Royal Mail has been fined £5.6m by Ofcom for failing to meet its first- and second-class delivery targets in the 2022-23 financial year. The regulator stated that the company missed the targets by a “significant and unexplained margin”, causing “considerable harm” to customers.
Only 74% of first-class post arrived on time, far below the statutory target of 93%, while second-class performance was 91% against a 98.5% target. Royal Mail also completed just 89% of delivery routes each required day, compared with a 99.9% expectation.
Ian Strawhorne, Ofcom director of enforcement, said: “Clearly, the pandemic had a significant impact on Royal Mail’s operations in previous years. But we warned the company it could no longer use that as an excuse, and it just hasn’t got things back on track since. The company’s let consumers down, and today’s fine should act as a wake-up call.”
Royal Mail argued that disruption from strikes, extreme weather, and the closure of Stansted airport’s runway affected performance. However, Ofcom noted that even accounting for these factors, first- and second-class punctuality was only 82% and 95.5% respectively. The company said it was “very disappointed” and that the industrial dispute involving 18 days of strike action had materially impacted quality of service.
Ofcom granted a 30% discount on the fine after Royal Mail admitted liability. The company has two months to pay the £5.6m to the Treasury. Royal Mail’s parent, International Distributions Services, reported a £748m loss for the financial year to March, with its letters and parcels business losing £1bn.
Royal Mail is seeking to cut costs, including potentially dropping Saturday letter deliveries, which could save up to £225m annually but would require legislative change. Ofcom also stated it found no evidence that managers prioritised parcels over letters in breach of obligations, though oversight of local offices was insufficient.
