Britain’s letter writers, and the small businesses that still depend on the post for invoices, contracts and statutory notices, are paying the price for another year of underperformance at Royal Mail.
Just 75.7% of first-class mail was delivered on time in the 12 months to the end of March, the postal operator confirmed on Friday, a country mile from its 93% regulatory target and the first full-year snapshot of life under Czech billionaire Daniel Kretinsky’s EP Group, which completed its £3.6bn takeover last spring.
Performance has actually slipped since the company’s final year on the London Stock Exchange, when 76.9% of first-class and 92.2% of second-class letters arrived on time. The new figures show only 90.2% of second-class post landed within three working days, against a target of 98.5%.
The communications regulator described itself as “very concerned” by the figures. Business Matters understands Ofcom is preparing to open a formal investigation into Royal Mail’s performance as soon as next week – a move that would almost certainly lead to a further multi-million-pound fine on top of the £21m penalty imposed last October, the third-largest in the watchdog’s history.
It is six years since Royal Mail last hit its second-class target and a decade since it cleared the bar on first-class. The slump that began during the pandemic has stubbornly refused to reverse.
Chief operating officer Jamie Stephenson struck a contrite tone, insisting the business is on course to meet new, softer targets of 90% for first-class and 95% for second-class by this time next year.
“We’re putting significant investment into improving reliability and reaching these new delivery targets, but delivering lasting change across a network of this scale takes time,” he said.
The company is ploughing £500m into its five-year improvement plan, which includes offering part-time posties longer hours and scrapping second-class Saturday deliveries – a structural overhaul agreed with Ofcom and rolled out from April.
For Britain’s 5.5 million small businesses, however, the patience required is wearing thin. SMEs remain disproportionately reliant on physical mail for cheques, payment reminders, HMRC correspondence and signed agreements. Slow post means delayed cash flow, missed deadlines and, in the worst cases, penalties from regulators whose own letters arrive late.
Tom MacInnes, policy director at Citizens Advice, was withering in his assessment. Poor performance at Royal Mail, he said, was “business as usual”.
“What’s worse, Royal Mail claims people will have to wait another year until it can meet its new, lower delivery targets,” he added.
In February, postal workers told the BBC that letters had been sitting undelivered in depots for weeks because staff had been instructed to prioritise parcels, which carry fatter margins. Mr Kretinsky was hauled before MPs on the Business and Trade Committee in March, where he said he was “deeply sorry for any letter that arrives late” but flatly denied that parcels were being put ahead of letters. As the House of Commons Library has documented, letter volumes have collapsed from 20 billion items in 2004-05 to around 6.6 billion last year, putting the universal service economics under unprecedented strain.
Ofcom has already eased Royal Mail’s regulatory burden. Since April, the operator has been measured against the lower targets of 90% next-day delivery for first-class and 95% three-day delivery for second-class. The regulator argued the previous benchmarks were “more stretching” than in comparable European countries and would “carry higher costs which would need to be recovered through higher prices” – an unwelcome trade-off for any SME owner who has watched a first-class stamp climb to £1.70.
Whether £500m and a slacker rulebook can finally turn around an institution that has failed its own customers for the best part of a decade is the question now landing on Mr Kretinsky’s desk. On the evidence of Friday’s numbers, the answer is not yet in the post.