Wants temporary contribution from government

Royal Mail reveals wish list for USO reform, appoints new CEO

Royal Mail: "Reform gives us a fighting chance"

Royal Mail has submitted its proposals for reform of its Universal Service Obligation, including changes to bulk mail and Second Class delivery frequencies. And the group has also appointed a new CEO.

Perhaps surprisingly, Royal Mail proposes to continue delivering First Class letters six days a week, Monday to Saturday.

It said it recognised “the importance of next day and Saturday deliveries, especially for the NHS, publishers and senders of greeting cards”.

Royal Mail said that Second Class and all non-First Class letters would be delivered every other weekday.

“The delivery speed of standard bulk business mail would be aligned to Second Class, so they arrive within three weekdays instead of two currently,” Royal Mail explained.

Many bulk mailers already choose to use Royal Mail’s Economy Sort service, which has a five-day delivery window.

The current one-price-goes-anywhere would be retained.

It has created a video outlining its case for change.

Today (3 April) is the deadline for responses to Ofcom’s consultation on the future of the USO.

Publishers of time-sensitive weeklies had lobbied for Saturday deliveries to be maintained.

Some, such as Richard Campbell, managing director of The Week magazine at media group Future, have also contacted subscribers directly urging them to take part in the consultation.

In a recent missive to subscribers, he warned: “We know already that many of our subscribers regularly experience late deliveries. Royal Mail’s failure to deliver mail on time led to Ofcom fining Royal Mail £5.6m in November of last year.

“This is deeply worrying to us, and we regret that we cannot hold Royal Mail to higher standards, but we know that reducing delivery days would only make these problems worse.”

Royal Mail has also called for the introduction of “new, additional reliability targets for First Class and Second Class services, alongside revised, realistic speed targets, to give customers further confidence” as part of its submission.

It said the need for reform was pressing, and its proposals could be made without the need for time-consuming legislation.

“Royal Mail is urgently calling for Ofcom to act faster on implementing change, with the introduction of new regulations by April 2025 at the latest,” the postal operator stated.

Parcels would still be delivered seven days a week, with tracking added to Universal Service parcels.

Royal Mail posted a £419m loss in its most recent financial year. It said that providing the current USO was effectively costing the business £1m-£2m every day.

Martin Seidenberg, Group CEO of Royal Mail parent group International Distributions Services reiterated the huge drop in letter volumes from 20bn to 7bn per year since the last time the USO was reformed, with further decline expected. 

The number of delivery addresses has increased by around 4m, to 32m.

 “If we want to save the Universal Service, we have to change the Universal Service. Reform gives us a fighting chance and will help us on the path to sustainability,” he stated.

“Our proposal is based on listening to thousands of people across the United Kingdom to ensure it meets their needs. We have worked hard to come up with a proposal that is good for our customers, good for our people and would allow Royal Mail to invest in products and services that the UK wants.”

Royal Mail also called on the government for assistance.

“Whilst the process of regulatory reform is ongoing, and during any period of implementing change, we call for government to consider a temporary contribution to address the net cost of the USO.

“The case for a temporary contribution is even more imperative if Ofcom delay urgently needed regulatory reform until after a General Election,” it stated.

If accepted, the revised USO would involve a net reduction in daily delivery routes of 7,000-9,000 over the course of around 18-24 months.

Royal Mail said this was likely to involve fewer than 1,000 voluntary redundancies, managed through natural staff turnover wherever possible.

Separately, IDS has appointed Emma Gilthorpe as the new CEO of Royal Mail.

Gilthorpe is currently COO at Heathrow Airport.

She will join the business on 1 May and will take over responsibility for Royal Mail over summer, following an “intensive induction process” with Seidenberg.

He commented: “I am delighted to announce the appointment of Emma as CEO of Royal Mail Group. Emma has an impressive track record of delivering major strategic change programmes whilst driving up performance.

“She will bring a customer and employee-centric approach to delivering Royal Mail’s transformation for the benefit of all our stakeholders, and I look forward to working closely with her to ensure Royal Mail reaches its true potential.”

Seidenberg has been acting as interim CEO of Royal Mail since the departure of Simon Thompson, who quit last year.

Royal Mail has produced an exeutive summary outlining its USO proposals.