Latest on Ofcom review of the postal service

Earlier this month the Greeting Card Association provided Ofcom with a detailed response to proposals to weaken the ‘Universal Service Obligation’ (USO) by cutting back letter deliveries to five or even three days per week and giving Royal Mail freedom to raise prices, see more below.

GCA’s #Cardmitment campaign communications around this submission and in preceding months, ensured that greeting cards featured prominently both in submissions from others and across the media. In April 2024 the GCA, it’s CEO and individual members featured on ITV & BBC TV news, in all mainstream newspapers, radio and many local newspapers and radio too, sharing industry concerns on price rises, the reduction in service levels proposed and talking about the importance and joy of connecting through cards.

This media activity ensures that the greeting card industry voice is being heard as part of this review process, but also raises the profile for greeting cards and reminds every one of the joy and importance of sending and receiving cards.

To see the TV, radio and press coverage achieved by our #Cardmitment campaign see Media blog.

Industry concerns about latest Royal Mail proposals

Now the GCA has had the chance to review submissions to Ofcom from others, including Royal Mail and consumer groups, we have an additional concern:

Royal Mail are proposing now to keep the six day a week service, but with no mention on what this first class service could cost (first class prices are not subject to safeguard caps).

In addition the one-price-goes-anywhere service to all parts of the UK would remain, but all non-first class letter deliveries, including 2nd class, would be delivered alternate days – Monday, Wednesday, Friday one week and Tuesday, Thursday the next.

Royal Mail have suggested their proposals means that Ofcom do not now have to go back to parliament for legislative change, therefore if Ofcom agree with Royal Mail the USO could be fundamentally weakened without the need for Parliamentary approval

In addition there is still no clear plan to return to service levels currently expected under the USO.

We feel very concerned that this could lead to a dramatic reduction in our postal service without Parliament, and ultimately consumers, having a say,

An affordable, reliable and national postal service is crucial for our industry. We know the issues our members have had delivering consumer orders via Royal Mail, and feedback from retailers highlight consumer concern about stamp prices.

We have therefore written again to Royal Mail, Ofcom and relevant MPs on your behalf
Amanda Fergusson GCA CEO

The GCA will continue to work on behalf of the industry to wave the flag for greeting cards and ensure that Royal Mail, Ofcom and MPs across the country understand the needs and concerns of our industry.

We ask Members’ who share our concern to contact their MP, below is a suggested draft letter that you can amend and use to contact your MP.

GCA’s submission to Ofcom

Our submission to the Ofcom Review makes clear:

Our 500-plus members are card shops, designers and publishers that form a vital part of the UK’s economy. Many of our members use Royal Mail to send out customer orders, and also our customers need an affordable reliable postal service to send their cards.
More price rises and service reductions will accelerate a decline in the British postal service, leading to increasingly frequent requests for bailouts.
There is no historical precedence of a declining industry recovering by radically increasing prices whilst concurrently dramatically reducing service. The GCA therefore has no confidence that Ofcom’s currently proposed solutions will do anything other than accelerate existing postal decline.
It is simply unjust to ask the British public to accept weaker service or the cost of subsidies, when far simpler solutions would fix things faster.

In our proposals we ask that Ofcom:

Demands an immediate service stabilisation and restoration of public confidence in postal service levels as a priority.
Makes any future stamp price rises conditional on Royal Mail delivering its required USO service levels. This month’s additional 10p on 7bn letters with no volume loss will raise over £100m for Royal Mail (based on Ofcom data that suggests 17pc of that volume is currently USO-regulated).
Require that if Royal Mail are given freedom to set pricing for monopoly products, they must first undertake transparent econometric or price elasticity modelling and meaningful consultation with consumer advocates and trade associations.
Ensure affordable Saturday deliveries stay. Saturday delivery is crucial to GCA members and consumers. Customers regularly order cards in anticipation of posting to, seeing a loved one over the weekend, and Saturday provides a critical backstop given current quality of service performance. It is even more critical in the run up to big seasonal events such as Mother’s Day, Father’s Day and Easter which fall on a Sunday.
Ask Royal Mail to explain how currently applying a peak surcharge to business letters during each festive period is consistent with its claim that falling letter volumes cause network under-utilisation which is the reason letter prices must rise.
Encourages Royal Mail to take a far more initiative approach to stem letter volume declines and plan to return sectors of their Letters business to growth. The GCA’s continues to engage around commercial opportunities, such as lowering the price of stamps ahead of Christmas.
Demands greater transparency from Royal Mail – In a market that Ofcom advises is highly unlikely to attract new entrants, there are extremely limited reasons why data can be justified as commercially confidential, especially in circumstances where Royal Mail are claiming they require further regulatory relief, bailouts and/or state support to continue.