UK Royal Mail faces GBP50m fines for poor deliveries
The Royal Mail will face fines of at least GBP50m following the release next month of annual performance figures that are expected to show a sharp deterioration in the punctuality of its deliveries.
The record penalties would stem from the introduction of a tough new regulatory regime, designed to compensate business customers.
A spokesman for Postwatch, the independent body that monitors the Royal Mail’s performance, said: “The Royal Mail has got 15 licence service standards and it is unlikely that it achieved any of them in the past year. Because of the automatic compensation scheme for large mailers, the Royal Mail will have to return many millions of pounds to large customers.”
He added: “If the scheme had been in place last year, it would have cost pounds 40m. Performance has worsened and it will probably cost more.”
The Royal Mail has missed its delivery targets for the past three years. But the year that ended in March is thought to have been even worse, with performance adversely affected by wildcat strikes and by a radical shake-up of the organisation that included the end of the second delivery.
The previous year’s target for on-time delivery was set at 92.5 per cent. Royal Mail achieved only 91.7 per cent and was fined a record pounds 7.5m by Postcomm, the industry regulator, under its consumer compensation scheme.
The target remained unchanged, but by the end of the third quarter Royal Mail was only delivering 90.3 per cent of letters on time. Royal Mail is bracing itself for an even bigger fine.
A spokesman for Royal Mail said: “A fine is inevitable. The reality is that we will fail to achieve those targets.”
He added that the Royal Mail is undergoing an unprecedented reorganisation as it prepares for competition in its main markets. This has led to a sharp recovery in its financial performance: profits in the past year are thought to have been about pounds 200m.
Postmen’s routes have been reorganised and Royal Mail is reshaping its national transport distribution business. It is also pushing through a massive efficiency programme, which last year caused wildcat strikes in London.
“Including the compensation, the cost of the strikes will be around pounds 40m,” the spokesman added.
