Under-fire bosses at Royal Mail now have another problem on their plates, after MPs referred the business to Ofcom over its "systematic failure" to meet parts of the Universal Service Obligation (USO).

The USO requires Royal Mail to deliver letters to every household in the UK, six days a week. 

The move follows the recent appearances by Royal Mail bosses, including CEO Simon Thompson, before the BEIS select committee of cross-party MPs.

This involved the unusual step of a recall for a second sitting, under oath, “in order to stress the importance of giving answers to the committee that are wholly truthful”.

In its report published today (17 March), the committee stated: “We believe that Royal Mail has deprioritised delivery of letters as a matter of company policy and that it has systemically failed to deliver against parts of its USO. 

“The evidence suggests that this practice has taken place not just during periods of industrial action but since the start of the pandemic, if not earlier. We therefore call on Ofcom to undertake an enforcement investigation into Royal Mail’s delivery of the USO and to report to this committee by the end of 2023.”

The committee also called on the government to “formally engage with Royal Mail, following the outcome of Ofcom’s enforcement investigation, to secure the future of the Universal Service Obligation and Royal Mail; and to provide an initial report to this Committee no later than the end of 2024”.

The report also stated: “The committee is not empowered to instruct senior leaders at Royal Mail on how to run their business. Royal Mail is now a private company. However, as the provider of the USO, Royal Mail does have a statutory responsibility to deliver this public service and is therefore accountable to Ministers and to this committee. 

“The issues at Royal Mail have caused the committee great concern and we call on the board of Royal Mail and the CWU to seek to resolve the outstanding issues in dispute as quickly as possible.”

In response, a Royal Mail spokesperson said the business was proud to deliver the Universal Service, “and our policies are clear that parcels and letters should be treated with equal importance”. 

“We have informed the committee that we will be reviewing the consistent application of our policies regarding the delivery of letters and parcels across the business. We will share our findings with the committee and Ofcom. We have asked the committee to share the material they have received, and reiterate again our request for them to do that at the earliest opportunity so it can help inform that review.”

The spokesperson also asserted that Royal Mail had answered in detail the questions asked by the committee, and rejected the suggestion that Royal Mail may have misled the BEIS select committee during that process.  

"We welcome the committee’s acknowledgement that the commercial reality of providing the Universal Service has changed, and their recommendation that the Government formally engage with Royal Mail to secure the future of the Universal Service,” the spokesperson stated. 

“The challenges facing Royal Mail and the Universal Service cannot be ignored. Royal Mail is losing a million pounds a day, and customer behaviours have fundamentally changed. Letter volumes have decreased from more than 20 billion letters a year in 2004/5, to approximately eight billion letters per year now, posing real risks to the financial sustainability of the Universal Service.

"We urge the Government, Ofcom and all stakeholders to work with us to ensure we have a financially sustainable Universal Service for many years to come. 

“We also welcome the committee’s call for a quick resolution to the industrial dispute with the CWU, and continue to make this a priority.”

 

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