Royal Mail may need bailout from taxpayer
ROYAL Mail has warned that it may need a taxpayer bailout to keep the postal service afloat amid a sharp decline in letter sending.
Martin Seidenberg, the chief executive, said it was “simply not sustainable” to maintain a delivery network built for 20bn letters when the company was now only delivering 7bn.
He said this number would drop to 4bn within five years at the current rate of decline, while the number of addresses was also increasing. Royal Mail is now delivering an average of four letters a week to each UK address. Royal Mail has been campaigning for a relaxation of its universal service obligation (USO), which requires the company to deliver letters from Monday to Saturday.
But Mr Seidenberg warned that other options included “significantly” increasing prices or seeking a “subsidy” from the Government. In a letter to Liam Byrne, chairman of the business and trade select committee, Mr Seidenberg wrote: “Delivering the current universal service requirements − in a financially sustainable way − is increasingly difficult, if not impossible, to achieve as the mix and number of parcels and letters changes.”
The company posted a £319m loss in the first half of its financial year, an increase of £100m compared to the same period in 2022.
Meanwhile, quality of service has fallen sharply. Royal Mail paid out £26m in compensation to customers last year amid rising complaints, while in November it was hit with a record £5.6m fine after it failed to deliver more than a quarter of first-class post on time.