The universal postal service risks becoming unsustainable as people send fewer letters and receive more parcels, meaning reform is necessary to secure its long-term future, according to evidence set out by Ofcom on Wednesday.
While Royal Mail’s obligations have not changed since 2011, letter volumes have halved and parcel deliveries have become increasingly important.
Given the significant cost to Royal Mail of delivering the universal service, Ofcom said there is an increasing risk it will become financially and operationally unsustainable in the long term.
The regulator has invited views on a range of options for redesigning the universal postal service to secure its future, while ensuring it reflects the way people use it. Under any scenario, it said, Royal Mail must modernise its network, become more efficient and improve its service levels.
Ofcom’s research shows that people want to get what they pay for. But people are not currently getting a reliable service because of Royal Mail’s recent poor performance, for which Ofcom fined the company £5.6 million last year.
The regulator is not consulting on specific proposals to change the universal service obligation (USO) at this stage as some of the options included in the consultation document, such as reducing the number of letter delivery days in the service from six to five or three, would require the government and Parliament to change primary legislation.
“[The universal service] is getting out of date and will become unsustainable if we don’t take action. We’ve set out options for reform so there can be a national discussion about the future of universal post. In the meantime, we’re making sure prices will remain affordable by capping the price of Second Class stamps,” Melanie Dawes, Ofcom chief executive, said.
Commenting, Post Office chief executive Nick Read said they ‘fully agree’ that there must be a national debate around how consumers need a parcel and letter delivery service to work for them in the 2020s and into the next decade.
“Our postmasters serve tens of thousands of customers every week who need to send important letters – whether that’s to loved ones or for personal or work-related reasons. Vulnerable and elderly people, as well as many businesses, depend on a reliable letter service and their needs must be considered in any review,” he said.
The consultation will run till 3 April.
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