Committee publication · Correspondence · 15 July 2026
Letter from Ofcom relating to the Committee's Report on the Regulation of postal services, 9 July 2026
From: Business and Trade Committee
Inquiry: Royal Mail
Summary
Ofcom Chief Executive Dame Melanie Dawes responds to the Business and Trade Committee's report on postal services regulation, defending Ofcom's enforcement record against Royal Mail while acknowledging poor performance is unacceptable. She details structural market decline, explains regulatory constraints, and outlines Ofcom's six-month monitoring focus on Royal Mail's £500m improvement plan and operational reforms.
Key findings
- Ofcom has fined Royal Mail £37m+ in three years (£5.6m in November 2023, £10.5m in December 2024, £21m in October 2025) for persistent failure to meet regulatory targets
- Letter volumes have halved from 14 billion in 2011 to 6.5 billion in 2024/25, while UK addresses exceed 32 million, fundamentally changing universal service economics
- Royal Mail's universal service profit margin reached only 5% in two years since 2013/14, last achieved in 2015/16, raising financial sustainability concerns
- Ofcom opened an investigation on 1 June 2026 into Royal Mail's 2025/26 delivery failures, examining prioritisation practices and exceptional events
- Royal Mail has committed to £500m investment over five years and must complete operational reforms by November 2026 and meet quality targets by April 2027
Tone
FactualTopics
Key actors
Dame Melanie Dawes, Ofcom, Royal Mail, Business and Trade Committee, Liam Byrne, Communications Workers Union (CWU), IDS (Royal Mail ownership), Spectos
Notable line
“There can now be no excuses for continued poor performance. The conditions are in place for Royal Mail to turn around its service quality: a reformed universal …”
Key Quotes
“Royal Mail's performance in recent years has not been good enough. Too many deliveries have been delayed, which has had a serious impact on families, communities and businesses across the UK.”
“We have found the company in breach of its regulatory obligations for three consecutive years, fining it £5.6m in November 2023, £10.5m in December 2024, and £21 million in October”
“Letter volumes have fallen from around 14 billion items in 2011/12 to approximately 6.5 billion in 2024/25 – a decline of more than half.”
“Financial sustainability and consumer outcomes are not competing objectives; they are closely interdependent. A universal service provider that is not financially sustainable will be unable to invest adequately in its network …”
“If Royal Mail fails to deliver, we will take further enforcement action as appropriate. But I must be clear that persistent failure to meet quality of service targets may raise more fundamental questions about the long-term provision of the universal service …”
“The plan includes a £500 million investment commitment over the next five years, deployment of the new delivery model enabled by Ofcom's USO reforms, and interim milestones for improvement.”
Source · parliament.uk record ↗