Royal Mail fined £10.5m after missing delivery targets

Royal Mail has been fined £10.5m for missing postal delivery targets.

Regulator Ofcom said 74.7% of first class mail and 92.7% of second class was delivered on time in 2023/24.

The targets were 93% and 98.5%.

It is the second time Ofcom has fined Royal Mail since the pandemic and it “needs to do much better”, the regulator said

The company blamed a “challenging financial position” for its poor performance, Ofcom said in a statement.

There were also “delays to the ballot on a deal that followed the previous year’s industrial action”.

But Ofcom said it did “not consider either of these to be justifiable reasons for Royal Mail’s failure to provide the levels of service expected of it”, adding that the company had “breached its obligations”.

Royal Mail also took “insufficient and ineffective steps to try and prevent this failure”, with millions of customers likely to have been affected, the regulator said.

It went on: “Ultimately, it is for the company to manage its financial position, taking account of its obligations.”

The fine will be passed “in full” to the “public purse”.

Ofcom has been “pressing Royal Mail regularly” on plans to turn things around.

“While there has been some progress, its overall performance in 2023/24 was only marginally better than its reported performance in 2022/23, and it needs to do much better,” said the regulator.

“At a minimum we expect to see a clear, credible and publicly-communicated plan setting out how Royal Mail will get back on track through meaningful, sustainable and continuous improvements for customers.

“Having failed to hit its targets in 2022/23, Royal Mail did not set out a clear improvement plan for 2023/24.”

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Ian Strawhorne, Ofcom’s director of enforcement, said: “Royal Mail’s poor service is now eroding public trust in one of the UK’s oldest institutions.”

Royal Mail had “provided an improvement plan” and there were “some signs of progress”.

But he said the company “must go further and faster to deliver the service that people expect”.

A high quality service is “extremely important to us”, a Royal Mail spokesperson said, adding that changes are being made.

They said, however, that its one-price-goes-anywhere obligation needs “urgent reform”.

Royal Mail is required to deliver letters six days a week and parcels on five days, but that is under review.

Royal Mail said: “Between the last two quarters of 2023/24 (excluding Christmas), first class quality improved by 7.8% and second class by 3.4%.

“We remain fully focused on, and committed to, continuous improvement throughout 2024/25, underpinned by an affordable and sustainable level of investment.”

It also said it was “committed to a quality action plan for 2024/25”.

The fine was handed down as the government continues to deliberate on a £5.3bn takeover deal that could see Royal Mail’s parent firm owned by Czech billionaire Daniel Kretinsky.

A Communication Workers Union spokesperson said of the fine: “This is a direct result of the deliberate, sustained dismantling of UK postal services by a failed board and senior management team.

“To partially blame poor performance in 2023-24 on the impact of industrial action when the last day of national strike action was in December 2022 shows the lack of credibility and integrity of a board who have overseen the most shameful period in Royal Mail’s history.

“Whatever happens with the ongoing takeover bid, this moment must spell the end for so many of the individuals who put their own obsession with attacking frontline workers ahead of their obligations to their own employees – as well as the public and businesses across the UK.

“Royal Mail also talk of moving ahead with Universal Service Obligation change as if it is a given.

“We need to be very clear – there will be no agreement to these changes from the CWU unless we see quality restored and the terms and conditions of our members improved. We cannot and will not let the same people who destroyed the service claim to be its saviours.”