There would be no changes to parcel deliveries under the new proposals.
“The world has changed, we’re sending a third of the letters we were 20 years ago,” said Natalie Black, Ofcom’s group director for networks and communications.
“We need to reform the postal service to protect its future and ensure it delivers for the whole of the UK.”
The regulator said Royal Mail’s delivery performance was “not good enough”, noting that it has fined the company more than £16m over the past 18 months.
But, among the reforms it is proposing, Ofcom has suggested reducing Royal Mail’s next-day delivery target for first-class post from 93% to 90%.
It has also proposed dropping the target for second-class mail arriving within three days from 98.5% to 95%.
The number of letters Royal Mail delivers has fallen from a peak of 20 billion in 2004-05 to 6.6 billion last year.
However, the price of stamps have continued to rise. Since 2022, Royal Mail has hiked the cost of a first class stamp five times from 85p to £1.65.
It has also increased the cost of a second class stamp over the same period from 66p to 85p.
Ofcom said making changes to second-class deliveries could save the loss-making Royal Mail between £250m and £425m.
“This could enable it to improve reliability and redeploy existing resources to growth areas such as parcels,” it said.
Emma Gilthorpe, chief executive of Royal Mail, said the proposals recognise the “urgent need for change” to protect the future of the USO.
“Our proposal was developed after speaking to thousands of people and is designed to preserve what matters most—maintaining a one-price-goes-anywhere service and first-class deliveries six days a week.
“Reform is crucial to support a modern, sustainable, and reliable postal service for our customers, our company, and our people.”
But the Post Office has objected to the changes.
“Our postmasters and customers, particularly those who are vulnerable, do not want to see a reduction in the Universal Service Obligation,” said a spokesperson for the Post Office.
“The proposals announced today put more pressure on postmasters who are already facing tough trading conditions.”
