Ofcom to produce potential options for the future of the universal postal service
Ofcom is laying the groundwork for providing advice on how the universal postal service might need to evolve to better reflect the changing needs of postal users.
The universal service has been unchanged since the implementation of the current framework under the Postal Services Act 2011. However, consumer demand for postal services has changed substantially, and continues to do so.
So, Ofcom is gathering evidence on how the universal service might need to evolve to more closely meet consumer needs.
We will set out this evidence in detail later this year – explaining how demand is changing, the challenges and costs of delivering the universal service, potential options for change in the future and how these might be managed to ensure smooth transition to any future arrangements. We encourage input from interested parties after our publication.
It would ultimately be for the UK Government and Parliament to determine whether any changes are needed to the minimum requirements of the universal service.
What is the universal service?
The universal postal service requires Royal Mail to deliver letters six days a week (Monday to Saturday) and parcels five days a week (Monday to Friday) to every address in the UK, at affordable prices that are uniform throughout the UK. These minimum requirements are set out in legislation, and any changes to them can only be made by the UK Government and Parliament.
As the postal regulator, Ofcom’s job is to ensure that a universal postal service is provided, taking account of the need for that service to be financially sustainable and efficient. When making regulation, we must make sure we understand postal users’ needs.
We can also specify additional features of the universal service, such as requiring the choice of a First Class and Second Class service, and setting Royal Mail enforceable targets to deliver a certain proportion of items on time each year.
The last few years have demonstrated the importance of postal services, but the way people use them is changing, and we expect these trends to continue.
Letters remain important to many of us, particularly those who have difficulty relying on electronic communications and transactions. However, the number of letters we send and receive has declined by 46% over the last decade, as people and businesses increasingly use digital alternatives. And as the number of letters delivered each day falls, the average cost of delivery is increasing.
At the same time, parcel deliveries have become increasingly important to our daily lives and consumers’ expectations of them are changing.
What are we looking at and why?
The UK is not alone in seeing user demands change, with an increasing reliance on parcels and a decline in letter volumes. Many countries around the world are reviewing how their universal postal service should adapt in line with consumers’ needs, environmental concerns and the need to ensure that everyone is able to participate fully in society, while others have already scaled back the scope of their universal service.
Last year, we concluded our latest review of postal regulation, which set our regulatory framework for postal services from 2022 to 2027. Since then, there has been growing public debate around the long-term future of the universal service.
We therefore believe that now is a good time to consider the longer-term future of the universal service, ahead of any future review of the regulatory framework.
As well as gathering input from a wide range of people and organisations across the UK, our review will draw on our existing monitoring work; our periodic review of users’ needs; our regular and one-off programme of consumer surveys; and international comparisons.