03/03/2017

A comprehensive review of Royal Mail and its delivery of the universal postal service by the postal regulator, Ofcom, has concluded that the regulatory framework introduced in 2012 is generally working well. It will consequentially be extended from 2019, when it was scheduled to expire, until 2022.

Research carried out for ‘Review of the Regulation of Royal Mail’ revealed that businesses and people were largely satisfied with Royal Mail’s performance, which has improved since 2012. Some targets are, however, still being missed and fines could be imposed if this continues.

Crucially, Royal Mail’s profits for 2015/16 were within the 5-10% margin – albeit at the lower end – that Ofcom considers likely to be consistent with the delivery of a sustainable universal service.

This was a key objective of the 2012 regulatory framework, which was introduced after Royal Mail made a £100m loss in 2011. The new framework gave it greater commercial freedom while introducing a cap on second class stamp prices to safeguard vulnerable customers.