Downing Street has indicated that the government will oppose Royal Mail plans to scrap Saturday letter deliveries, as the regulator assesses the possibility of cuts to the postal service.
Ofcom, the communications industry regulator, is expected to publish a series of options for the future of the postal service when the results of a five-month-long review are published this week, probably on Wednesday.
The watchdog is likely to lay out a number of potential changes, including cutting the Saturday services, in its review of the universal service obligation (USO) – the legislation that requires Royal Mail to deliver nationwide, six days a week at a fixed price – and a consultation will then follow.
But Rishi Sunak’s spokesperson said on Monday that the government “would not countenance” enabling Royal Mail to ditch its six-day-a-week letter postal service.
The prime minister’s representative said: “Obviously Ofcom has a role here and is reviewing the future of Royal Mail.
“But the prime minister’s strong view is that Saturday deliveries provide flexibility and convenience that are important for businesses and particularly publishers and the prime minister would not countenance seeing Saturday deliveries scrapped.
“So I think we’ll see exactly what the outcomes are. But given the importance of these deliveries, particularly to businesses, it’s not something we would countenance.”
Ofcom has previously said cutting Saturdays could save Royal Mail £125m to £225m a year. Its proposals could also include changing first- and second-class delivery targets, higher stamp prices, a state subsidy for Royal Mail to provide the USO and even alternate day deliveries. However, the regulator does not have the authority to order any such changes, which would require an update to the Postal Services Act 2011.
Royal Mail has long argued that delivering the six-day service in its current form is unsustainable, but last year Ofcom rejected those calls before later fining the company £5.6m for missing delivery targets.
The Observer revealed this month that the regulator was canvassing views on alternate day and three-day services, and a former employee said that Royal Mail’s push for a five-day service was a “red herring” before a more radical longer-term reduction in delivery days to cut costs.
In a letter to MPs, the boss of Royal Mail’s parent company, Martin Seidenberg, said the USO was “simply not sustainable” and cited changes in other countries, including a move to alternate day deliveries in Germany and Italy.
The Downing Street comments could cause problems for Labour if the party wins power at a general election this year as polls suggest.
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The party has yet to firmly assert its position on Saturday deliveries. Asked whether Labour would be content with an alternate day service, the shadow environment secretary, Steve Reed, told Sky News: “No, I think it’s very worrying. There is a USO obligation, wherever you live in this country you should get a regular postal service – I think that’s still an important part of the infrastructure of our country and it’s very worrying to hear these proposals.”
It is understood that Labour has been in talks with the Communication Workers Union (CWU) for 12 months and conversations are continuing over how to sustain the USO. Labour said last year it would conduct a regulatory review to improve quality of service and labour standards across the postal sector if it gained power, and opposed the breakup of Royal Mail mooted during industrial action.
On Monday, the CWU said: “Ofcom have abandoned their responsibilities on quality of service and are now attempting to do the same on the USO.”
The Labour backbencher and former Royal Mail employee Kate Osborne said: “Royal Mail is trying to strip away our much cherished postal service with no regard for the longer-term impact it will have on not only the workers and communities but also on businesses that rely on a six-day service.”
Royal Mail reported its best Christmas in four years last week, despite missing targets that would have triggered a £500 staff bonus.
