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Royal Mail is broken – can Britain's postal giant be saved?
Royal Mail has been getting worse for years, and Ofcom's stern warnings and fines have made no difference. What went wrong – and is there any hope?
Royal Mail announced this week that a pilot scheme it's been running since last July – under which it delivers second-class mail only every other weekday and not at all on Saturdays – is to be rolled out nationwide from next month. This scaling back of its level of service to customers, it says, is part of a £500 million investment plan to tackle late deliveries. There will be no change to first-class post, which will still be delivered daily from Monday to Saturday, or to parcels, at up to seven days a week. The plan ends a dispute with postal unions and includes a provision to allow 6,000 part-time postal workers to increase their average weekly hours if needed. Meanwhile, earlier this month, the price for a second-class stamp rose another four pence to 91p.
(Image credit: Jason Alden/Bloomberg via Getty Images)
So, worse service for more money?
That's par for the course with Royal Mail. The cost of first-class stamps has risen by 10p to £1.80 – meaning the price has more than doubled since 2020 (it's up 137%) with eight separate increases. Yet the quality of the service has declined and the business has repeatedly failed to meet delivery targets set by the regulator, Ofcom. In 2024-2025, only about 77% of first-class mail was delivered on time (against a 93% target), alongside similar underperformance in second-class deliveries. There have been multiple reports of a chaotic and demoralising working environment. Mail has been piling up in sorting offices from Cornwall to the Scottish islands, with numerous accounts of postal workers being instructed by managers to prioritise parcels over letters and even hiding vast quantities of mail from bosses. Ten different postal workers, all from different delivery offices, told the BBC that “take the mail for a ride” was a common phrase in their workplace.
Why is Ofcom not doing anything about Royal Mail?
Arguably not furious enough. In October 2025, Ofcom fined Royal Mail a record £21 million for failing to meet its delivery targets – not nothing, but hardly draconian for a business turning over £8.2 billion a year – and issued some stern words. But the regulator has been dishing out similar warnings and fines every year for the past three years – with fines for the period totalling £36 million – and nothing has changed. Part of Royal Mail's failure is due to operational failures and labour disputes. But the company is also battling a giant structural issue that may well make it doomed to fail without radical surgery.
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In the age of the internet, individuals and businesses are sending a fraction of the letters they used to, but a lot more parcels. Over the past two decades the number of letters sent each year in the UK has collapsed from around 20 billion annually in the mid-2000s to roughly six billion today, while parcel volumes have surged with the rapid growth of online shopping. That transition has proven all but impossible to manage because Royal Mail's cost base – its nationwide delivery network and legally mandated “universal service obligation” (USO) – was designed for a high-volume letters business that no longer exists. The modern Royal Mail is still obliged to deliver letters to all 32 million addresses in the UK (four million more than 20 years ago) at a uniform price, but it doesn't have the volume of letters business to do so economically and efficiently.
Who owns Royal Mail?
Royal Mail is owned by Czech billionaire Daniel Kretinsky, an energy magnate who made a fortune transporting Russian gas to eastern Europe and is one of the richest people in Europe. For most of its five-century history Royal Mail was a public service, but it was privatised by the Tory-led coalition government in 2013, having been legally separated from the Post Office the year before. The state kept a 30% stake, but sold its shares (at a profit) in 2015, ending 499 years of state ownership. Then, in 2022, Royal Mail changed its name to the unlovely International Distribution Services (IDS), becoming a subsidiary of a listed holding company that also owned Parcelforce Worldwide and GLS Group.
In 2024, having built up a large stake in IDS over several years, Kretinsky's privately owned Czech-based EP Group offered to buy the whole thing – a £3.6 billion takeover that was approved by shareholders and the Labour government, and which was completed in May 2025. But since EP took control, the service has only got worse. Now, only about 75% of first-class mail arrives on time. Promises of new investment have not materialised. And the firm has been loaded up with £3 billion in debt, private-equity-style.
(Image credit: Getty Images)
Is Royal Mail more stable now?
Too early to say. In September 2025, Royal Mail announced a profit on an adjusted basis for the first time in three years for 2024-2025, having increased volumes through automation and locker deliveries, as well as cutting costs. Royal Mail's adjusted operating profit was £12 million, its first since the year to March 2022. Including voluntary redundancy costs, it reported operating losses of £8 million, against a £348 million loss for the year to March 2025, on revenue up 7% to £8.23 billion. However, these figures pre-date the takeover: Kretinsky inherited a modestly improving scenario, in which marginal profitability was heavily dependent on cost reductions. Analysts also have concerns about debt and financial engineering associated with the takeover.
Questioned by a House of Commons trade and business committee in March, Kretinsky said he was “deeply sorry” for late deliveries, but that getting the service back on track would be conditional on further reform of the universal service obligation. Alas, trying to “stitch a 21st-century parcels service onto a regulated letter-delivery service is never going to work”, says Alex Brummer in the Daily Mail. What is needed is radical reform and modernisation at all levels, “otherwise the start-up services, without historic costs and obligations, are going to make mincemeat of Royal Mail”.
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