The government has rejected a plea from Royal Mail to cut its legal obligation to deliver letters to businesses and homes from six days a week to five.
Previously unpublished correspondence with the government, obtained by The Times under the Freedom of Information Act, shows that Simon Thompson, chief executive of the heavily lossmaking Royal Mail, wrote to Kwasi Kwarteng, who was business secretary, in May asking for an end to its commitment to deliver on Saturdays.
Despite the rejection by Kwarteng of the request to reform the “universal service obligation”, the privatised postal network and letters monopoly has gone public, stating that without the go-ahead to change the way it operates, it faces financial ruin.
At the publication of losses of £219 million in the six months to the end of September, Royal Mail said relaxing its universal service commitment — enshrined in law at its privatisation in 2013 to deliver letters six days a week on the principle of one price goes anywhere — was now “urgent”.
Kwarteng, who became chancellor under Liz Truss for seven weeks, wrote back in June that “I understand that Paul Scully [who was the minister in charge of postal affairs] has been clear in his discussions with you that the case for change to the statutory framework has not been met”.
Some of the details of Thompson’s demands in the correspondence with Kwarteng were redacted before being released to The Times.
Thompson also complained that Royal Mail needed to “avoid being caught between Ofcom [the postal regulator] and the department with each saying the other is responsible”.
Although Thompson cited “commercial reasons” for reform, in reality Royal Mail’s financial woes are more deep-seated. Much of the losses this year, after a highly profitable 2021-22, are due to its failure to take its 140,000-strong workforce along with its plans to modernise. This has led to one-day strikes as the boom in home deliveries from online shopping during the pandemic restrictions ends.
Royal Mail confirmed that the company had gone public in its demands because of the change of personnel at the top of government and in the business department, with Grant Schapps now business secretary and Kevin Hollinrake the postal minister. Royal Mail said it could make a financial case — its deepening losses — and a customer case for reform of the universal obligation.
The company said customers were relaxed about postal deliveries going to five days, as witnessed by referencing a survey of postal users by Ofcom in 2020 and by the fact that sending letters is going out of fashion.
The habit has been in a steep decline for decades and has accelerated since the advent of email and smartphone messaging to a point at which it is now down 24 per cent on pre-pandemic levels.
The Royal Mail is understood to believe it is making headway with the business department, as its most recent parliamentary statements on reform of the universal delivery obligation used the phrase “no current plans”, compared with previous statements that said “no plans”.
One industry that is against the end of the six-day service is the Professional Publishers Association, which represents 200 publishing houses covering magazines from New Scientist and WhatCar? to Good Housekeeping, Vogue and Vanity Fair.
“This move will seriously impact long-established weekly magazine titles,” the publishers said. “This could lead to the closure of UK print editions and result in multimillion-pound losses due to cancelled subscriptions and reduced advertising revenues.”
