Committee publication · Report · 22 May 2026 · HC 131

2nd Report - The regulation of postal services

Government response deadline: 22 July 2026

Summary

This Business and Trade Committee report examines the regulation of postal services, prompted by Royal Mail's persistent service failures. The committee finds that Royal Mail's delivery performance is unacceptable—74.9% of First Class mail missed next-day targets in early 2026, affecting 16 million people over Christmas. The report concludes Ofcom is failing as regulator and recommends it reset its regulatory approach, produce a roadmap for improvement, and investigate Royal Mail's prioritisation of parcels over letters. It also proposes statutory changes if meaningful improvements don't materialise within six months.

Key findings

Royal Mail has incurred fines every year since 2022/23 for missing service targets; 74.9% of First Class mail delivered late in April 2025–January 2026, 18.1 percentage points below target
16 million UK adults (29%) experienced letter delays over Christmas 2025; 5.7 million missed vital letters about health, fines and benefits
Ofcom has failed to enforce regulation adequately: it cannot disclose absolute numbers of late letters to Parliament citing commercial confidentiality, conducts no unannounced inspections, and has not acted on previous committee recommendations about deprioritisation
Competitors including Amazon use Royal Mail's universal service infrastructure without contributing proportionately to costs; Royal Mail faces unfair labour cost competition from gig economy models
Royal Mail–CWU industrial dispute blocked improvement planning for months; resolution required Secretary of State intervention on USO reform and new entrant pay equalisation

Recommendations

Ofcom must investigate urgently whether Royal Mail has deprioritised letter delivery in violation of its regulatory duties
Amend legislation restricting disclosure of commercial information to Parliament so Ofcom can provide Parliament with specific numbers of letters and parcels delivered outside performance targets
Ofcom must produce a clear roadmap setting out statutory and non-statutory tools at its disposal and how it will use them to improve public satisfaction with postal services, including services outside the Universal Service Obligation and those by competitors
The roadmap must include far more assertive spot-checking of whether and how often parcels are prioritised over letters
If meaningful change is not delivered within six months, the Secretary of State should consult on statutory changes to Ofcom's duties and powers
Secretary of State should present a proposal to level the playing field between Royal Mail and competitors, including options for a levy on competitors reflecting benefits from network use, or minimum employment standards

Tone

Critical

Topics

postal-servicesregulatory-compliancecompetition-policylabour-standardsconsumer-protection

Key actors

Liam Byrne, Royal Mail, Ofcom, Daniel Křetínský, Communication Workers Union (CWU), Citizens Advice, Natalie Black, Dave Ward

Notable line

“Ofcom is failing as the statutory regulator of the postal service to deliver on the task it has been set by Parliament.”

Key Quotes

“Ofcom however is directly accountable to Parliament, and through Parliament to the public, for ensuring the nation's postal service meets the standard expected. Today, we conclude Ofcom is failing as the statutory regulator of the postal service to deliver on the task it has been set by Parliament.”
— Business and Trade Committee · The committee's core judgment on Ofcom's regulatory failure

“Royal Mail appears to be more rigorous in policing itself than its statutory regulator.”
— Business and Trade Committee · Comparing Royal Mail's 100 weekly unannounced self-audits with Ofcom's lack of unannounced inspections

“Advice argued in its evidence that Ofcom has focused on the "financial sustainability" aspect of its statutory remit, while "ignoring the question of most concern to consumers and government: whether Royal 10 Letter from Royal Mail regarding deliveries …”
— Citizens Advice · Criticising Ofcom's narrow focus on financial rather than operational efficiency

“Royal Mail's labour costs are double those of competitors using "gig economy" models.”
— Daniel Křetínský · Highlighting competitive disadvantage in employment terms

“It appears to have taken the Secretary of State's direct intervention to resolve this crisis. We are grateful to the Secretary of State for his action, but he is not the statutory regulator of the postal service.”
— Business and Trade Committee · On the need for ministerial intervention to break the Royal Mail–CWU deadlock

“"without the universal network, [competitors] would be forced to bear the costs of delivering to those addresses or pass these on to consumers".”
— Communication Workers Union · Arguing competitors free-ride on Royal Mail's infrastructure

“"out of all the players you have seen this afternoon, Ofcom has been the organisation that has grasped the nettle".”
— Natalie Black · Ofcom's claimed regulatory assertiveness, contradicted by the committee's findings

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Source · parliament.uk record ↗