GCA welcomes Ofcom probe and call for government to secure Universal Service Obligation
“Are Royal Mail prioritising parcels over mum?” was the striking headline of a GCA press release on Friday afternoon in response to a government report concluding Royal Mail has deliberately prioritised parcels over letters, and “systemically failed to deliver against parts of its Universal Service Obligation (USO)” which sent shockwaves around the greeting card industry.
Released on Friday, 17 March, as millions around the country were hoping their Mother’s Day cards would arrive in time for Sunday’s big event, the House Of Commons Business, Energy and Industrial Strategy Committee report has been greeted with sadness by the GCA, although it is welcoming the steps regulator Ofcom will now be taking to establish if any decisions taken by Royal Mail meant it has breached its obligations to the British public.
The mps’ report comes hot on the heels of the announcement of above-inflation price rises in the cost of both first and second-class stamps, increasing by 15p to £1.10 and 7p to 75p respectively from 3 April, while Royal Mail is still angling to cut its Universal Service letter-delivery obligation from six days a week to just Monday to Friday so no cards would arrive for weekend celebrations such as Mother’s and Father’s Day.
The committee stated: “We believe that Royal Mail has deprioritised delivery of letters as a matter of company policy and that it has systemically failed to deliver against parts of its USO. The evidence suggests that this practice has taken place not just during periods of industrial action but since the start of the pandemic, if not earlier.
“We therefore call on Ofcom to undertake an enforcement investigation into Royal Mail’s delivery of the USO and to report to this committee by the end of 2023.”
While noting the company is transforming itself into a more efficient parcels-based business, the committee pointed out: “The USO limits its freedom for manoeuvre and makes it harder to be fully competitive on parcels. We do, however, recognise the importance of the USO in delivering a vital public service, and we hope that Royal Mail seizes the commercial opportunities available to it in accessing every household across the country on six days of the week.
“We call on the government to formally engage with Royal Mail, following the outcome of Ofcom’s enforcement investigation, to secure the future of the Universal Service Obligation and Royal Mail; and to provide an initial report to this committee no later than the end of 2024.”
The GCA said it looks forward to reviewing the findings of Ofcom’s investigation and contributing to the subsequent government report, and welcomed the committee’s call to Royal Mail’s board to reflect on its decision to exclude the delivery of the USO from the long-term pay and incentive structure for its senior managers, a recommendation the industry association believes is vital to the public interest.
As Royal Mail is now a private company, the committee said it is not empowered to instruct its senior leaders how to run the business, but added that the USO provider it “does have a statutory responsibility to deliver this public service and is therefore accountable to ministers and to this committee”.
The report added: “The issues at Royal Mail have caused the committee great concern and we call on the board of Royal Mail and the CWU to seek to resolve the outstanding issues in dispute as quickly as possible.”
Responding at lightning speed, the GCA Royal Mail sub-committee launched into action crafting a press release which delivered the strong message of the importance to British society as a whole of being able to send and receive cards.
Cardology director David Falkner, who is a GCA council member and the sub-committee chairman, said: “With Mother’s Day around the corner, the report into recent postal service performance is a timely reminder of how much we Brits rely on sending cards to retain the emotional connections so important to our lives.
“Our GCA Consumer Survey Report shows two key reasons we love receiving cards are that they help us feel a connection with someone special and they help us know someone was thinking of us. For those of us who can’t see mum this weekend, knowing she’ll get this little lift can make all the difference. I believe many of us would wholeheartedly support the committee’s conclusion that the postal service is such a key part of the fabric of local communities.
“Ofcom’s investigation matters to everyone who doesn’t get to see family and friends as much as they’d ideally like. While I believe we’d all recognise the postal landscape is changing, it’s recently felt like much of that conversation was being undertaken by lobbying groups operating behind closed doors. This investigation offers the chance for us to have that debate as a nation, highlighting what options we want to hold onto to retain our connections with loved ones”.
The GCA welcomed the committee’s invitation to Royal Mail to consider the specific commercial opportunities available stemming from its ability to access “every household across the country on six days of the week, noting the stark contrast between this invitation and the recent lobbying it has been reported was undertaken by the company in a bid to reduce its obligations to the British public.
Fellow GCA council member David Byk, ceo of Ling Design and GBCC owner Swan Mill Group, added: “You pay good money to have your card delivered to a loved one you may not be able to see on the day. For the British public, it must be particularly galling to note those prices are set to rise again for a service it has now been found Royal Mail aren’t delivering. Are Royal Mail prioritising parcels over mothers?”
Calling it “a brand with a long and proud heritage”, and saying “postal workers are part of the fabric of local communities and were rightly celebrated as key workers during the pandemic”, the mps accepted Royal Mail is “going through troubled times” following reports last year that it was losing £1million per day, and is in the midst of “a bitter industrial dispute” with its workforce.
However, the report added: “When we explored these issues with Royal Mail’s senior management, our concerns were not allayed: in fact they grew. Some of the statements made by the chief executive officer Simon Thompson during oral evidence provoked a huge response from postal workers, who contacted the committee directly, claiming that the committee had been misled.
“We therefore took the very unusual step of recalling Royal Mail in order to clarify or correct the public record. In doing so, we used the procedures available to us to ask witnesses to take the oath, in order to stress the importance of giving answers to the committee that are wholly truthful.”
Having stated in evidence given to the committee in January that it was “absolutely not true” employees had been told to prioritise parcels over letters, which might affect the company’s capacity to fulfil its statutory USO duties, when recalled last month Simon Thompson was presented with photos of posters and handwritten sheets plus audio and video recordings sent in by postal workers all showing local managers giving essentially the same instructions to prioritise parcels.
The committee also pulled the ceo up on his original claim that data from personal handheld devices used by delivery staff was not used for performance management – which is being investigated by the Information Commissioner’s Office as to its legality – and he then accepted the evidence to the contrary, admitting he knew it was sometimes used in disciplinary cases.
The report stated: “Whether intentionally or inadvertently, Mr Thompson misled the committee when he first gave evidence by giving an answer which was not wholly accurate.”
Ofcom said it was carefully considering the mps’ report into late letter deliveries: “Royal Mail’s recent performance is clearly well short of where it should be. We’re very concerned about this and have asked the company to explain what it’s doing to bring service levels back up as a matter of urgency.”
The regulator said it would look at Royal Mail’s performance from April to March and wouldn’t hesitate to take enforcement action if required – in 2020 Ofcom fined the company £1.5m for missing delivery targets.
A company spokesman said: “Royal Mail is proud to deliver the universal service, and our policies are clear that parcels and letters should be treated with equal importance. We have informed the committee that we will be reviewing the consistent application of our policies regarding the delivery of letters and parcels across the business.”
The company said it would share the findings of this review with Ofcom but rejected the suggestion mps had been misled, while welcoming the call for a quick resolution to the industrial dispute, and the recommendation the government formally engages with Royal Mail to secure the future of the Universal Service.
Top: The Universal Service Obligation is a one-price-goes-anywhere principle of affordable postal services to all UK addresses, however remote