Royal Mail would prefer not to deliver letters on Saturdays, a plea that would be more powerful if the company could get vaguely close to hitting the performance standards currently expected of it. The postal service was miles off last year. Only 74% of first-class letters were delivered on time, versus a target of 93%, for instance. Even the regulator Ofcom, often a soft touch on these matters, said it was growing tired of hearing excuses about Covid hangovers and opened an investigation.
Thus one could take the view that Ofcom’s review of the universal service obligation (USO) – and Royal Mail’s welcome for it – is premature. Fix the current setup before contemplating reform, one could argue. Anything else might look like a reward for failure.
An understandable view but probably wrong. While there are big questions still to be answered about whether Royal Mail’s management has been prioritising parcels over letters, one shouldn’t confuse current failures and deeper structural issues. There is a fair argument that the USO – the requirement on Royal Mail to deliver letters six days a week (and parcels five days a week) to every address in the land – would be out of date even if the company were performing to scratch. A rejig looks inevitable for at least three reasons.
First, the plunge in the volume of letters in the UK has been so large that it must affect the economics of delivery. The peak for volumes was 20bn in 2004-05, before email use exploded; the tally is now 7bn on Royal Mail’s calculations, which cannot be blamed solely on rising stamp prices. Ofcom talks about a 46% decline in the past decade. At some point, the inefficiencies in spreading operations thinly cannot be ignored. The regulator last time estimated possible savings of £125m-£225m by dropping Saturdays – a useful sum if directed at a better five-day service.
Second, the evidence suggests the vast majority of customers aren’t bothered about receiving letters on Saturdays. The last time Ofcom asked, in 2020, 97% said their postal needs would be met by a five-day-a-week letter service. We’ll see what the regulator finds this time, but one suspects most punters are more interested in getting their internet shopping at the weekend (via the parcels side that Royal Mail wants to expand) than in receiving another marketing missive from their bank.
Third, much of the rest of Europe has already watered down its USO equivalents. France has extended delivery times for second-class letters. Italy has alternative day deliveries in rural areas. The UK would not be an outlier in seeking reform, although the uniquely British point is that most people see the fairness in keeping requirements uniform everywhere. Big cities should not have a superior service written into the rules.
The other essential safeguard would be to protect the publishers of weekly titles. For them, an expected Thursday or Friday delivery cannot slide into a nonexistent Saturday slot. But it should not be impossible to use a small portion of the savings to fund a guaranteed service.
Parliament is the only body that can rewrite the USO and ministers have tiptoed around the subject for years, presumably waiting for the cover of a recommendation from Ofcom. We’re at a stage now, though, where even the leadership of the Communications Workers Union, traditionally an opponent of relaxation, has wondered aloud whether the five-day option is the best way to sustain the USO.
Dropping letters on Saturdays, then, looks bound to happen sooner or later. The world will not end. If Ofcom can beat up Royal Mail to ensure a Monday-to-Friday letter service is reliable, most of us will settle for that.
