Ofcom investigates Royal Mail again as quarter of first-class mail arrives late

Ofcom opens formal probe

Ofcom, the UK communications regulator, said Monday it had opened a formal investigation into Royal Mail’s delivery performance after the company disclosed that 24.3% of first-class mail failed to arrive within one working day of collection in the year to the end of March. Under Ofcom’s rules, 93% of first-class mail must be delivered within that timeframe, excluding the Christmas period.

The figures represent a deterioration from the previous year, when 23.5% of first-class mail arrived late. Royal Mail also reported that it delivered 90.2% of second-class mail within the three-working-day limit, well below Ofcom’s target of 98.5%.

The company has not hit its Ofcom-mandated first-class delivery target since 2017 or its second-class target since 2020. Ofcom has fined Royal Mail £37m since 2023 for routinely failing to meet those targets, including the £21m penalty in October — the third-largest financial penalty the regulator has ever issued to any company.

Parcel prioritisation question

Ofcom said the investigation would examine whether Royal Mail is prioritising parcel delivery over letters, a practice that whistleblowers and unions have alleged but the company denies.

“In deciding whether Royal Mail breached its regulatory obligations, we will consider all relevant factors,” Ofcom said. “This will include the question of parcel prioritisation, as well as identifying whether there were any exceptional events beyond the company’s control that may have affected its performance. Where we determine a breach of Royal Mail’s obligations during our investigation, we will consider whether to impose a financial penalty.”

Structural decline in letter volumes

The investigation comes as Royal Mail faces a steep structural decline in the volumes it was built to carry. A decade ago the company was delivering 20bn letters a year. That figure has fallen to 6.7bn and could drop to 4bn within four years, even as the number of addresses it serves has risen by 4m over the same period.

In April, Royal Mail raised the price of a first-class stamp by 10p, or 6%, to £1.80. The cost of a first-class stamp has more than doubled since 2020. The second-class stamp rose by 4p, or 5%, to 91p. Royal Mail said the increases were driven by “the continued rise in the cost of delivery for every letter.”

Last July, Ofcom gave Royal Mail’s owner, International Distribution Services, permission to loosen the company’s universal service obligation, ending second-class deliveries on Saturdays and reducing the service to alternating weekdays.

Ownership and company response

In 2024, the Czech billionaire Daniel Křetínský completed a £3.6bn purchase of IDS after the takeover was approved by a UK government national security review.

A Royal Mail spokesperson said the company would “engage fully with Ofcom” and that improving quality of service was “a top priority.” The company said it was delivering a significant programme of change backed by £500m of investment over five years.

“These reforms are designed to deliver long-term quality improvements for customers as we modernise the postal service and deploy the new delivery model,” the spokesperson said.