Royal Mail £5.6m fine for not delivering on time

You’ve been telling us for long enough that Royal Mail haven’t been delivering letter post on time and now Ofcom has agreed, imposing a Royal Mail £5.6m fine for the year 2022/23.

It’s worth noting that this does not apply to parcel tariffs (e.g. Tracked 24/48) which fall outside the Royal Mail Universal Service Obligation, but to 1st and 2nd class letters, including large letters or parcels sent by 1st or 2nd Class post.

Ofcom has discretion to adjust Royal Mail’s performance to take into account the impact of events which Ofcom considers to be exceptional and which affected its performance. After adjusting Royal Mail’s performance to take into account the impact of industrial action, the Stansted runway closure and the extreme heat in July, Royal Mail still failed to meet the above targets by a significant and unexplained margin.

With adjustment:

• Royal Mail’s maximum first class national performance was 82% (falling below the 93.0% target);
• Royal Mail’s maximum second class national performance was 95.5% (falling below the 98.5% target); and
• Royal Mail’s maximum delivery routes completed daily target was 89.35% (falling below the 99.90% target).

What Ofcom didn’t adjust for was Royal Mail’s excuses that the ongoing impact of Covid and Strikes also impacted performance. Royal Mail said:

Last year was uniquely challenging for Royal Mail. 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.

– Royal Mail

The Royal Mail £5.6m fine could have been even bigger, the penalty includes a 30% discount from the penalty Ofcom would otherwise have imposed. The discount reflects Royal Mail’s admissions of liability and its agreement to settle which has allowed Ofcom to bring this matter to a close more swiftly.

Ofcom takes compliance with performance targets very seriously and has imposed a financial penalty of £5.6 million on Royal Mail. We consider that this penalty, which was set in line with our Penalty Guidelines, is appropriate and proportionate to the seriousness of the contravention. It is also important to incentivise Royal Mail to improve its QoS performance in order to provide customers with the service they have paid for and that they can rely on.

– Ofcom

Ofcom are also worried that local Delivery Offices aren’t performing

In addition to the contravention finding, we have noted a particular concern about the operation of delivery offices, which we view as fundamental to Royal Mail meeting its QoS obligations. Issues include the need to return delivery offices to pre-Covid practices, with mail being cleared each day, and providing appropriate training and support for delivery office managers who play a key role in decision-making in local offices. We are particularly concerned about these issues in light of the high absence and vacancies in 2022/23 which meant it may have often been necessary to make “on the day” decisions about what to deliver, in circumstances where Royal Mail appears to have insufficient control, visibility and oversight over this local decision-making.

– Ofcom

Has Royal Mail performance improved?

Royal Mail still face a challenging time – We hear that parcel volumes )where they should be most profitable) are down and they have increasing competition with DPD and Evri now starting to be sold across Post Office Counters, ending Royal Mail’s 360 year exclusivity.

Looking at the year 2023/24, Royal Mail have reported missing their 1st Class target by 18.4%, missing their 2nd Class target by 4.2%, and not completing 9.54% of Delivery Routes daily for the first quarter of the year. That’s very roughly equivalent to the Ofcom adjusted performance for which they’ve just been fined, so they have some catching up to do over the winter months if they’re to avoid another fine next year.