Royal Mail fined £5.6 million for missing its delivery targets ‘significantly’

Royal Mail has been fined £5.6 million by the industry regulator Ofcom for missing targets for both its first and second class deliveries.

The company is obliged to publish its performance in regards to delivery targets every year, which is scrutinised by the watchdog.

Each year, Royal Mail is required to deliver 93% of first class mail within one working day and 98.5% of second class mail within three working days.

However, Ofcom said that for the 2022-23 financial year the British postal service only delivered 73.7% of first-class mail on time and 90.7% of second class mail on time.

The target for its delivery routes is 99.9% but it only managed to complete 89.35% of delivery routes each day a delivery was required.

During this period, Royal Mail was hit by a series of strike days in action taken by frontline workers. 

However, taking into account the strikes, extreme weather conditions and the closure of Stansted Airport, Ofcom found that the company still did not meet its targets.

In a statement the regulator said: “Ofcom can consider evidence submitted by Royal Mail of any exceptional circumstances that may have explained why it missed targets.

“Even after adjusting Royal Mail’s performance for the impact of industrial action, extreme weather and the Stansted runway closure, its first and second class performance was still only 82% and 95.5% respectively.

“This means that Royal Mail breached its obligations by failing to meet its targets by a significant and unexplained margin. This caused considerable harm to customers, and Royal Mail took insufficient steps to try and prevent this failure.”

The fine was reduced by 30% for the company’s co-operation and admission of liability.

During the timeframe it was fined, around 112,000 of Royal Mail delivery workers took industrial action in a row over pay and conditions. The dispute was eventually settled in July.

In an effort to strengthen its finances, the mail company has increased the price of stamps with an update on its performance due this week – which will reveal its latest financial results. 

Ian Strawhorne, director of enforcement for Ofcom, said: “Royal Mail’s role in our lives carries huge responsibility and we know from our research that customers value reliability and consistency.

“Clearly, the pandemic had a significant impact on Royal Mail’s operations in previous years. But we warned the company it could no longer use that as an excuse, and it just hasn’t got things back on track since.

“The company’s let consumers down, and today’s fine should act as a wake-up call – it must take its responsibilities more seriously. We’ll continue to hold Royal Mail to account to make sure it improves service levels.”

A Royal Mail spokesperson said: “We are very disappointed with our Quality of Service performance in 2022-23 and acknowledge Ofcom’s decision today.

“Last year was uniquely challenging for Royal Mail. Quality of service was materially impacted by the long-running industrial dispute which included 18 days of strike action.

“We are pleased that Ofcom has acknowledged that elements outside of Royal Mail’s control had a significant impact on service levels and has adjusted the figures to 82% for first class and 95.5% for second class mail.

“Quality of Service is extremely important to us. We take our commitment to delivering a high level of service seriously and are taking action to introduce measures to restore quality of service to the level our customers expect.”