Royal Mail has been fined £10.5 million by the communications regulator Ofcom for failing to meet delivery targets for both first- and second-class mail. This penalty is nearly double the fine
imposed on the company last year for similar shortcomings.
Ofcom expressed concern over Royal Mail's performance, stating that its "poor service" is undermining public trust in one of the UK’s oldest institutions. Royal Mail's parent company, International Distribution Services (IDS), claimed it has implemented "substantial" reforms this year to address the issues.
"We are making the necessary changes to deliver for our customers," an IDS spokesperson said. However, Ofcom’s Director of Enforcement, Ian Strawhorne, emphasized the need for faster progress, saying, "With millions of letters arriving late, far too many people aren't getting what they pay for when they buy a stamp."
Public criticism
Citizens Advice, a consumer advocacy organization, criticized Royal Mail for failing to meet delivery targets for nearly five consecutive years. Tom MacInnes, the charity's Director of Policy, highlighted the impact on the public, stating, "Letter delays leave millions of people missing urgent medical appointments, legal documents, and benefit decisions." He also pointed out that Royal Mail has raised prices despite its declining service, leaving customers paying more for less.
Missed targets
Under the Universal Service Obligation, Royal Mail is legally required to deliver letters across the UK at a fixed price six days a week. Ofcom mandates that at least 93% of first-class mail be delivered within one working day and 98.5% of second-class mail within three working days. However, Royal Mail fell short of these benchmarks in the year ending March 2023, delivering just 74.7% of first-class mail and 92.7% of second-class mail on time.
The company attributed its poor performance to financial difficulties and delays in resolving a pay dispute following strike action by the Communication Workers' Union. Ofcom rejected these explanations, stating, "Royal Mail took insufficient and ineffective steps to try and prevent this failure, which is likely to have impacted millions of customers who did not get the service they paid for."
Calls for reform
Royal Mail's parent company, IDS, has called for "urgent reform" of the Universal Service Obligation to align with modern customer needs. It suggested changes to second-class delivery schedules while maintaining a six-day-a-week service for first-class mail. Ofcom has also explored reforms, including reducing delivery days to save costs.
Despite some improvement in Royal Mail’s performance during 2023-24, Ofcom described the progress as marginal and emphasized the need for significant advancements. "Regardless of its ultimate owner, we’ll continue to hold Royal Mail to account," said Strawhorne.
Financial struggles and future ownership
The fine comes amid reports that Czech billionaire Daniel Křetínský's EP Group is nearing a takeover of IDS. Royal Mail has struggled financially in recent years, with the volume of letters sent halving since 2011. Although IDS reported a 10% revenue increase in the six months to September 2023, it posted an operating loss of £26 million, an improvement from the £243 million loss in the previous year.
As Royal Mail works to restore its reputation and improve services, Ofcom continues to monitor its performance and push for reforms that ensure customers receive reliable and efficient postal services. Photo by Ross Holdway, Wikimedia commons.