Seventh Report - Royal Mail

It is clear to us that, despite statements in evidence on 17 January by Simon Thompson, the Chief Executive Officer of Royal Mail, PDA data has been used to track the speed at which postal workers deliver their post and, subsequently, for performance management, both explicitly in disciplinary cases and as a tool by local managers to dissuade staff from stopping during their rounds. Based on the evidence, it seems clear to us that, whether intentionally or inadvertently, Mr Thompson misled the Committee when he first gave evidence by giving an answer which was not wholly accurate.

We acknowledge that there may be a case for Royal Mail to use PDA data to achieve consistent and effective performance, as long as it is undertaken within the terms of established policies and following consultation with the workforce.

Mr Thompson asserts that the evidence we presented to him was due to failures to apply company policy. However, we do not believe that such widespread errors in applying company policy could happen without the direct or indirect approval of management at Royal Mail.

If Mr Thompson’s assertion is correct—namely, that there are errors in applying company policy at Royal Mail—then these would appear to be widespread, and we can only conclude that the level of management oversight at Royal Mail is negligent and warrants a formal review by the Board.

The Committee is concerned by the discrepancies between stated policy and the actual use of PDA data at Royal Mail for individual performance management. We therefore invite the Information Commissioner to review the legal basis for the collection, storage and use of this data and to report their findings to the Committee by the end of 2023.

We conclude that, despite Mr Thompson’s statements to us on 17 January, which he qualified on 22 February, Royal Mail has deprioritised delivery of letters as a matter of company policy. While this might have been a legitimate approach at times during the pandemic, to handle exceptional volumes of parcels in order to ensure safe access through delivery offices, we do not believe it is justifiable over the long term.

We believe that Royal Mail has systemically failed to deliver against parts of its Universal Service Obligation. We recognise the challenges of both the pandemic and ongoing industrial action, but the evidence we have suggests this systemic failing has been taking place before, between and during these events.

We therefore call on Ofcom to undertake an enforcement investigation into Royal Mail’s delivery of the USO and to report to this Committee by the end of 2023. In doing so, we encourage Ofcom to meet with postal workers from across the country to take evidence on verbal briefings to deprioritise letter deliveries and to do so on a timeframe which spans pre-pandemic to the current day. (Paragraph 31) Royal Mail 17

Lastly, we call on the Royal Mail board to reflect on its decision to exclude the delivery of the USO from the long term pay and incentive structure for its senior managers and to reconsider whether this is the right approach. We encourage the Royal Mail board to add delivery of the USO to its pay and incentive structure and to write to this Committee to set out its conclusions.

We are in little doubt that the blanket approach by Royal Mail in not paying sick pay during periods of strike action will have been unduly harsh on those who were genuinely unfit for work and who may, through no fault of their own, have been unable to provide the fit note required. (Paragraph 35) The future for Royal Mail

Royal Mail is a brand with a long and proud heritage, and postal workers have been rightly celebrated as key workers. We want to see Royal Mail on a firm and sustainable footing for the future. However, it is clear that the landscape has changed a great deal since the passing of the Postal Services Act 2011 and the Universal Postal Services Order made in 2012. The commercial reality is that the balance between letter and parcel volumes has tilted, perhaps decisively.

We recognise the importance of the Universal Service Obligation in delivering a vital public service, and we hope that Royal Mail seizes the commercial opportunities available to it in accessing every household across the country on six days of the week. We call on the Government to formally engage with Royal Mail, following the outcome of Ofcom’s enforcement investigation, to secure the future of the Universal Service Obligation and Royal Mail, and to provide an initial report to this Committee no later than the end of 2024.

Finally, we put on record that the issues at Royal Mail covered by this Report have caused the Committee great concern. Regarding the current industrial dispute, we call on the board of Royal Mail and the Communication Workers Union to seek to resolve the outstanding issues as quickly as possible. (Paragraph 48) 18 Royal Mail