MAGGIE PAGANO: If Royal Mail is to compete with rival services, it should be allowed flexibility by government and unions to adapt as market changes
When Herbert Henry Asquith was Britain’s Prime Minister, in the years leading up to the First World War, he would send love letters to his mistress up to three times a day by post.
The letters – all 560 of them and often written during Cabinet – would contain vital secrets about military strategy such as ordering submarines to the Baltic.
His billets-doux would reach his lover within hours of sending, and by normal post. Until the end of the war, there were postal deliveries on a Sunday.
All change: The decline in letter-writing, a long-running trend accelerated by the pandemic, is one of the reasons the Royal Mail is heading for a loss this year
How times have changed. Today Asquith would have been tapping away on his iPhone, using WhatsApp or Signal, to send his messages. Even if he had wanted to write a letter, there is no guarantee it would arrive the day after sending, let alone the same day.
Such is progress. Email, texts, WhatsApp and other social media tools have ruined our letter-writing habits. In 2012-13, we sent 17.4billion addressed letters. In 2019-20, the numbers were down nearly 30pc to 12.7billion.
This decline in letter-writing, a long-running trend accelerated by the pandemic, is one of the reasons the Royal Mail is heading for a loss this year, despite higher revenues. It’s also why the chairman, Keith Williams, is preparing the ground for controversial reforms to postal services with his latest wake-up call that delivering post six days a week is no longer ‘economic’.
His weekend warning was carefully planned, and follows on from rumours over the last few weeks about cutting Saturday postal deliveries.
This is explosive stuff, and puts Williams on course for another bust-up with the unions, annoying customers in the remoter parts of the UK and of course breaching duties promised to the Government. Dropping Saturday deliveries would mean breaking the universal service obligation which requires the Royal Mail to deliver letters from Monday to Saturday at a ‘uniform price’ throughout the country and parcels for five days a week. Yet if anyone can manage such a high-wire act between three sets of interested parties it is Williams, the former boss of British Airways. He’s a bruiser who is well-oiled in tough negotiations with unions.
His intervention has been carefully timed: the watchdog Ofcom is due to report the results of its regulatory review of Royal Mail’s services over the next few weeks.
Parcels are the elephant in the room, and possibly the Royal Mail’s saviour. Over the last seven years, the number of parcels delivered by your postman has jumped 20 per cent to 1.3billion this year. Royal Mail is already delivering parcels six days a week and has just set up Parcel Collect, a new service charging customers 72p for picking up parcels from your home.
That sounds like a good deal, saving people the trouble of going to the post office – where counter services are amongst the worst and the slowest on the High Street – and providing the elderly with convenience.
With customers shopping more online, another trend accelerated by the lockdown restrictions, demand for deliveries can only grow. Half of all Christmas shopping this year will be via our screens.
If Royal Mail is to compete with DPD and Hermes, and other rival services, Williams should be allowed the flexibility by government and the unions to adapt as the market changes. With any luck, he can persuade the unions that there will be more jobs in the future rather than fewer. Indeed, another 13,000 temporary workers are being hired to help with the Christmas rush while many hundreds of jobs will be created with the new parcel service. Perhaps this could be Royal Mail’s Clause 4 moment?
Hut on a high
Booming sales at Hut Group rather prove the point that online shopping is defying gravity and in a world of its own.
Hut’s boss and founder, Matthew Moulding, has revised his sales guidance up to around £1.5bn for the year. In its first update as a public company, Hut – which operates websites that most of us have never heard of, like Glossybox, Perricone and My Protein – also reports a 38 per cent boost in sales for its beauty and lifestyle products.
Hut’s stellar growth is astonishing. Despite dubious corporate governance credentials, Hut listed on the London Stock Exchange at around £5.4billion only a few weeks ago. It is now worth £6.7billion. If Hut’s valuation reaches £7.25billion, Moulding is to receive £700m shares, taking his stake to 25.1 per cent. For what it’s worth, his fortune rose another £22m yesterday on the back of the sales update. For those who hold shares, time to take a profit. If something looks too good to be true, it usually is.