Royal Mail warns on stamp prices if USO doesn't change

Could a First Class stamp end up costing more than a quid?
Could a First Class stamp end up costing more than a quid?

Royal Mail’s chairman has warned that the price of a First Class stamp could go up to more than £1 if the group has to keep making Saturday deliveries.

Keith Williams was speaking to the Telegraph in an interview published over the weekend when he made the claim. 

In November Royal Mail called for urgent reform of the Universal Service Obligation, and said it wanted the requirement to deliver on Saturdays to end. 

The business is currently involved in a bitter dispute with workers who are members of the CWU, with more strike days due this week on 23 and 24 December. 


The CWU tweeted about the scale of the Royal Mail backlog yesterday

The price of a First Class stamp had already been hiked by nearly 12% to 95p earlier this year. 

Williams told the Telegraph that the “quid pro quo” for maintaining Saturday deliveries would be increased stamp prices. 

To back up its position that Saturday deliveries could be done away with, the Royal Mail has cited Ofcom research that found that 97% of households and SMEs would be happy with Monday-Friday deliveries. 

However, last week business secretary Grant Shapps also told a House of Commons committee that there were no plans to end Saturday deliveries. 

Separately, Ofcom has reported on Royal Mail’s performance between April 2021 and March 2022, and found that the operation failed to meet several of its delivery targets. However, Ofcom accepted that during the period under review “Covid-19 continued to have a significant, pervasive and unprecedented impact on Royal Mail’s operations”.

82% of First Class mail was delivered within one day, whereas the target is 93%. 95.6% of Second Class mail was delivered within three working days, against a target of 98.5%. 94.28% of delivery routes were completed on the required day, below the target of 99.9%.

Ofcom warned Royal Mail that the pandemic was no longer an excuse for missing delivery targets. 

Lindsey Fussell, Ofcom's group director for Networks and Communications, commented: “Looking back at last year, Covid-19 was clearly still having a significant impact on Royal Mail’s operations. However, the company’s had plenty of time to learn lessons from the pandemic, and cannot continue to use it as an excuse.

“We’re concerned by Royal Mail’s performance so far this year, which is falling well short of where it should be. It must do everything it can to bring service levels back up, and we’ll be keeping a close eye on it throughout the year.”

Royal Mail posted a huge loss at the half-year stage. In the 26 weeks to 25 September sales were down 10.5% at nearly £3.65bn. 

Addressed letter volumes, excluding elections, fell 6% to 3.6bn items, while parcel volumes were down 15% at 613m. 

Royal Mail posted an adjusted operating loss of £219m for the period, compared to the prior year’s £235m profit.