End of Saturday post? Royal Mail may cut deliveries after union gives in

Union leaders have conceded for the first time that they will accept an end to six-day-a-week letter deliveries, clearing the way for Royal Mail to enact historic cuts to postal services.

The Communication Workers Union (CWU), which represents 110,000 postal workers and brought services to a standstill with industrial action in 2022, has been one of the biggest hurdles to Royal Mail reducing its loss-making daily deliveries.

But it is now ready to back the company’s proposed reforms, admitting that the current service is “no longer financially viable”.

Royal Mail is pushing to reform the universal service obligation (USO) — legally binding rules that stipulate letters must be delivered to every UK household six days a week. It wants to shift to delivering second-class post only every other day, and slowing down bulk letters from government organisations and businesses.

The union’s about-turn came just days after Czech billionaire Daniel Kretinsky launched a £3 billion takeover swoop for Royal Mail, which appears to have influenced the CWU’s change of heart.

Martin Walsh, its deputy general secretary, told the union’s national conference in Bournemouth last week: “The reality is, the USO as a six-day option is no longer financially viable.

“The challenges we face are so significant — probably the most challenging time in this union’s history, whether it’s the USO change, sale or possible takeover.”

Union sources said they would not agree to stopping a six-day letters service altogether, as first-class mail would still be delivered on Saturday. But with first-class stamps not subject to a price cap, steep price rises could be used to make second-class stamps the norm; their price is capped.

Royal Mail now has to convince ministers and the industry regulator, Ofcom, to accept the reduced service. Ofcom is yet to respond to Royal Mail’s proposals.

Kevin Hollinrake, the government minister for postal affairs, said: “There is no done deal here and, as far as we are concerned, the USO remains and we are not aware of any recommendations [by Ofcom] to change it.”

Nevertheless, union support for the plans is likely to lead to a more favourable perspective if Labour win the next general election.

Last week, Walsh also took to the CWU’s YouTube channel to underline that he still has concerns. “The USO in its current form is unsustainable. There’s got to be change but that change has got to be right by the members,” he said.

“Ofcom is looking at three, four days, all different types of speed of delivery… Only once we’ve looked at this will we decide whether we support it or not.”

Kretinsky, an energy tycoon whose net worth is estimated to be £7.3 billion and whose empire includes stakes in Sainsbury’s and West Ham United football club, is Royal Mail’s largest shareholder with a 27.5 per cent stake.

He sparked anger among fellow shareholders earlier this month by launching a 320p-a-share takeover bid for the 500-year-old company. Some declared it a predatory attempt to buy the company on the cheap.

The board of Royal Mail’s parent, International Distributions Services (IDS), rejected it and last week took soundings from other leading institutional investors. One told chairman Keith Williams that IDS shares could be worth as much as 600p each — they currently stand at 271p — once a peace deal with the union filters through to profits in the next 12 to 18 months.

Royal Mail’s plans would keep a notional six-day service in place for those who want to pay for first-class deliveries, but in reality it means most letters will be delivered three days a week. The company has estimated that between 7,000 and 9,000 daily rounds would be axed through the reforms, which it hopes will save £300 million a year.

Crucially, retaining the first-class option means the reductions would not require a change in the law. Ofcom alone can give them the green light, although it will need at least tacit approval from the government to do so.

The CWU had previously opposed the “killing off” of a six-day postal service.

The union’s general secretary, Dave Ward, had said: “At a time when postal services have never been more essential and we should be investing in our national infrastructure, we should be looking for ways to protect and enhance a six-day universal postal service, not for reasons to cut it back.”