Royal Mail PLC (LON:RMG) has been given regulatory backing to reduce the number of days it delivers letters from six days a week to five.
Ofcom, however, said while this could save the postal delivery group GBP125-225mln per year, the company needs to make its own efficiency savings to ensure the longer-term sustainability of the ‘universal service’.
Under the current rules of Royal Mail’s universal service obligation (USO), which stem from its history as the state monopoly, it must deliver letters from Monday to Saturday and parcels from Monday to Friday.
Research by Ofcom has found that reducing the USO for letters from six days a week to five would still meet the needs of 97% of residential users and small and medium-sized businesses, compared to 97-98% for the current six-day service.
“This suggests that reducing letter deliveries five days a week would still reflect postal users’ reasonable needs,” Ofcom said.
Lindsey Fussell, Ofcom’s Networks and Communications Group Director, said: “It would ultimately be for Parliament to decide whether this change is needed.”
The regulator said it was now calling on Royal Mail to “modernise its network and become more efficient”, putting the pressure on talks that are currently underway between the company and its main union, the CWU.
Last week the company’s interim executive chair Keith Williams said the board has been “encouraged by our talks with CWU, which have intensified over the past weeks”.
Senior representatives from the union telling Royal Mail put out a statement to members that one of their main points of focus in the talks is to ensure staff “receive a backdates consolidated pay award before Christmas.
“On the basis of the company’s half-year results, we now anticipate an improved offer on pay.”
The CWU bosses promised members a full update next week.
