Royal Mail Must Take Action to Improve Services Amid Potential Saturday Post Cancellation

According to Sir Vince Cable, Royal Mail should invest in improving its services if it decides to discontinue Saturday post.

Sir Vince Cable, the former Business Secretary who oversaw the company’s privatization in 2013, stated that the company’s performance “clearly needs improvement.” He made these comments in response to Ofcom’s announcement last week that it will review Royal Mail’s legal obligation to deliver mail from Monday to Saturday, known as the Universal Service Obligation (USO).

While the announcement caused uproar, Ofcom stated that the majority of individuals and businesses would not be affected. Sir Vince Cable believes that if Royal Mail reduces deliveries on Saturdays, the company should reinvest the money back into its operations. He stated, “If Ofcom is willing to relieve them of Saturday delivery obligations, they cannot simply keep the savings given their overall performance.”

Writing on the wall?: The postal watchdog, Ofcom, said that it would review Royal Mail’s legal requirement to deliver letters from Monday to Saturday

While acknowledging the complexity of the situation for the business, Sir Vince Cable believes that Royal Mail should be required to present a detailed strategy in the event of a change to the USO. He stated, “Royal Mail cannot simply reduce its obligations. That should not be allowed.”

The debate over the future of Saturday post was reignited after recent figures indicated that Royal Mail is likely to miss its delivery targets for the seventh consecutive year. Furthermore, Ofcom is currently investigating Royal Mail’s performance, which could result in a substantial fine.

Royal Mail has been advocating for the elimination of six-day deliveries due to the decline in letter usage, which has negatively impacted its revenue. Last year, only 7 billion letters were sent compared to 20 billion in 2004.

An analysis by The Mail on Sunday discovered that, in its first year of privatization in 2013, Royal Mail’s letter business generated £4.8 billion in revenue, enough to cover its annual wage costs. However, ten years later, the company’s letter business only made £3.5 billion in revenue, covering only two-thirds of its wage expenses.

Royal Mail has previously cited research conducted by Ofcom in 2020, which states that providing a letter service on weekdays only would meet the needs of 97% of consumers, as well as small and medium-sized businesses. Eliminating Saturday post could potentially save the company £250 million per year, although attempts to implement this change have been repeatedly blocked by the government.