Royal Mail Cuts Second Class Post

Royal Mail's Great Unravelling: Service Cuts, a Billionaire Takeover, and the Fight for Britain's Postal Future

The Royal Mail, an institution woven into the fabric of British life for over five centuries, stands at a precipitous crossroads. In a move that signals the end of an era, the communications regulator, Ofcom, has authorised a historic reduction in services, effectively scrapping the six-day-a-week delivery for second-class letters. This decision, announced in July 2025, is the culmination of years of financial turmoil, declining letter volumes, and missed performance targets. It arrives amid a contentious £3.6 billion takeover by a foreign billionaire and ignites a fierce national debate. The core conflict is stark: a clash between the demand for financial sustainability and the cherished principle of a universal public service. This is the story of that conflict, involving a struggling national icon, its powerful regulator, an incoming tycoon, and the thousands of postal workers who walk every street in the country.

The End of an Era: Second-Class Post Scaled Back

Ofcom's announcement confirmed a landmark change to Royal Mail's legal obligations. From 28 July, the six-day delivery schedule for non-urgent items will cease. Instead, these letters will now be transported on a new alternating-day schedule. For instance, post might arrive on Mondays, Wednesdays, and Fridays of one week, and then only on Tuesdays and Thursdays of the next. The regulator insists that the requirement for second-class items to reach their destination inside of three working days remains. First-class letters and parcels, for now, retain their existing service levels. This represents one of the most significant alterations to the country's mail system since its inception, a fundamental rewiring of its connection with the British public and a clear signal that the old model is considered broken beyond repair.

Ofcom’s Rationale: A Service on the Brink

The regulator presented its decision not as a simple cost-cutting measure, but as a necessary act of survival. Natalie Black, a director at Ofcom, stated that immediate reform was essential to provide the mail network its greatest prospect for continuation. The underlying logic rests on undeniable trends. The volume of mail that people dispatch has fallen sharply. The quantity of letters handled by Royal Mail collapsed from a high of 20 billion in the 2004-05 financial year to a mere 6.6 billion in 2023-24. In this environment, Ofcom argued, maintaining a six-day operation for non-urgent mail was no longer economically viable. The adjustments, it claimed, serve the best interests of both consumers and businesses because they secure the future of the entire universal service.

The Price of Survival: Relaxed Targets and Past Failures

Alongside the service reductions, Ofcom has also diluted Royal Mail’s performance benchmarks. The company must now ensure 90% of first-class mail arrives the next day, a drop from the prior 93% requirement. For second-class post, the benchmark for completion inside of three days falls from 98.5% to 95%. This move follows a consistent failure by the company to meet its legal obligations. Ofcom has imposed fines on Royal Mail repeatedly, with a £1.5 million penalty in 2020, followed by £5.6 million in 2023, and a substantial £10.5 million fine in 2024. To combat the worst delays, Ofcom introduced a new backstop, stipulating that 99% of all items must arrive with a maximum delay of two days, a measure designed to prevent letters from getting stuck in the system for weeks.

A Company in the Red: The Financial Imperative

The drive for these changes is rooted in Royal Mail’s dire financial situation. The firm’s owner, International Distribution Services (IDS), reported that the UK postal operation recorded an adjusted operating loss of £348 million in the 2023-24 financial year. This stark figure highlights the unsustainability of the letters business. The group as a whole was kept afloat by the profits of its international parcels division, GLS. According to Ofcom’s calculations, axing Saturday and some weekday non-urgent deliveries will generate savings for Royal Mail between £250 million and £425 million annually. This financial relief, the argument goes, is not just about profit, but about freeing up capital to invest in modernisation and compete in the booming parcels market.

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Soaring Stamps, Sinking Service

For the public, the reforms present a galling paradox: paying significantly more for a demonstrably worse service. While Royal Mail’s performance has faltered and its services are being cut, the price of postage has escalated dramatically. Since 2022, the price for a first-class stamp has doubled, climbing from 85p to an eye-watering £1.70. This has fuelled public anger and accusations of profiteering from a captive market. In response to these concerns, Ofcom has belatedly initiated a probe into the affordability of stamp prices. Yet for many consumers and small businesses, the damage is already done, cementing a perception that they are being asked to fund the company’s survival with little to show for it but a lighter postbag.

Enter the 'Czech Sphinx': A Controversial Takeover

Adding another layer of complexity to the situation is the impending takeover of Royal Mail’s parent company, IDS. The £3.6 billion deal will see the company fall into the hands of Daniel Křetínský, a Czech billionaire investor known as the "Czech Sphinx" for his inscrutable approach. His firm, EP Group, is poised to take control of one of the UK’s most critical pieces of infrastructure. The takeover, which was delayed by regulatory hurdles in Romania, has sparked widespread concern about the intentions of a foreign private equity owner. Křetínský’s past statements, which have characterized the Universal Service Obligation as a "death grip," have done little to soothe fears about his long-term commitment to the public service aspect of the business.

Government Scrutiny and the 'Golden Share'

The prospect of a foreign takeover of a national institution prompted intense scrutiny from the UK government. The Business and Trade Department engaged in robust negotiations with EP Group to secure a range of legally binding undertakings designed to safeguard the company’s future. These commitments only become effective if the takeover is completed. Among the most significant safeguards is the creation of a "golden share," a legal mechanism that gives the government veto power over any attempt to relocate the company's headquarters or abandon its UK tax residency. This is an unprecedented step, designed to prevent the kind of asset stripping that has plagued other privatised British industries.

EP Group’s Pledges: A Sustainable Future?

Beyond the headline commitment of the golden share, EP Group has made several other crucial promises. Daniel Křetínský has pledged to maintain the one-price-goes-anywhere principle for the universal service, ensuring that sending a letter costs the same whether its destination is London or a remote Scottish island. The company has also committed to keeping the Royal Mail brand, its UK headquarters, and recognising the Communication Workers Union. Furthermore, EP Group has promised to implement a balance sheet restructuring to resolve significant internal debts and to provide the necessary funding for Royal Mail’s transformation over the next three years, ensuring it has the capital to modernise its operations.

The Union’s Stance: A 'Groundbreaking' but Troubled Agreement

The Communication Workers Union (CWU), which represents the majority of postal workers, has adopted a pragmatic but cautious stance. General Secretary Dave Ward acknowledged that the postal landscape has changed and accepted the need for reform to the Universal Service Obligation (USO). The union has reached what it calls a "groundbreaking agreement" with EP Group, which it claims will provide a fresh start. This deal includes guarantees of no compulsory redundancies as a direct result of the service changes and a commitment to level up the pay and conditions for new staff, who are currently employed on inferior terms. The CWU sees this as the best available path to securing its members' long-term futures.

Rank-and-File Reality: A 'Blueprint to Eliminate Jobs'

Despite the official union leadership's position, many postal workers on the ground remain deeply sceptical. They point to the ongoing trials of Royal Mail’s "Optimised Delivery Model" as evidence that the changes are less about service sustainability and more about aggressive cost-cutting. Critics within the workforce describe the new model as a blueprint for eliminating jobs and increasing workloads. They report that the trials have been beset by problems, with mail piling up in delivery offices. The fear is that the reforms, combined with the new ownership, will accelerate the shift towards a gig-economy-style parcels business, dismantling the stable, pensionable careers that were once a hallmark of the company.

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A 'Woeful Track Record': The Consumer Backlash

Consumer advocacy groups have been scathing in their assessment of the reforms. Citizens Advice condemned Royal Mail for what it termed a dreadful history of not hitting its delivery benchmarks while simultaneously increasing postage fees. The group’s policy director, Tom MacInnes, argued that the regulator had squandered a significant chance for meaningful change. He asserted that simply slashing services and relaxing targets would not automatically improve reliability or standards. For these groups, the changes fail to address the fundamental problem: years of underinvestment and mismanagement that have led to a systemic decline in service quality. They argue the reforms reward failure rather than incentivising genuine improvement.

Business Concerns: The Uncapped Cost of First Class

The business community has also voiced significant alarm. Organisations like the UK Greeting Card Association have denounced the decision, expressing concern that trimming the second-class offering will force customers towards the uncapped and unregulated first-class service. This, they argue, will become ever more costly for both small businesses and individual consumers who depend on the mail for their livelihoods and personal connections. The fear is that as second-class becomes less reliable and predictable, the only viable option for time-sensitive mail will be the premium-priced first-class stamp, creating a two-tier system that penalises those with the tightest budgets.

Political Fallout: A 'Deeply Worrying Decision'

The decision has not escaped political criticism. The Liberal Democrats described Ofcom's announcement as a profoundly troubling move that could abandon many individuals who rely on consistent deliveries. Sarah Olney, the party’s business spokesperson, captured a common sentiment, stating that the public needs assurance of timely mail arrival to manage their daily affairs. The Department for Business and Trade offered a more measured response. It acknowledged that mail usage patterns have changed and that it was right for the regulator to review the service. However, it also put the onus squarely on the company to collaborate with unions and its workforce to provide the service the public anticipates.

The Universal Service Obligation: A 'Death Grip' or a Public Right?

At the heart of the entire debate is the Universal Service Obligation (USO). This is the legal mandate that dictates Royal Mail must transport letters to any of the UK's 32 million addresses for a single, uniform price, throughout the week. For prospective owner Daniel Křetínský, this obligation is a "death grip" that is financially unsustainable in a digital age. He argues it is the strictest such requirement in Europe and prevents the company from competing effectively. However, for many others, the USO is a fundamental public right. It ensures that citizens in isolated rural communities have the same access to postal services as those in major cities, binding the nation together and preventing the emergence of "postal deserts."

The Path of Modernisation: Automation and Efficiency

While the service cuts have dominated headlines, Royal Mail insists it is also on a path of modernisation. The company is actively expanding its network of out-of-home parcel drop-off and collection points, aiming to increase locations by more than 50% to over 21,000. It is also investing in the automation of its parcel hubs to increase efficiency and speed up processing. These moves are a direct response to the intense pressure from nimble, tech-driven competitors like Amazon, DPD, and Evri. The challenge for Royal Mail is to retool its vast, centuries-old infrastructure to compete in a market that prioritises speed, tracking, and customer convenience above all else.

A Tale of Two Companies: The GLS Lifeline

Understanding Royal Mail’s current predicament requires looking at the structure of its owner, International Distribution Services. IDS is effectively two companies in one. There is the familiar UK-based Royal Mail, with its declining letters business and challenging transformation. Then there is General Logistics Systems (GLS), a highly profitable and growing international parcels business operating across Europe and North America. For years, the profits from GLS have been used to offset the heavy losses incurred by the UK operation. The takeover and the current reforms are, in part, an attempt to finally resolve this internal tension and put both businesses on a more independent and financially stable footing.

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Regulator Under Fire: Has Ofcom Failed?

The role of the regulator, Ofcom, has come under intense fire throughout this process. The CWU has accused Ofcom of failing in its duty, not just to Royal Mail but to the entire postal market. The union argues that the watchdog has allowed parcel giants like Amazon to operate without the same level of scrutiny or obligation, creating an uneven playing field that has placed an unfair burden on Royal Mail. Critics contend that by focusing solely on tweaking the USO, Ofcom is avoiding the bigger, more difficult questions about how to properly regulate a modern delivery market to ensure fair competition and protect the interests of the public and workers alike.

The View from the Sorting Office: Overworked and Under-Resourced

For all the talk of high-level finance and regulatory frameworks, the crisis at Royal Mail is also a story about people. The CWU has forcefully argued that the "real culprit" behind the service's decline is not the six-day week, but the company's inability to recruit and retain staff. Delivery offices nationwide are reportedly understaffed, leading to soaring workloads for existing employees and mail being left behind. From this perspective, the service cuts are a sticking plaster on a much deeper wound. They fail to address the fundamental operational problems of a demoralised workforce struggling with poor management, inferior conditions for new recruits, and the immense pressure of an unmanageable workload.

An Uncertain Future: Can Royal Mail Deliver?

Royal Mail now stands on a precipice, caught between the weight of its public service history and the relentless demands of the modern market. The reforms approved by Ofcom are a gamble. They may provide the financial breathing room needed for the company to modernise and survive under its new billionaire owner. However, they could also accelerate its decline, alienating the public, demoralising the workforce, and eroding the very universal service they are meant to save. The coming months will be critical. The nation will be watching to see if this historic institution can navigate its turbulent new reality, or if the promise of a letter delivered anywhere, for one price, is a piece of British heritage that is destined to be returned to sender.