number of annual letters sent meant the current universal service obligation was “unsustainable”.

“If we want to save the universal service, we have to change the universal service,” Seidenberg said. “Reform gives us a fighting chance and will help us on the path to sustainability.”

Royal Mail reported operating losses of £1bn for the year to March 26 last year, partly because of strikes.

Under its proposals, Royal Mail would be obliged to deliver only first-class letters six days a week. That proposal follows an outcry from magazine publishers, the health service and others at previous suggestions all deliveries on Saturdays might end.

The continued first-class obligation recognised the “importance of next day and Saturday deliveries, especially for the NHS, publishers and senders of greeting cards”, the company said.

However, non-first class letters, including second-class mail, would be delivered only every other weekday, the company said.

It also proposed that bulk business mailings — for items such as bank statements and utility bills — be aligned in the service standards with second-class mail. They would then take three business days to arrive, not the current two.

Tina McKenzie, Federation of Small Businesses policy chair, said that Royal Mail’s plan to retain a six-day-a-week service for first class letters was a “good step in the right direction”.

However, she added that “taking the axe to daily deliveries for second class would be a drastic cut which would hit the many small businesses which rely on it”.

Seidenberg said the proposals were based on listening to “thousands of people across the United Kingdom”.

He stressed the need for change, noting “serious concerns” that the urgency of the situation was not properly recognised by Ofcom, adding that the company wanted to see changes made by April next year.

Additional reporting by Daria Mosolova