British second-class mail deliveries could be scrapped on Saturdays

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LONDON (Reuters) – Royal Mail could be allowed to drop second-class letter deliveries on Saturdays under changes proposed by the regulator Ofcom aimed at securing the future of Britain’s universal postal service.

Royal Mail is owned by International Distribution Services, which has accepted a takeover bid from Czech billionaire Daniel Kretinsky. The British government is scrutinising the 3.57 billion pound deal.

The company has long called for reforms to the nationwide single-price first- and second-class service obligation, and in April it proposed non-first class deliveries could be reduced to every other weekday.

Ofcom said on Thursday there was a clear need for reform, given that people were sending far fewer letters and Royal Mail had been losing hundreds of millions of pounds.

It said its research had found that people wanted a next-day first-class service six days a week for urgent mail, but they acknowledged that most letters were not urgent.

“If Second Class letters continued to be delivered within three working days but not on Saturdays – and First Class remained unchanged at six days a week – it would enable Royal Mail to improve reliability, make substantial efficiency savings, and redeploy its existing resources to growth areas such as parcels,” it said.

But Royal Mail’s performance must improve, it said. 

IDS Group Chief Executive Martin Seidenberg said letter volumes had fallen from their peak of 20 billion to 6.7 billion a year, meaning the average household now receives just four letters per week.

“Change cannot come soon enough,” he said, adding that the company’s own proposal would protect what matters most for customers. 

Shares in IDS rose 1% on Thursday.

Ofcom said it would consult on detailed proposals next year with a view to making a decision next summer.