Axing Saturday post would cut Royal Mail loss: Scrapping letter deliveries might save lots of of tens of millions of kilos a yr because it fights to modernise
- Group might see as a lot as £250m saved if deliveries cut to 5 days per week
- It probably might slash firm’s projected annual losses for this yr
- Saving might permit it to extend employees pay and decrease stamp costs
Scrapping letter deliveries on Saturdays might save Royal Mail lots of of tens of millions of kilos a yr because it battles to stem ballooning losses and modernise.
According to calculations seen by the Mail, the supply group might see as a lot as £250m saved if deliveries had been cut to 5 days per week, a lot increased than earlier estimates of £125m-£225m made by the regulator Ofcom in 2020.
It probably might slash the corporate’s projected annual losses for this yr, that are anticipated to be between £350m to £450m, by greater than half.
Such a saving might additionally present sufficient monetary wiggle room to extend pay for its employees in addition to decrease stamp costs, in line with sources acquainted with the matter.
Royal Mail is at the moment legally required to ship letters to each handle within the UK six days per week below what is called the Universal Service Obligation (USO).
Cutting again: Royal Mail might see as a lot as £250m saved if deliveries had been cut to 5 days per week
But the corporate has been pushing for this to be cut to 5 days because the variety of posted letters has fallen.
‘It is obvious that when letter volumes have declined by greater than 60 per cent, to be financially sustainable the USO requires main reform now,’ a Royal Mail spokesman stated.
They added: ‘This change is vital. Being required to offer a service that prospects have stated they not want, at important structural price to Royal Mail, will increase the risk to the sustainability of the Universal Service.’
Royal Mail factors to the 2020 Ofcom report which concluded lowering letter deliveries to 5 days per week would meet the wants of 97 per cent of customers.
But the Government has refused to cut back the USO, with enterprise minister Kevin Hollinrake saying in December there have been ‘no present plans’ to permit any modifications.
Any alterations to the USO would have to be made by means of laws and agreed by Parliament.
Some publishing teams have additionally warned scrapping Saturday deliveries might have a catastrophic impact on journal publishers, lots of which ship out new editions on Fridays and Saturdays.
The push to cut back comes as Royal Mail scrambles to turn into extra aggressive in opposition to the likes of Amazon.
But its plans have been hampered by a long-running pay dispute which noticed 1000’s of posties stroll out on strike for 18 days final yr.