Royal Mail has put a £500 million price tag on salvaging its tarnished reputation for on-time delivery, unveiling a five-year plan that will see it end second-class Saturday mail from May and ask thousands of part-time delivery workers to take on full-time hours.
The commitment represents the first significant operational reset under Czech billionaire Daniel Kretinsky, whose EP Group last year completed its £3.5 billion takeover of parent company International Distributions Services, removing Britain’s letter monopoly from the London Stock Exchange after trading as a listed company for more than a decade.
Under the plan, the 510-year-old postal operator will spend £100 million a year to create the equivalent of 3,000 full-time delivery jobs. This will be achieved primarily by convincing around 6,000 part-time employees to increase their average weekly working hours to 35 hours. The company has secured union support for the package, no small feat in a company that has endured some of the worst labor disputes in recent British corporate history.
The numbers behind the overhaul show how far standards have slipped. Compared to a regulatory benchmark of 93 per cent of first-class mail delivered next day, Royal Mail currently manages 77 per cent, meaning almost one in four letters arrive late. The performance of the second class is hardly better: 91 percent end up on doormats within three days, while the target value is 98.5 percent.
Ofcom has already relaxed the regime in the wake of the Kretinsky takeover, relaxing the universal service obligation to allow delivery of non-first class items on alternating days and reducing regulatory targets to 90 per cent for first class next day and 95 per cent for second class over three days. Royal Mail says the revised thresholds will be met within 12 months of the new regime being introduced.
For SME owners and finance directors who have long complained about unreliable mail cluttering up invoicing, contract delivery and customer correspondence, the proof is in the doormat. The company’s own diagnostics cite “delivery route completion rate” as the key flaw, with an estimated 8 percent of deliveries either under-equipped or too cumbersome to complete within a working day. A targeted shift in working practices is planned in the worst performing of Royal Mail’s 1,200 delivery offices, with new hires concentrated in Oxford, Cambridge and London, where staff shortages are worst.
The salary situation is also revealing. Postal workers hired since 2022 cost the equivalent of £27,200 a year, around £1,800 less than the £29,000 paid to longer-serving colleagues. This two-tier structure has led to retention difficulties and is expected to be partially alleviated by moving to fuller working hours.
Royal Mail chief executive Alistair Cochrane said he was remorseful. “We recognize that our service has not always been up to the standard our customers rightly expect and we are committed to doing better,” he said. When his leader was criticized by MPs in recent weeks, he went even further, telling a parliamentary inquiry: “We regret any letter that arrived late”, before describing the operation as “not perfect, but not disastrous either”.
The political optics are important. The universal service obligation, enshrined in 2013 with the launch of Royal Mail by David Cameron’s coalition, has been the convenient scapegoat for years of underperformance. Now that Ofcom has loosened this constraint, the excuses are becoming less important. Of Royal Mail’s 130,000 employees, 80,000 are frontline delivery workers, and it is on their rounds that Mr Kretinsky’s £500 million stake will ultimately stand or fall.
For Britain’s small businesses, many of which still rely on the mail for everything from checks to compliance documents, Mount Pleasant’s message is cautiously optimistic. Whether the new owners can succeed where successive management teams have stumbled remains the open question.
