Let's not delay
One of the more surprising facts about the postal system is that the UK was the first country anywhere in the world to establish one, over 500 years ago. But the UK is one of the last to modernise it.
The Universal Service is the legal requirement for Royal Mail to deliver to the UK’s 32 million addresses six days a week. It’s a wonderful thing, ensuring that everyone can benefit from a one-price-goes-anywhere postal service no matter whether they live, in a tiny village or a bustling city.
But the sad truth is, it is now unsustainable. Customer behaviour has dramatically changed and the data speaks for itself. Letter volumes have declined from a peak of 20 billion 20 years ago to seven billion today. They are likely to drop to around four billion in the next five years.
Ofcom, the postal regulator, says that in its current form the net cost of the Universal Service to Royal Mail is between £325 million and £675 million a year, or £1 million to £2 million a day. That puts pressure on prices and on Royal Mail’s finances.
Last year we lost £419 million — we can’t sustain those losses for ever. For years we have been telling Ofcom and the government that without reform the future of the Universal Service is in doubt but to no avail, until now.
In what should be a major milestone in the history of Royal Mail, Ofcom has launched a review into the future of the Universal Service in light of the risk it recognises to its sustainability.
On Wednesday we published our proposal for how the Universal Service should change to meet the needs of our customers, our people and Royal Mail. It is based on the views of thousands of customers, small business owners, charities, trade bodies, publishers and the NHS, who we have listened to over recent months.
Our proposal is simple. It protects what matters most to customers, with limited change overall, and an emphasis on delivering a more reliable, more efficient and financially sustainable service.
We are proposing to retain the one-price-goes-anywhere service to all parts of the UK with the option of a next day First Class as well as a Second Class letters service. This would give our customers choice over price and speed of delivery, with First Class letters delivered six days a week.
Parcels would continue to be delivered up to seven days a week with tracking added to Universal Service parcels to reflect customer demand. The necessary change is that all non-First Class letters, including Second Class, would be delivered every other weekday.
The changes, if fully and swiftly implemented, would save up to £300 million a year. Not only would this create a more financially stable future for Royal Mail, protecting tens of thousands of jobs in the process, it would also mean we can invest in our business and future growth.
At Royal Mail we consider it a privilege to serve every household and business in the UK. But to save the Universal Service, we have to change the Universal Service. Our proposal is designed to do just that.
Saving the Universal Service requires decisive action, not prevarication. With no need for legislation, Ofcom can decide on the change immediately.
This article first appeared in The Times.
