On 26 June we published our consultation proposals to introduce a new change provision to enable the timely introduction of any Ofcom decision on the Universal Service Obligation (USO). Thank you to those customers who have responded so far.

We would also like to thank customers for attending the workshop we hosted on 15 July 2024, which gave Royal Mail an opportunity to elaborate on its proposals put forward in its submission to Ofcom’s “The Future of the Universal Postal Service” Call for Input (CFI), and to hear initial views from customers in respect of the implications for their own businesses.

Having considered the feedback provided, we understand that there are two main areas of concern from some customers in respect of the proposed change provision which is the subject of our consultation:

1. The drafting should be narrower and only permit changes to reflect Ofcom’s decision relating to the current regulatory review on the future of USO i.e. the clause should not be so wide as to give Royal Mail the ability to make contract amendments to reflect any changes which arise as a result of future regulatory reviews by Ofcom; and

2. Royal Mail needs to provide the contract changes which could arise from Ofcom’s decision so that customers can fully assess the implications for their business.

We address both points in turn.

Change provision drafting

In consideration of the feedback, please see below revised drafting of the change provision, which we would welcome customers’ feedback on (the red text shows the amendments as compared to the previously proposed drafting):

The parties acknowledge that further to the Regulator's "Call for input: The future of the universal postal service" (“Call for Input”) and any subsequent Regulator consultations following on from its Call for Input (“Consultations”), the Regulator may make changes to the Regulatory Conditions and/or Access Condition. If the Regulator decides to change the Regulatory Conditions and/or Access Condition following its Consultations, then we may change this Contract without your consent on giving you at least 70 days’ notice to reflect the obligations placed on us under the revised Regulatory Conditions and/or Access Condition (as applicable). By way of illustration only, the types of changes that we may effect under this clause include, but are not limited to, changes to the days we deliver Mailing Items under this Contract and/or the delivery periods for Mailing Items under this Contract.  

As you will see we have confined the drafting to only give Royal Mail the ability to amend the contract to reflect the pending decision from Ofcom in respect of the USO.  We have also sought to provide examples of the types of changes which could be captured by the clause. The examples given mirror the changes put forward in Royal Mail’s CFI submission. The next section of this letter explains the contract changes we believe need to be made to reflect our CFI submission.

Presenting the contract changes

To meet with some customers’ expectation that we share the contract changes which could arise from the Ofcom decision, we are pleased to provide a redlined version of the ALC which shows the amends we believe would be required to move delivering Access mail to weekdays only and on a D+3 basis (as per our CFI submission).  As you will see the changes are confined to the following areas of the ALC:

• a new definition of “Weekday” in Schedule 1 (page 51);
• an amend to bullet (k) of the interpretation section (page 53);
• amendments to the D+2 Service Standard provisions at paragraphs 2.1 to 2.5 and paragraph 2.11 of Schedule 2 (pages 54-57); and
• equivalent changes to the Mailmark Economy Service Standard provisions at paragraphs 3.1 to 3.5 and paragraph 3.11 of part 2 of Schedule 8 (pages 129-132).

At the 15 July workshop, customers asked whether there would be other changes to existing operational process requirements under the ALC, such as forecasting and handover days into Mail Centres. We can confirm that other than the changes reflected in the redlined version above, we do not expect any other contract amendments which would change customers’ existing requirements under the ALC (including the User Guide). 

Extending the consultation deadline

So that you can consider the implications of our proposed amended change provision and the ALC changes presented above, we have decided to extend the deadline for responding to our consultation to 14 August 2024.  The full consultation document can be found here.  

In addition to the two questions we have asked in the consultation we would like to pose a further question:

Based on the contract changes presented by Royal Mail on 31 July 2024, do you have any specific observations on a 70 days’ notice period to implement the changes?

Please send your feedback to Ravi Chauhan (Access Contract Manager) at ravi.chauhan@royalmail.com.

If you have responded to the consultation already, we will be in touch to discuss your submission further. Any other customers who wish to discuss the consultation with us in more detail can arrange a 121 via their Account Director.

Following the closing date for comments, we will consider the responses with a view to finalising our proposals and sharing these with you in the form of a response document on or around 26 September 2024. During this period of dialogue, Royal Mail will seek to engage with all customers directly wherever possible to ensure a full understanding of their views.

Delivery visibility

We acknowledge that customers have fed back that if USO reforms were to materialise, posting customers (i.e. senders) may require more information about when items would be delivered to recipients under an alternate day delivery model.

To help with shaping a solution, we will shortly be inviting customers to take part in an online research questionnaire. The research is specifically targeted to understand the opinions of posting brands, and their supply chain providers, to ascertain their need for planning, scheduling and reporting tools. 

This research exercise is running separately to the above referenced consultation and any outputs from the exercise will be implemented in line with the provisions of the ALC.