Royal Mail threatened with regulator fines after blaming industrial dispute for missing service targets

Oliver Gill
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Royal Mail said an Australian flu outbreak had also impacted service quality (Source: Royal Mail)

Royal Mail today blamed a bitter spat with postal workers for failing to meet its annual quality of service targets.

Postal regulator Ofcom, which said it was "concerned that Royal Mail has fallen short" will now consider whether to slap it with fines of up to 10 per cent of "relevant turnover". Last year Royal Mail generated £7.7bn of turnover across all of its UK letters and parcel operations.

The FTSE 100 firm delivered 91.6 per cent of first class mail on time – below a target set by regulatory Ofcom of 93 per cent. Some 98.4 per cent of second class post was delivered on time, missing the minimum requirement of 98.5 per cent.

Royal Mail cited "a very challenging industrial relations environment" as one of the reasons for falling short of Ofcom's targets. It pleaded with Ofcom to take into account this and other "exceptional events".

A spokesperson for Ofcom said: “These targets are designed to ensure postal users receive a good, reliable service from Royal Mail. We are concerned that Royal Mail has fallen short, and have met the company to ask them to explain why. We are now reviewing the results in detail and will then consider further action.”

After more than a year of talks and facing the prospect of crippling Christmas strike action, Royal Mail agreed a pay and pensions deal earlier this year with its 160,000 UK workforce.

Read more: Royal Mail set for red letter day as £2bn surge prompts blue chip return

Cyber Week

Royal Mail also blamed "some very severe weather" and "significantly reduced staffing levels caused by the Australian flu outbreak".

The Christmas period – from the first Monday in December to the first Monday in January – is not included in Royal Mail's quality of service measurements. "Cyber Week", the days around Black Friday, fell outside of this period and Royal Mail said the associated increase in volumes were also to blame for missing expectations.

Today's target miss comes after Royal Mail has delivered bumper returns to investors. After shares sank to an all-time low last November – which led to the firm's embarrassing demotion from Britain's blue-chip FTSE 100 index – they have surged more than 75 per cent to all-time highs.

Sue Whalley, Royal Mail's operations chief, said she was "disappointed" about the firm's performance.

"Several exceptional events that took a heavy toll on our performance during the year," she said.

Royal Mail has one of the highest quality of service specifications of any major European country and our postmen and women work extremely hard to deliver demanding targets.

Read more: Royal Mail chief executive Moya Greene will step down in September

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