Letterboxes could fall silent on Saturday mornings, after the postal workers’ union appeared to accept a proposal from Royal Mail that would see it abandon its duty to deliver all letters six days a week.
Royal Mail is required to deliver post from Monday to Saturday under the terms of the universal service obligation (USO) set down by an act of parliament in 2011. Amid a long-running industrial dispute with the financially struggling company, the Communication Workers Union (CWU) has so far opposed a £300m cost-cutting blueprint that would include scrapping most Saturday services.
But the union appeared to concede last week that a complete six-day service is unaffordable. The change of heart comes as the 500-year-old company battles a £3.1bn takeover bid from its largest shareholder, the Czech billionaire Daniel Křetínský.
Speaking at the CWU’s annual conference in Bournemouth last week, the union’s deputy general secretary, Martin Walsh, said: “The reality is, the USO as a six-day option is no longer financially viable. The challenges we face are so significant – probably the most challenging time in this union’s history, whether it’s the USO change, sale or possible takeover.”
Royal Mail reported a £1bn loss last year, with bosses blaming strike action by CWU members and a failure to increase productivity for its poor performance during a year in which it cut 10,000 jobs. It also said that fewer deliveries were required because the volume of letters sent has declined from 20bn in 2004-05 to 7bn last year.
Union sources told the Times that accepting changes to the six-day service did not mean a complete end to Saturday post because first-class mail would still be delivered. However, first-class stamp prices are not capped, meaning the company could increase prices steeply to reduce the number of Saturday deliveries it is required to make.
Royal Mail’s plans could see second-class deliveries reduced to every other day, with reductions achieved partly by slowing down bulk deliveries for government departments and businesses from two days to three days. Such a change would reduce the number of postal rounds by 9,000 a day.
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But it must first persuade ministers and the media regulator, Ofcom, to accept its proposals. Ofcom has yet to respond, while Kevin Hollinrake, the government minister for postal affairs, has not given his blessing. “There is no done deal here and, as far as we are concerned, the USO remains and we are not aware of any recommendations [by Ofcom] to change it,” he told the Times.
But any accord between Royal Mail and its union – which represents 110,000 postal workers – could smooth the way for government approval, especially after a prolonged period of bitter industrial action, including several strikes.
Křetínský, who is estimated to be worth £7.3bn, launched a £3.1bn takeover bid for Royal Mail’s parent company, International Distribution Services (IDS), earlier this month.
The 320p a share offer is far below the peak of nearly 580p that the company reached in summer 2021, and has been rejected by IDS.
Success would see Křetínský add Royal Mail to a business empire that was built on energy assets but also includes stakes in Sainsbury’s and West Ham United FC. The investor, known as the “Czech Sphinx” due to his inscrutable demeanour, has until 15 May to improve his offer.
Křetínský is being advised on his attempt to take over Royal Mail by JP Morgan’s Chuka Umunna, the former shadow business secretary – who became a rising star during his time on the Treasury select committee, when he criticised highly paid bankers.