Royal Mail fined £5.6 million for missing targets, with just 74% of first-class post delivered in a day
13 November 2023, 09:09
Royal Mail has been fined £5.6 million for missing targets for delivering first- and second-class post on time.
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The company is supposed to deliver 93% of post with a first-class stamp within one working day, and 98.5% of second-class mail within three working days.
Royal Mail is also meant to complete 99.9% of delivery routes for each day on which a delivery is required.
But in 2022/23 the company, which is owned by FTSE 250-listed International Distributions Services, only delivered 73.7% of first class mail on time and 90.7% of second class mail on time.
Postal workers also only completed 89.35% of delivery routes for the days on which a delivery was required.
Read more: Royal Mail strike action ends as postal workers vote overwhelmingly to accept pay deal
Royal Mail admitted it was "very disappointed" with its delivery performance in 2022-23, but said it was a "uniquely challenging" year.
Regulators Ofcom, who handed out the fine, said that they took "exceptional circumstances" into account in a separate analysis, including bad weather, strikes and the closure of the Stansted runway. Royal Mail members of the CWU union went on strike for 18 days between last September and December.
But even without these external factors, Royal Mail still would have only delivered 82% of first class post on time, and 95.5% of second-class mail.
Ofcom said: "This means that Royal Mail breached its obligations by failing to meet its targets by a significant and unexplained margin.
"This caused considerable harm to customers, and Royal Mail took insufficient steps to try and prevent this failure."
Regulator boss Ian Strawhorne said that Royal Mail "fell way below the standards we expect".
He told LBC News: "That means consumers did not get the services that they paid for, and that's not acceptable.
"It's our job to hold Royal Mail to account, and that's why we've imposed a substantial financial penalty.
"The message of this decision to Royal Mail is to sit up, take notice and get its house in order."
Ofcom said that it had cut its fine to Royal Mail by 30% because the company had admitted liability, and agreed to pay up. The money will go to HMRC, and has to be paid within two months.
Ofcom closed an investigation last year into previous missed targets because it found that staff absences and social distancing had affected its service.
The regulator also said it would not investigate Royal Mail's service levels during the 2020-21 financial year because Covid had made working "uniquely difficult".
But Royal Mail's performance appears to be deteriorating, even without the effects of Covid. Ofcom fined the company £1.5 million in 2020 for its 2018/19 record, when 91.5% of first-class post was delivered on time.
Ofcom said it had not found that Royal Mail bosses had been ordering staff to prioritise delivering parcels over letters, despite concerns to the contrary.
But it discovered that delivery offices were not being run with the right level of control, an area that they said was "fundamental" to meeting delivery targets.
The company "appears to have insufficient control, visibility and oversight over local decision-making at certain delivery offices," the investigation found.
Customer operations managers make "on-the-day" decisions about deliveries while dealing with staff shortages because of absences and vacancies.
Ofcom said that Royal Mail should train staff better to make these decisions in a more measured way.
The regulator said: "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".
A spokesman for Royal Mail said: "Quality of service was materially impacted by the long-running industrial dispute which included 18 days of strike action.
"We are pleased that Ofcom has acknowledged that elements outside of Royal Mail's control had a significant impact on service levels and has adjusted the figures to 82% for first class and 95.5% for second class mail."
"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."
