Watchdog listens to GCA but Royal Mail reform is still worrying greetings industry
Ofcom has taken on board the GCA’s tenacious representations as it revealed yesterday, 5 September, its proposed overhaul of the postal service – which suggests keeping six-day-a-week first-class deliveries.
However, the industry watchdog’s proposals, following its The Future Of The Postal Service review launched early this year, include cutting second-class deliveries on Saturdays, and possibly to only alternate days, with the plans to be put to consultation before a final decision is made next summer.
Though intending to keep up the pressure to safeguard the UK’s regular postal service, the GCA welcomed the clear timetable laid out by Ofcom, but said any changes to the legally-binding universal service obligation, where Royal Mail must deliver every day except Sunday to all households in the UK for the same price, are of grave concern to the greeting card industry, including keep stamp prices in check.
Even though the GCA’s original concerns that all weekend deliveries faced the chop appear to have been alleviated, it fears the report will lead to heightened worries among small businesses and consumers that Ofcom intends to rubber-stamp a move to second-class deliveries being cut to Monday-Wednesday-Friday one week and Tuesday-Thursday the next, with an uncapped and unregulated price for sending letters first class.
The GCA PR team at Arena PR were swift to issue a press release as soon as the Ofcom announcement was made yesterday which has received good pick-up by the media.
Within this GCA chief executive Amanda Fergusson said: “We will continue to engage directly, and in good faith, with Ofcom as they assess the direction of USO reform over the coming months. However, we are concerned that their proposed timetable takes us one step closer to the dismantling of a postal service that’s affordable and reliable.
“Our members have been clear that moving to a second-class delivery service that’s limited to three days a week will mean customers buying and sending cards will have little idea when they’ll arrive.
“Those members, and the consumers they serve, rely on a postal service that’s reliable, affordable and national – they’ve already told us loud and clear they’re not getting it. Any changes to the USO must prioritise the needs of small businesses and consumers – not Royal Mail profitability.
“We are delighted that Royal Mail’s David Gold is attending our conference on 19 September so members can hear directly about RM’s plans and put their questions to him.”
Lindsey Fussell, Ofcom’s group director for networks and communications, told the BBC’s Today programme yesterday that the USO “does need to change”, and added: “To be clear, no change is not really an option, otherwise it is going to be unsustainable and we’re all going to have to pay a lot more for it.
“We’re now looking at whether we can get the universal service back on an even keel in a way that meets people’s needs. This won’t be a free pass for Royal Mail. Under any scenario, it must invest in its network, become more efficient and improve its service levels.”
Royal Mail’s owner International Distribution Services (IDS) – which has accepted a total £5billion takeover offer from Czech billionaire Daniel Křetínský and his EP Group but the deal has yet to be ratified by shareholders and the government have called it in for investigation – said that “change cannot come soon enough”.
But Tom MacInnes, interim policy director at Citizens Advice, said Royal Mail had failed to meet its targets for five years, and the USO “clearly doesn’t protect consumers as it should”.
Reforms should not “just be a disguise for cuts that prioritise saving Royal Mail money over providing a good standard of service”, he added.
As well as the BBC’s Today programme, the story has made the national news across print, TV and radio media, with the GCA’s views getting good coverage, including in on the BBC, Sky News, The Times, Daily Mail, The Guardian, The Sun, Daily Mirror, Daily Telegraph, and Daily Record.
Ofcom received thousands of responses from a range of stakeholders, including many from the greeting card sector, which “made clear that post continues to be a vital communications service for consumers, businesses and government organisations”, but added: “it is also clear that there is an urgent need to reform the specification of the postal universal service obligation, so the service remains sustainable and continues to meet future needs.”
The 15-page report, which can be downloaded here, acknowledged: “In a five-day scenario, respondents from the greeting card industry and publishers of weekly magazines were keen to maintain Saturday delivery and remove a weekday”, although it continued “while there were many others that said removing Saturday would have the least impact on them”.
Ofcom’s data indicates greeting cards are critical to how Royal Mail is perceived by end consumers, with cards being the most frequent items UK consumers post, and 42% of customers now say sending cards is the only time they use the postal servicel.
In its statement yesterday Ofcom said it had estimated the net cost of the USO to Royal Mail was between £325million and £675m in 2021-2022 calculated on the profits it estimates RM could have made had it had commercial freedom, adding this level of net cost is not sustainable in the long term, even when set against the benefits of owning the “unique national asset” of the postal network.
The proposals align with suggestions made by Royal Mail, and Ofcom added: “The evidence we have gathered so far suggests people want a next-day service available six days a week for when they need to send the occasional urgent letter or card. However, people acknowledge that most letters are not urgent.
“If second class letters continued to be delivered within three working days but not on Saturdays – and first class remained unchanged at six days a week – it would enable Royal Mail to improve reliability, make substantial efficiency savings, and redeploy its existing resources to growth areas such as parcels.
“We will now carry out further in-depth research among postal users to explore whether this option – which broadly aligns with one of the options we set out earlier this year – meets their needs.”
Following the conclusion of the further consumer research, the watchdog expects to consult on detailed proposals for reform in early 2025, with a view to publishing a decision by next summer.
Ofcom’s suggestions could lead to an engaging GCA AGM & Conference on 19 September at the Bristol Harbour Hotel as David Gold, RM’s director of external affairs and policy, will be sharing the 508-year-old firm’s plans for the future, including the upcoming Christmas season, and is keen to hear members’ concerns over the postal service.
Questions for David to answer are welcome, and should be sent to amanda@gca.cards.
Tickets are still available for the event – but get in quick – where the speakers include James Taylor, commercial director at Cardzone; Ohh Deer co-founder and MD Mark Callaby; James Ellis, owner James Stevens; and Jon Hendy, Kantar’s business unit director who will deliver 2024 consumer insights.
The AGM & Conference is on Thursday, 19 September, and association members can book their tickets for both the event and the fun networking drinks the evening before, kindly sponsored by Ling Design and Emotional Rescue, next door to the venue at Dirty Martini Bristol from 6pm.
