Royal Mail fined £5.6m for missing delivery targets

Royal Mail has been fined £5.6m for failing to meet its first and second class delivery targets in what the regulator has called a "wake-up call" for the postal service.

Ofcom said that Royal Mail had breached its obligations by missing targets "by a significant and unexplained margin".

This caused "considerable harm" to customers, and Royal Mail did not take sufficient action to prevent it.

Royal Mail said it was "very disappointed" with its performance.

It said last year had been "uniquely challenging", with its services hit by the long-running industrial dispute which led to 18 days of strike action.

Under Ofcom's rules, Royal Mail has to deliver 93% of first class mail within one working day and 98.5% of second class mail within three working days.

But in 2022-23, only 73.7% of first class mail was delivered on time and 90.7% of second class mail was on time.

Royal Mail is obliged to publish its delivery performance every year, and this is scrutinised by the regulator.

In May, Ofcom said it would consider whether any "exceptional events" explained why the company had fallen short.

Royal Mail was hit last year by a long-running row over pay and conditions, which led to thousands of workers going on strike and postal delays across the UK. The dispute was only settled in July this year.

However, the regulator found that even when the impact of the strike action, extreme weather and the runway closure at Stansted airport was taken into account, Royal Mail still didn't meet its targets.

"Clearly, the pandemic had a significant impact on Royal Mail's operations in previous years. But we warned the company it could no longer use that as an excuse, and it just hasn't got things back on track since," said Ian Strawhorne, Ofcom director of enforcement.

"The company's let consumers down, and today's fine should act as a wake-up call - it must take its responsibilities more seriously. We'll continue to hold Royal Mail to account to make sure it improves service levels."

Ofcom said the fine included a 30% reduction after Royal Mail admitted liability and agreed to settle the case. The money will be paid to the Treasury within two months.

This is not the first time that Royal Mail has been penalised for poor service. In July 2020, Ofcom fined it £1.5m for failing to meet its first class delivery target in 2018-19.

A Royal Mail spokesperson said: "We are very disappointed with our quality of service performance.

"We take our commitment to delivering a high level of service seriously and are taking action to introduce measures to restore quality of service to the level our customers expect."

Ofcom also said it had looked into whether Royal Mail was prioritising the delivery of parcels over letters, following complaints that it had been doing so.

The regulator said it found no suggestion that Royal Mail's senior management had prioritised parcels over letters, apart from in recognised contingency plans covering the pandemic or last year's strike action.

However, it added that it was concerned that the company "appears to have insufficient control, visibility and oversight over local decision-making at certain delivery offices where high absence and vacancies may have led to customer operations managers... making 'on the day' decisions about what to deliver".

Ofcom said Royal Mail needed to ensure these managers had sufficient training to make such decisions.

"We will be keeping a close eye on the company's performance this year, and the steps it is taking to return delivery offices to pre-Covid practices," Ofcom said.