Royal Mail’s Chief Executive, Martin Seidenberg, has issued a stark warning to Labour ministers: support crucial postal reforms or face significant consequences.
The reforms in question pertain to the Universal Service Obligation (USO), which mandates uniform pricing for deliveries across the UK, regardless of location. However, this requirement is increasingly viewed as outdated due to declining letter volumes and rising parcel deliveries. Seidenberg, underscored the urgency of reform, arguing that without ministerial backing, the burden would ultimately fall on the government. “The problem will land on the desk of the government,” he stated in an interview. This comes just days before regulatory authority Ofcom announced it would consult on changes, including potentially scrapping Saturday second-class deliveries.
Royal Mail has been actively lobbying successive governments and Ofcom for adjustments to the USO, viewing it as a critical obstacle to its transformation from a struggling letter carrier into a competitive parcel delivery service. Ofcom’s forthcoming consultation, expected early next year, could herald significant changes, such as reducing delivery days and refocusing resources on the booming parcels market. Seidenberg, who took the helm last year after leading the profitable European parcel arm, GLS, said without reform, postal workers would be “walking around with an empty bag… and then you lose tons of money.” He has consistently urged both Conservative and Labour ministers to act swiftly, making it clear that he will continue pushing for changes until a decision is made.
Meanwhile, Royal Mail is navigating a £3.57 billion takeover bid from EP Group, backed by Czech billionaire Daniel Kretinsky, its largest shareholder. In a bid to address financial pressures, the company recently announced a 30p increase in the price of a first-class stamp to £1.65, effective from October 7, citing the “urgent” need for revenue improvement. The Department for Business and Trade has acknowledged the significance of a reliable and affordable postal service, with a spokesperson stating that it is crucial for UK businesses. Ofcom has launched a review to ensure the postal service reflects contemporary usage patterns, and the government is considering its recommendations.
Seidenbergs tenure has been marked by efforts to stabilise Royal Mail amid financial losses, shrinking market share, and the fallout from a prolonged industrial dispute that saw 18 days of strikes over pay and conditions. Despite some progress, Royal Mail has missed its delivery targets for two consecutive years and faces potential fines from Ofcom. Under Seidenberg‘s leadership, the company has focused on enhancing operational efficiency and improving delivery reliability. This includes hiring logistics experts and investing in fixed-contract employees to address staffing shortages. He has also implemented incentives for workers to hit key performance targets, resulting in the best Christmas delivery performance in four years.
Despite these efforts, Seidenberg remains adamant that without reform of the USO, Royal Mail’s long-term viability remains in jeopardy. “The future is, I’m afraid to say, parcels,” he remarked, highlighting the shift from traditional letter volumes, which have plummeted from 20 billion annually in 2004-2005 to just 6.7 billion today. As Royal Mail looks ahead, Seidenberg is optimistic about the potential benefits of Kretinsky’s takeover but warns that regulatory delays and a lack of urgency could hamper progress. Ofcom’s consultation is expected to conclude next summer, around the time the postal industry prepares for its peak Christmas season, but Seidenberg is pushing for faster action, insisting, “It just needs urgency.”
With plans to expand into parcel lockers and electrify its vehicle fleet, Royal Mail is positioning itself for the future. However, without the critical reforms to its service obligations, Seidenberg cautions, “That’s a tricky one, because I wouldn’t even want to think about it.”
Seidenberg‘s call for urgent postal reforms underscores the critical juncture at which Royal Mail finds itself. As the company navigates financial pressures and a shifting market landscape, the support of Labour ministers will be pivotal in ensuring its long-term viability.