The owner of Royal Mail has confirmed a significant delay to its planned overhaul of postal services, pushing back the UK-wide rollout of changes that include the end of Saturday second-class letter deliveries.
Postal Service Reforms Put on Hold
International Distribution Services (IDS), the parent company bought by Czech billionaire Daniel Kretinsky's EP Group in a £3.6 billion deal last year, will not implement the new delivery system more widely until early 2026. The announcement came in the group's half-year results released this week.
The reforms, which received regulatory approval from Ofcom to begin from the end of July, have been undergoing trials in 35 delivery offices. The proposed changes involve stopping second-class deliveries on Saturdays and altering the service to run on alternate weekdays.
Regulatory Pressure and Performance Issues
The delay follows substantial regulatory action against Royal Mail. Last month, Ofcom fined the company £21 million for failing to meet its annual delivery targets for both first and second-class mail, marking the third-largest penalty ever imposed by the communications watchdog.
Ofcom's investigation revealed that during the 2024/25 financial year, Royal Mail delivered only 77% of first-class mail and 92.5% of second-class mail on time. In response, the regulator has adjusted its universal service obligations, lowering the target for next-day first-class delivery from 93% to 90% and for three-day second-class delivery from 98.5% to 95%.
However, Ofcom has introduced a new enforceable backstop requirement, mandating that 99% of all mail must be delivered no more than two days late.
Financial Performance and Christmas Preparations
Despite the challenges, Royal Mail showed some positive financial indicators. Interim figures revealed that revenues at Royal Mail increased by 1.5% to £3.98 billion in the six months to September 28. This growth was driven by a 3.2% rise in parcels business, which offset a 0.4% decline in letters revenue.
Across the wider IDS group, total revenues grew by 1.6% to £6.45 billion, with its GLS international parcel business seeing revenues climb by 1.9% to £2.48 billion.
The group acknowledged operating against a backdrop of rising costs and macroeconomic pressures, including national insurance contribution increases of around £120 million and higher wage costs.
Looking ahead to the festive season, Royal Mail has undertaken substantial preparations, recruiting 20,000 temporary workers and deploying 7,000 new vans. The company has also opened four seasonal parcel sorting centres, adding 118,000 square metres of extra space - equivalent to 16.5 football pitches.
IDS chief executive Martin Seidenberg stated: We never underestimate the important role we play at Christmas and we are hiring more people, opening temporary parcel sorting centres and putting more vans on the road to deliver for our customers again this year.
In September, Mr Seidenberg had described the postal reforms as a massive task, emphasising that the company would take the time to get this right rather than rushing the nationwide expansion. At that time, IDS said it remained too early to determine which of its 1,200 delivery offices would be next for the overhaul.
