Royal Mail Response to Ofcom Consultation

International Distribution Services plc

(Incorporated in England and Wales)

Company Number: 8680755

LSE Share Code: IDS

ISIN: GB00BDVZYZ77

LEI: 213800TCZZU84G8Z2M70

9 April 2025

ROYAL MAIL RESPONDS TO OFCOM CONSULTATION ON THE UNIVERSAL SERVICE

International Distribution Services plc (IDS.L) announces that Royal Mail has today submitted its response to Ofcom's consultation 'Review of the universal postal service and other postal regulation'.

Ofcom recognises that the Universal Service needs to be modernised and reform is necessary given letter volumes have declined from 20 billion a year at their peak in 2004/05 to 6.7 billion a year in 2023/24. Ofcom states that if the Universal Service does not evolve to align with customer needs, it risks becoming unsustainable, and people could end up paying higher prices than necessary.

Proposed changes to the Universal Service

Currently the Universal Service Obligation (USO) requires Royal Mail to deliver First Class and Second Class letters six days a week, Monday to Saturday. Ofcom's consultation proposes to remove the requirement for Royal Mail to deliver Second Class post six days a week and allow delivery of these letters every other weekday, Monday to Friday. There would be no changes to:

· The one-price-goes-anywhere service to all parts of the United Kingdom

· First Class letters delivered daily, six days a week (Monday to Saturday) to recognise the importance of next day and Saturday deliveries for some customers

· The option of First Class and Second Class letters, giving people the choice of price and speed

· Parcel services which Royal Mail is required by regulation to deliver Monday to Friday, but which the company also delivers on weekends.

These proposed changes were developed following extensive consultation by both Ofcom and Royal Mail, listening to a wide range of consumers, businesses and stakeholders.

Changes to Ofcom's package of reforms are required

Royal Mail, however, is concerned that key changes by Ofcom to Royal Mail's proposed reforms will not deliver the efficient, reliable and financially sustainable Universal Service that customers need.

Royal Mail proposed the introduction of new additional reliability targets in its response to Ofcom's Call for Inputs (April 2024). These will give customers greater confidence and reflect the fact that customers increasingly value reliability over speed. Royal Mail is however concerned that the level at which Ofcom is proposing to set the new reliability targets1 is over specified and will add significant cost to the delivery of the Universal Service. This would put the benefits of Universal Service reform at risk and could lead to materially higher prices for customers.

Royal Mail is also concerned that Ofcom's proposal to add a Priority (D+2) Access business service to postal regulation significantly reduces the chances of achieving a successful roll out of the new delivery model and goes against the wider Government drive to reduce unnecessary regulation.

Furthermore, Royal Mail proposes that Ofcom enhances and modernises the Universal Service by removing unnecessary regulation that prohibits Royal Mail from offering parcel tracking for Universal Service customers. Tracking is now a hygiene factor when sending parcels in this highly competitive sector. The current restriction does not reflect what customers want and renders the Universal Service unfit for the digital age.

Royal Mail urges Ofcom to publish its consultation decision and updated regulations by 1 July 2025 so that customers can benefit from a more efficient, reliable and financially sustainable Universal Service without delay.

Martin Seidenberg, Chief Executive Officer, International Distribution Services, said: "It is vital that Universal Service reform delivers a postal service which is reliable, affordable and better meets what customers need for both letters and parcels. These changes we seek are important measures to ensure we can protect the one-price-goes-anywhere Universal Service for many years to come."

1 Ofcom's consultation proposes setting the reliability targets at 99.5% of First Class letters delivered within three days and 99.5% of Second Class letters delivered in five days. 

Ends

Notes to editors

· Ofcom calculates that providing the current Universal Service has a net cost to Royal Mail of £325 million to £675 million every year - equivalent to £1 million to £2 million every day to provide the Universal Service to the UK. 

· This is in the context of Royal Mail making losses of £419 million in 2022-23 and £348 million in 2023-24.

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