Royal Mail failing to deliver, admits boss Simon Thompson

The Royal Mail boss faced fierce backlash from MPs last night after he admitted the company was failing in its legal duty to deliver letters on Saturdays.

In an embarrassing meeting with the House of Commons affairs committee, CEO Simon Thompson said yesterday that the company had breached its universal service obligation (USO).

This legally requires Royal Mail to deliver letters to UK households six days a week and parcels five days a week.

‘You haven’t fulfilled your national service to deliver letters six days a week for some time now. That’s correct, right?’ said committee chair Darren Jones.

Thompson replied, “Yes, I think that’s right.” He added that the company was “absolutely non-compliant with the USO”, but did not say whether he believed there had been a systemic failure at Royal Mail.

He also denied that it is company policy to prioritize parcels over letters.

When MPs asked last month whether postmen had been told to give priority to parcels over letters, Thompson said: ‘No, that’s absolutely not true.’

But yesterday, responding to evidence from postal workers across the country, he said packages take precedence over letters during industrial action.

“It is not our policy, but within [the] Because of the reality of industrial action, we need to change policies,” he said.

The committee also questioned Keith Williams, the chairman of Royal Mail’s parent company International Distributions Services (IDS), about why fulfilling the USO was not part of the group’s long-term incentive plan, the terms under which executives receive bonuses and stock awards.

Williams said the USO was not included because the incentives were related to “the transformation of the company,” but stressed letters were still “very important” to Royal Mail.

But Jones accused him of choosing to “write off and exclude” letter delivery and the USO from the company’s long-term performance plan.

Royal Mail has previously pushed for Saturday letter delivery to be scrapped as the number of letters posted has fallen sharply over the years.

It is estimated that the group could save as much as £250 million a year if the change were made.

The tense committee hearing came as Royal Mail is still embroiled in a bitter dispute with workers over wages and has plans to modernize the company to make it more competitive with rivals.

And the row didn’t seem to end after a vote by the Communication Workers Union (CWU) – representing around 115,000 Royal Mail workers – to strike again.

It follows 18 days of strikes last year, which the company said cost £200 million.

The company has warned that if it fails to transform the company, it could split IDS in half.

This would separate Royal Mail from its more successful international branch GLS.