Royal Mail in talks to end dispute with union over second class post changes

Royal Mail has kicked off month-long intensive talks with the staff trade union after failing to agree on how to roll out changes nationwide that will see it ditch second class letter deliveries on Saturdays across the UK.

Owner International Distribution Services (IDS) – bought last June by Czech billionaire Daniel Kretinsky’s EP Group in a £3.6 billion deal – said the changes have been delayed for over six months as it remains at loggerheads with the Communications Workers Union (CWU) on the plans.

This has ramped up cost pressures on Royal Mail as it had hoped to already have the cost-saving changes in place, adding to a soaring wage bill, according to the group.

IDS said it is taking action to offset the extra costs, including “improved productivity through automation and reduction in discretionary spend”.

It started a month-long dispute resolution process with the CWU on January 29 with the aim of reaching agreement on the workforce overhaul needed for the reforms.

IDS said: “This provides a framework to have focused discussions so an agreement can be reached as quickly as possible.

“Moving ahead with reform will deliver long-term success for the business and our colleagues and improved quality of service for our customers.”

Regulator Ofcom last year gave the green light to Royal Mail to scrap second class letter deliveries on Saturdays and change the service to every other weekday, starting from July 28.

Under its Universal Service Obligation, Royal Mail must keep Monday to Saturday deliveries for first class post and maintain the target for second class letters to arrive within three working days.

Royal Mail has launched second class letter changes across 35 delivery offices as a pilot, but has yet to expand this nationwide across all 1,200 sites due to the failure to reach agreement with the union.

IDS said the delays were pushing up costs, on top of an extra bill of around £120 million in 2025-26 for the national insurance contribution hike and three-year pay deals agreed with unions.

Details of the universal service reform delays came as IDS gave figures for the busy Christmas season showing Royal Mail revenues lifted 1.6% to £2.4 billion in the three months to the end of December, as a 4.2% rise for parcels offset a 1.5% drop for letters.

It delivered 8% more parcels, at 424 million, while the number of addressed letters fell 9% to 1.5 billion despite the boost from Christmas card and letter deliveries.

Its GLS parcel business saw revenues jump 9% to £1.4 billion in the quarter, helping overall group-wide turnover rise 4% to £3.8 billion.

The group said 99% of items posted by the recommended dates arrived on time.

But figures last week from Citizens Advice showed an estimated 16 million people – or 29% of UK adults – experienced post delays with Royal Mail over Christmas.

The figure, which applies to letters and cards but not parcels, is a 50% increase on December 2024, up from 10.7 million people, the charity found.

In its latest update, Royal Mail cheered its biggest ever Christmas for out-of-home deliveries, with almost eight million more parcels year-on-year going through parcel points during the festive season.

Royal Mail had around 3,000 parcel lockers and nearly 8,000 Royal Mail Shops in December – up 80% on a year earlier.

Martin Seidenberg, group chief executive at IDS, said: “We delivered a strong and successful Christmas period across Royal Mail and GLS.

“We have seen record volumes flowing through our established networks, as well as in our rapidly expanding locker and shop networks.”

He added: “The macroeconomic environment remains challenging, cost pressures are increasing and competition is growing.

“This underlines the need for expansion in our out-of-home networks and further transformation at Royal Mail, including deployment of universal service reform.”