The owner of Royal Mail has announced a significant delay to its contentious plans to overhaul the UK's postal service, pushing the wider rollout of changes into next year.
Reforms Postponed Amidst Scrutiny
International Distribution Services (IDS), which was acquired last year by Czech billionaire Daniel Kretinsky’s EP Group in a £3.6 billion deal, confirmed that the broader implementation of its new delivery regime will now not happen until early 2026. The controversial reforms, which had received regulatory approval from Ofcom to start from the end of July, include discontinuing second-class letter deliveries on Saturdays and moving to an every-other-weekday service for some mail.
A pilot scheme involving these changes has been underway in 35 delivery offices. IDS stated in its half-year results that it is too early to specify a completion date for the national rollout or to name which of its 1,200 delivery offices will be next to transition.
Ofcom Fine and New Performance Targets
The delay comes in the wake of a substantial £21 million fine imposed on Royal Mail by the communications regulator Ofcom last month. The penalty was levied for the service's failure to meet its annual delivery targets, which resulted in millions of letters arriving late across the country during the 2024/25 financial year.
Ofcom's investigation found that Royal Mail delivered only 77 per cent of first-class mail and 92.5 per cent of second-class mail on time. This marked the third-largest fine ever issued by the watchdog.
As part of broader reforms to the universal postal service, Ofcom has simultaneously relaxed some performance benchmarks. The target for next-day delivery of first-class post has been lowered from 93 per cent to 90 per cent, while the target for second-class post delivery within three days has been reduced from 98.5 per cent to 95 per cent. However, a new enforceable 'backstop' target has been introduced, requiring that 99 per cent of all mail must be delivered no more than two days late.
Financial Performance and Christmas Preparations
Despite the operational challenges, Royal Mail's interim figures showed a 1.5 per cent rise in revenue to £3.98 billion for the six months to September 28th. This growth was driven by a 3.2 per cent increase in parcel business, which helped offset a 0.4 per cent decline in letters revenue. Across the wider IDS group, total revenues increased by 1.6 per cent to £6.45 billion.
The company cited a challenging backdrop of rising costs and macroeconomic pressures, including approximately £120 million in national insurance contribution increases, which are expected to continue into 2026.
Looking ahead to the peak season, Royal Mail has embarked on a major recruitment and logistics drive for Christmas. The service has hired 20,000 temporary workers, deployed 7,000 new vans, and opened four seasonal parcel sorting centres, adding a colossal 118,000 square metres of extra space—equivalent to 16.5 football pitches.
Martin Seidenberg, Chief Executive of IDS, emphasised the importance of the festive period, stating the company is pulling out all the stops to deliver for its customers. He had previously described the delivery reforms as a "massive task", underscoring the decision to "take the time to get this right" rather than rushing the national expansion.
