Government rejects Royal Mail request to stop Saturday deliveries

Simon Thompson (right) plans to step down from the role of CEO in October (PA Media)
Simon Thompson (right) plans to step down from the role of CEO in October (PA Media)

The Government has rejected a request from the Royal Mail to halt Saturday deliveries after a wave of strikes and slump in demand for parcel deliveries.

The delivery company, which reduced its workforce by 10,000 staff in March, is claiming that a six-day postal service has become financially unsustainable.

But the Government’s business department said it had no plans to adjust the universal service obligation (USO) – a condition of Royal Mail’s privatisation - after the postal service said it needed “urgent reform”.

Kevin Hollinrake, a minister at the Department for Business and Trade, wrote to the business select committee: “We currently have no plans to change the minimum requirements of the universal postal service as set out in the Postal Services Act 2011 … including six-day letter deliveries.”

MPs would have to vote through any changes to the obligation.

It came after Royal Mail blamed strike action for helping send it slumping to a full-year loss of more than £1 billion.

The group’s owner, International Distributions Services (IDS), revealed Royal Mail swung to an operating loss of £1.04 billion for the year to March 26, against earnings of £250 million the previous year.

The firm said it had completed a 10,000 reduction in its staff numbers by the end of March, and last month reached a deal with the Communication Workers Union that would see a 10% pay rise and profit share scheme for remaining staff.

A Royal Mail spokesperson said: “The government has said before that it has no current plans to change the USO, but it is clear that when letter volumes have declined by more than 60% since their peak in 2004-05, in order to be financially sustainable, the [USO] requires urgent reform.”

Continuing Saturday deliveries “increases the threat to the sustainability of the universal service”, the spokesperson said. “We urge the government to recognise Ofcom’s findings, to enable this change quickly, and work with us to protect the long-term sustainability of the one-price-goes-anywhere universal service.”