Royal Mail's £500 Million Investment to Fix Slow Deliveries by Next May
After years of consistently missing letter delivery targets, Royal Mail has announced a comprehensive £500 million turnaround plan aimed at finally addressing its performance issues. The privatised postal giant has vowed to meet its delivery targets by May next year, following a recent agreement with the Communication Workers Union (CWU) that ends a lengthy dispute over service reforms.
The plan includes significant changes to the delivery model, most notably the phasing out of Saturday second-class deliveries. Instead, second-class mail will be delivered on alternate weekdays—three days one week and two days the next. This overhaul is set to begin nationwide next month, as part of a broader effort to improve reliability and efficiency.
Investment and Performance Targets
Royal Mail's £500 million investment over the next five years is designed to fund these reforms and enhance service quality. The company has committed to improving first-class next-day delivery rates to around 85% within nine months of implementation, with a goal of reaching the 90% target set by regulator Ofcom within a year. For second-class letters, Royal Mail aims to deliver 93% within three days in nine months, hitting the 95% target by May next year.
This comes after Ofcom fined Royal Mail a record £21 million in October for missing previous targets. In the 2024-25 period, the company delivered only 77% of first-class post and 92.5% of second-class post on time. Ofcom has since adjusted its standards, lowering the first-class delivery target from 93% to 90% and the second-class target from 98.5% to 95%, while introducing a new enforceable backstop requiring 99% of mail to be delivered no more than two days late.
Workforce and Union Agreement
A key component of the plan is the agreement with the CWU, which allows around 6,000 part-time postal workers to increase their average weekly hours if needed. This flexibility is intended to support the second-class post reforms and improve overall service delivery. The changes are funded by savings from adjustments to the Universal Service Obligation, which Royal Mail has long sought to relax.
Dave Ward, general secretary of the CWU, welcomed the proposal but emphasised the importance of practical implementation. He highlighted concerns about workforce resourcing, manageable workloads, and employee involvement in the deployment of changes. The agreement is currently being put to a ballot among CWU members, with plans to extend the reforms to 240 delivery offices initially and complete the rollout across the full network of 1,200 offices by December.
Customer Impact and Leadership Response
The service improvements are particularly timely as customers have faced rising stamp prices. Recently, the price of a first-class stamp increased by 10p to £1.80, while a second-class stamp rose by 4p to 91p. Royal Mail's owner, International Distribution Services, acquired by Czech billionaire Daniel Kretinsky last year, has acknowledged the delivery issues. Kretinsky apologised for late deliveries in a recent appearance before MPs but denied that the situation was worsening, stating, "It is not perfect, but it is not catastrophic."
Alistair Cochrane, chief executive of Royal Mail, expressed determination to improve service standards, saying, "We recognise our service hasn't always been the standard our customers rightly expect and we're determined to do better." Ofcom's group director for infrastructure and connectivity, Natalie Black, urged Royal Mail to implement the plan swiftly, emphasising the need for "significant and continuous improvement" to get performance back on track.
The reforms follow a pilot program launched across 35 delivery offices, which was halted due to the dispute with the CWU. With the agreement now in place, Royal Mail is poised to move forward with its ambitious turnaround, aiming to restore confidence in its postal services and meet regulatory expectations in the coming year.
