Former business secretary urges Royal Mail to take action if Saturday mail is scrapped
Former business secretary urges Royal Mail to take action if Saturday mail is scrapped
Royal Mail must invest in improving services if it scraps Saturday mail, Sir Vince Cable has said.
The former business minister, who led the group’s privatization under the coalition government in 2013, said the company’s performance “clearly needs to improve”.
The postal watchdog, Ofcom, said last week it would review Royal Mail’s legal obligation to deliver letters Monday to Saturday, known as the universal service obligation (USO).
The announcement caused an uproar, although Ofcom said most individuals and businesses would not be affected.
Cable insisted that if it stopped deliveries on Saturday, the money would have to be funneled back into the company. “If Ofcom lets them off the hook on Saturday deliveries, they can’t simply pocket the savings given their overall performance,” he said.
Writing on the wall?: The postal watchdog, Ofcom, said it would review Royal Mail’s legal obligation to deliver letters Monday to Saturday
While admitting it was a “difficult” situation for the company, the former Lib Dem leader added that Royal Mail should be required to set out a detailed strategy following a change to the USO.
‘Royal Mail cannot simply walk away with fewer obligations. That shouldn’t happen,” he said.
Debate over the future of Saturday Mail reignited after figures last week showed the company was on course to miss its delivery targets for the seventh year in a row.
It came amid an ongoing Ofcom investigation into its performance, which could result in a hefty fine.
Royal Mail has been pushing for years to scrap six-day deliveries as the falling use of letters has hit revenues. About 7 billion were shipped last year, up from 20 billion in 2004.
Analysis by The Mail on Sunday has revealed that Royal Mail’s letters business generated a turnover of £4.8 billion in the first year of privatization in 2013 – enough to cover payroll costs for that year.
But a decade later, text messages and emails have severely reduced the number of letters sent while increasing costs. In the year to March, the company’s letters business generated just £3.5 billion, enough to cover just two-thirds of wages.
Royal Mail has previously highlighted research Ofcom carried out in 2020 which found that offering a letter service only on weekdays would meet the needs of 97 per cent of consumers and SMEs.
It is estimated that delivering five days a week would save £250 million a year, but attempts to scrap Saturday mail have been repeatedly blocked by the government.