Second-class letters delivered less often

Royal Mail plans to cut deliveries of low priority post to three times a week as it shores up its finances

SECOND-CLASS letters will be delivered just three times a week under new proposals submitted by Royal Mail.

The postal service has outlined plans to deliver second-class post on every other weekday as it looks to shore up its finances amid a slump in letter sending.

Bulk business mail would fall under second class, meaning bank statements, bills and tax returns will arrive within three working days rather than two.

But Royal Mail said it would continue to deliver first-class post six days a week as it acknowledged the importance of next-day and Saturday deliveries for industries such as magazine publishers and greeting card makers.

The company is also in talks with the NHS over ways to ensure greater reliability for time-sensitive medical letters.

This could mirror the hybrid system currently used by many GP practices, which issue electronic letters that are then printed and sent by Royal Mail.

The proposals were put forward in Royal Mail’s submission to regulator Ofcom, which is reviewing its so-called universal service obligation (USO). This requires it to deliver Monday to Saturday and sets delivery targets for first and second-class post.

Ofcom has estimated that the USO imposes a financial burden of between £325million and £675million on Royal Mail and warned it could become “financially and operationally unsustainable” unless the rules are eased.

The company lost £319million in the first half of the year as it warned that letter volumes are likely to drop to 4billion in the next five years, down from their peak of 20billion two decades ago.

Royal Mail also called for its quality of service targets to be relaxed. Currently, it is required to deliver 93 per cent of first-class mail on time and 98.5 per cent for second-class post. Last year, Ofcom fined the company a record £5.6million after it failed to deliver more than a quarter of first class post on time.

Royal Mail said the changes would reduce the net cost of the USO by up to £300 million.

Ofcom is expected to provide an update on its consultation in the summer. Any changes would ultimately have to be approved by Parliament.

Martin Seidenberg, the chief executive of Royal Mail parent company International Distributions Services, said: “If we want to save the universal service, we have to change the universal service. Reform gives us a fighting chance and will help us on the path to sustainability.”

An Ofcom spokesman said: “At this stage, we’ve not made any proposals to change the universal postal service. We’ve set out evidence suggesting it risks becoming unsustainable if we don’t take action, as people send fewer letters and receive more parcels.”