Royal Mail, which was split from the Post Office and privatised a decade ago, is legally obliged to deliver a one-price-goes-anywhere universal service, which means it has to deliver letters six days per week, Monday to Saturday, and parcels Monday to Friday.
But the company’s performance in recent years has deteriorated, leading to heavy financial losses, with customers regularly not receiving letters, including important medical appointments and legal documents, on time.
The volume of letters being posted has plummeted, with half the number being sent compared to 2011 levels. Meanwhile, parcel deliveries have become more popular – and more profitable.
In the update to investors on Wednesday, Keith Williams, chairman of IDS, described the initial offer as “fair” and said it reflected how the business was having to adapt.
“It is, however, regrettable that despite four years of asking, the government has not seen fit to engage in reform of the universal service and thus improve our financial position,” he added.
Last month, Royal Mail set out a serious of reforms it wanted to the universal service, one of which included cutting second-class letter deliveries to every other weekday, in a bid to cut costs.
In its submission to Ofcom’s consultation on the future of the postal service, Royal Mail said that new ideas were needed to give the organisation a “fighting chance”.
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