USO reform update

5-minute watch here

Here, General Counsel, Matt Newman, gives an update on Universal Service reform. You can also watch this film with Matt in conversation with Director of Corporate Affairs, Jenny Hall.

Matt writes:

I wanted to give you a quick update on the current debate regarding Universal Service reform. This is our legal requirement to delivery to all 32 million UK addresses six days a week. 

As you may be aware, a few weeks ago our regulator Ofcom launched its report into the future of the Universal Service. It made clear that modernisation is essential to protect its future, to meet changing customer needs and to maintain the one-price-goes-anywhere service. 

Why change is necessary 

We are faced with the reality of declining letter volumes which have fallen from a peak of 20 billion in 2004/05, to seven billion today and will likely drop to around four billion in five years. On average, we now deliver just four letters per address, per week. 

The number of addresses in the UK has also grown by four million. So, we are walking down more streets, six days a week, but actually delivering mail to fewer and fewer houses. As you know, we lost £419 million last year and no business can survive those kinds of losses on an ongoing basis. 

Discussing the changes 

Ofcom has been holding some public feedback sessions where various stakeholders, including Royal Mail, are invited to discuss their views. Many of the stakeholders share the view that change is necessary. The question seems to be not shall we change but, what do those changes look like? Director of Corporate Affairs, Jenny Hall, and I have been involved in some of these events – click here to watch the video to hear our views and for a link to share.

We will respond to Ofcom with our own proposal by the deadline of 3 April. To inform our response, we have been speaking to thousands of customers as well as businesses who use our services, consumer groups, the NHS, Unite and the CWU. 

It’s important to remember that any final decisions on changes to the Universal Service are ultimately down to Ofcom and Government. Any changes will likely take 18-24 months for us to implement, from the point any change is agreed. However, it’s important that we put forward proposals that we believe will work best for our people, our customers and our company.   

We will keep you regularly updated as the debate progresses and will communicate our proposed solution in the coming weeks.