British letter writers, and small businesses that still depend on the post office for invoices, contracts and legal notices, are paying the price for another year of underperformance at Royal Mail.
Just 75.7% of first-class mail was delivered on time in the 12 months to the end of March, the postal operator confirmed on Friday, a country mile from its 93% control target and the first brief of life under EP Group of Czech billionaire Daniel Kretinsky, which completed its £3.6bn takeover last spring.
Performance has actually declined since the company’s last year on the London Stock Exchange, when 76.9% of first-class and 92.2% of second-class securities arrived on time. The new figures show only 90.2% of second-tier positions arrived within three working days, compared to a target of 98.5%.
The communications regulator described himself as “very concerned” about the statistics. Business Matters understands Ofcom is preparing to open a formal investigation into Royal Mail’s operations as soon as next week – a move that could lead to another multi-billion fine on top of the £21m fine handed down last October, the third largest in the watchdog’s history.
It has been six years since Royal Mail last scored its second tier goal and ten years since it cleared the first tier. The recession that began during the pandemic stubbornly refused to reverse.
Chief operating officer Jamie Stephenson expressed regret, stressing that the business will meet new, softer targets of 90% of stage one and 95% of stage two by this time next year.
“We are investing heavily in improving reliability and achieving these new delivery targets, but delivering lasting change across a network of this scale takes time,” he said.
The company is plowing £500m into its five-year improvement plan, which includes offering longer hours and scrapping Saturday deliveries for the second phase – a building overhaul agreed with Ofcom and started in April.
However, for Britain’s 5.5 million small businesses, the patience required is less. SMEs are increasingly reliant on physical email to receive cheques, payment reminders, HMRC letters and signed contracts. Slow movement means delayed cash flow, missed deadlines and, in the worst cases, fines from regulators whose books are late.
Tom MacInnes, director of policy at Citizens Advice, was unflinching in his assessment. The underperformance at Royal Mail, he said, was “business as usual”.
“Worse still, Royal Mail says people will have to wait another year until it can meet its new, lower delivery targets,” he added.
In February, postal workers told the BBC that letters had been sitting undelivered at depots for weeks because workers had been told to prioritize parcels, which had fat edges. Mr Kretinsky was taken before MPs at the Business and Trade Committee in March, where he said he was “very sorry for any late letter” but flatly denied that the parcels were placed before the letters. As the House of Commons Library has documented, book volumes have fallen from 20 billion in 2004-05 to about 6.6 billion last year, putting the world’s resource economy under unprecedented pressure.
Ofcom has already reduced Royal Mail’s regulatory burden. Since April, the operator has been measured against minimum targets of 90% next-day delivery for the first phase and 95% three-day delivery for the second phase. The regulator said previous benchmarks were “more elastic” than in similar European countries and would “carry higher costs that would need to be recovered through higher prices” – an unacceptable trade-off for any SME owner watching a first-class stamp soar to £1.70.
Whether £500m and a loose rulebook can finally turn around an institution that has failed its clients for the better part of a decade is the question now sitting on Mr Kretinsky’s desk. As of Friday’s numbers, the answer is still not in the mail.
