Royal Mail is preparing to approach Ofcom with fresh requests for cuts to the Universal Service Obligation, according to industry sources, despite facing accusations of deliberately undermining delivery performance to make the six-day postal service appear unworkable under foreign ownership.
The move comes just months after the postal giant was hit with a record £21 million fine for catastrophically failing to deliver letters on time, and follows a pattern of service cuts, price increases, and performance failures that have accelerated dramatically since Czech billionaire Daniel Křetínský’s £3.6 billion takeover completed in April.
Industry insiders suggest Royal Mail will argue that the current Universal Service Obligation remains financially unsustainable, building on earlier successful requests to scrap Saturday second-class deliveries and introduce alternate weekday deliveries for second-class post.
But critics are questioning whether Royal Mail’s poor performance is genuine operational difficulty or a calculated strategy to justify gutting a 508-year-old public service that worked perfectly well before falling into foreign hands.
The Timing That Raises Eyebrows
The timing of this latest push for service reductions is particularly awkward given Royal Mail’s recent financial performance and operational decisions.
The company reported a return to profit for the year ending March 2025, making an adjusted operating profit of £194 million, achieved primarily through the service cuts and staff reductions that critics say were designed to make the Universal Service Obligation appear unworkable rather than genuinely necessary.
Royal Mail’s chief executive Martin Seidenberg admitted in September that rolling out the changes would take “many months” to implement, with the “massive task” of expanding them nationwide continuing well into 2026.
Just weeks before announcing these profits, Royal Mail was delivering only 77% of first-class mail on time, falling spectacularly short of its legally required 93% target and prompting Ofcom to issue the largest fine in the company’s history.
The company has also implemented price increases that saw first-class stamps rise to £1.70 in April, whilst simultaneously cutting Saturday deliveries and reducing service frequency for second-class post.
So customers are now paying more for demonstrably worse service, whilst the company prepares to ask regulators for permission to cut services even further.
CWU Challenges “Failed” Pilot Scheme
The Communication Workers Union has intensified its opposition to Royal Mail’s planned service cuts, with National Officer Tony Bouch confirming the union has returned to the negotiating table after finding the pilot delivery schemes to be unworkable.
“We will not agree to Royal Mail’s failed plan,” Bouch stated, adding that negotiations would intensify over the coming weeks and the union would “challenge publicly any claims that the pilot units have been a success.”
The pilot scheme, which has been running across 35 delivery offices, was supposed to demonstrate the viability of alternate weekday deliveries for second-class post.
However, the CWU’s intervention suggests significant operational problems that could delay Royal Mail’s timeline for requesting further cuts to the Universal Service Obligation.
Any formal request to Ofcom is now unlikely to come before the first quarter of 2026, pending the outcome of intensified negotiations and resolution of issues identified during the pilot phase.
The Deliberate Degradation Strategy
Kate Osborne MP, who worked for Royal Mail for 25 years before entering Parliament, has been increasingly vocal about what she sees as a calculated strategy to undermine the Universal Service Obligation.
In recent statements, she’s accused Royal Mail bosses of “deliberately missing targets, cutting staff from delivery offices & missing targets to ‘prove’ their Universal Service Obligation no longer works.”
The pattern certainly fits.
Royal Mail’s delivery performance was adequate, if imperfect, before the foreign takeover.
Since Křetínský’s acquisition completed, performance has plummeted whilst the company simultaneously celebrates returning to profit and requests permission to cut services.
Ofcom itself noted in announcing the £21 million fine that Royal Mail had “taken insufficient and ineffective steps” to prevent delivery failures, suggesting the company’s poor performance wasn’t simply bad luck or unavoidable circumstances.
The regulator specifically mentioned “empty promises” when discussing Royal Mail’s track record, indicating frustration with a company that talks about improvement whilst delivering nothing but declining service standards.
What Further Cuts to the Universal Service Obligation Might Look Like
Whilst the specific requests Royal Mail plans to make haven’t been publicly confirmed, industry observers suggest several possibilities based on the company’s previous statements and lobbying efforts.
Further reductions to second-class delivery frequency beyond the current alternate weekday system are likely, potentially moving to just two days per week as has been discussed in previous consultations.
There may also be pressure to reduce first-class delivery obligations, perhaps allowing two-day delivery rather than next-day service, which would fundamentally change what customers are paying £1.70 per stamp to receive.
Rural delivery obligations could face particular scrutiny, given the higher costs of serving remote communities that make up a significant part of the Universal Service Obligation’s financial burden.
The company might also seek to reduce the requirement to deliver to every address six days per week, potentially allowing some areas to receive service only on certain days based on demand or profitability.
Each of these changes would save Royal Mail money whilst degrading the universal service that has connected every corner of Britain for centuries, regardless of whether individual deliveries were profitable.
The £5 Billion Debt Mountain Driving Decisions
What’s driving this relentless push for service cuts isn’t operational necessity but financial pressure created by the takeover itself.
Křetínský’s highly leveraged acquisition saddled Royal Mail with approximately £5 billion in debt, creating enormous pressure to extract cash from customers through higher prices whilst slashing operational costs wherever possible.
The debt mountain requires substantial interest payments that must come from somewhere, and the easiest targets are the expensive elements of the Universal Service Obligation that serve communities rather than maximise profits.
Saturday deliveries, rural routes, and daily service to every address are all expensive to maintain but essential for the public service role Royal Mail is supposed to fulfil.
Under foreign ownership prioritising debt repayment and profit extraction, these obligations become obstacles to financial performance rather than the core purpose of a national postal service.
The Ofcom Decision That Will Define Royal Mail’s Future
Ofcom now faces a critical decision about whether to approve further service reductions or finally take a firm stand against the systematic dismantling of Britain’s postal infrastructure.
The regulator has already approved significant cuts to the Universal Service Obligation, including ending Saturday second-class deliveries and allowing alternate weekday delivery for second-class post.
These decisions were made despite widespread public opposition and warnings from MPs like Kate Osborne that the six-day postal service remains “a vital lifeline for many in the community, NHS appointments, and print businesses” that “must be protected.”
If Ofcom approves additional service reductions whilst Royal Mail continues to miss even reduced delivery targets and celebrates returning to profit, it will send a clear signal that regulatory oversight has become meaningless.
The regulator’s £21 million fine, whilst substantial, has done nothing to change Royal Mail’s behaviour or improve service standards.
What This Means for British Communities
For the millions of people who depend on Royal Mail for essential communications, medication deliveries, and connection to services, further service cuts would represent another blow to an already degraded postal system.
Rural communities would be particularly affected, facing the prospect of even less frequent deliveries whilst paying the same premium prices as customers in profitable urban areas.
Small businesses that rely on affordable tracked parcel services have already been hit with significant price increases in October.
Further service reductions would leave them with fewer options and higher costs, potentially making their operations unviable.
Vulnerable customers who depend on postal deliveries for prescriptions, benefit payments, and communication with essential services would find their lifeline increasingly unreliable.
And all of this would happen whilst Royal Mail celebrates profits achieved through service cuts rather than operational improvements, under foreign ownership that treats Britain’s postal infrastructure as a vehicle for debt repayment rather than a public service.
The Public Service Stripped for Private Profit
What’s happening to Royal Mail represents everything wrong with privatising essential infrastructure without adequate regulatory protection.
A service that successfully connected Britain for over 500 years is being systematically dismantled within months of falling under foreign private ownership, with regulators approving cuts whilst the company celebrates profits and prepares to request even more reductions.
The government’s retention of a “golden share” to approve major changes sounds reassuring until you realise they’ve already approved the foreign takeover and service cuts that created this situation.
Meanwhile, Křetínský’s other postal investment, PostNL in the Netherlands, has admitted its business model is “no longer sustainable” and is begging the Dutch government for financial support, hardly inspiring confidence about Royal Mail’s long-term prospects under similar ownership.
For now, British communities can only hope that Ofcom will finally take the firm stand that Kate Osborne MP and others have been demanding, rejecting further service cuts and holding Royal Mail accountable to the public service obligations it’s legally required to fulfil.
The CWU’s challenge to the pilot scheme’s viability may provide crucial leverage in preventing further degradation of the Universal Service Obligation, though the union faces an uphill battle against a company prioritising debt repayment over public service.
But given the regulator’s track record of approving previous reductions whilst issuing toothless fines that change nothing, don’t hold your breath waiting for meaningful protection of Britain’s postal infrastructure.
Royal Mail’s preparation to request further Universal Service Obligation cuts, whilst simultaneously celebrating profits and missing delivery targets it’s being fined for failing to meet, exposes a calculated strategy to dismantle a 508-year-old public service under the cover of operational necessity created by foreign ownership’s debt burden.
However, the CWU’s intervention and identification of serious problems with the pilot scheme may force Royal Mail to delay its plans and reconsider the viability of its proposed changes.
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