Ofcom readies report on future shape of the universal postal service

Royal Mail wants USO requirement to be reduced to a Monday-Friday service
Royal Mail wants USO requirement to be reduced to a Monday-Friday service

Ofcom has launched a project to look into how the universal postal service “might need to evolve to more closely meet consumer needs”.

The universal service requires Royal Mail to deliver letters six days a week, Monday to Saturday, while the parcel requirement is five days a week (Monday to Friday) to every address in the UK “at affordable prices that are uniform throughout the UK”.

In March, MPs referred Royal Mail to Ofcom for “systematic failures” to meet parts of its Universal Service Obligation (USO).

Royal Mail has repeatedly called for major reform of the USO, and wants the requirement to be reduced to a Monday-Friday service “to protect the long-term sustainability of the one-price-goes-anywhere Universal Service”.

At the end of last year Royal Mail warned that the price of a First Class stamp could rise to more than £1 if the USO wasn't reformed. The price subsequently went up by just under 15.8%, to £1.10, in April.

Addressed letter volumes for Royal Mail’s most recent financial year (excluding elections) were down 9%

The minimum requirements are set out in legislation, and any changes can only be made by the UK Government and Parliament.

The current framework under the Postal Services Act 2011 has been unchanged for more than a decade.

Ofcom stated: “We will set out this evidence in detail later this year – explaining how demand is changing, the challenges and costs of delivering the universal service, potential options for change in the future and how these might be managed to ensure smooth transition to any future arrangements.”

It noted that the UK is not alone in seeing user demands change, with an increasing reliance on parcels and a decline in letter volumes.

“Many countries around the world are reviewing how their universal postal service should adapt in line with consumers’ needs, environmental concerns and the need to ensure that everyone is able to participate fully in society, while others have already scaled back the scope of their universal service.”

Since Ofcom completed its review of postal regulation last year “there has been growing public debate around the long-term future of the universal service”.

The regulator said it would encourage input from interested parties after the findings are published.