Summary

  • Ofcom proposes keeping the Second Class letter basket cap through 31 March 2028, with permitted increases no faster than CPI; this remains an open consultation, not a final decision.
  • The consultation records the CWU’s 9 October announcement pausing further DM26 rollout. Ofcom says stable financial evidence requires wide deployment and time in operation, making the evidence timetable less certain.

Ofcom’s proposal is an interim bridge, not a decision to freeze stamp prices. The regulator wants to extend the current safeguard cap for Second Class letters by one year, to 31 March 2028. Under the proposal, the maximum price across the covered basket could still rise, but by no more than the Consumer Prices Index. Responses are due by 5pm on 27 November. Ofcom’s final interim-cap decision is planned for the fourth quarter of 2026/27; the consultation itself remains open.

The evidence behind that bridge is now the more consequential question. Ofcom says the economics of the universal postal service are under pressure as letter volumes decline, while affordability and delivery quality remain regulatory concerns. It wants more information about the effects of the 2025 universal-service reforms, Royal Mail’s operating changes, service performance and possible targeted affordability measures before settling the longer-term price framework.

Royal Mail agreed a revised delivery model, DM26, with the Communication Workers Union in April and began implementation in June. The company expected nationwide rollout before Christmas. But Ofcom’s consultation footnote says the CWU announced on 9 October that it would pause any further rollout until there was a credible agreed plan for units not working as intended. Ofcom adds that Royal Mail requested immediate negotiations. In its 16 October update, the union said no additional delivery units would be deployed during the week beginning 19 October while discussions took place.

That is a union-announced pause to further deployment, not evidence that every live unit has stopped delivering mail or that the pause is permanent. The distinction matters because Ofcom says it will not have reliable, stable evidence about DM26’s financial effects until the model is widely deployed and has operated in delivery offices for a period. A slower rollout could therefore change when representative evidence becomes available, but the public record does not quantify the delay or its effect. Ofcom has not said that the pause alters its cap proposal or decision calendar.

The regulator is asking for time because both the service and the economics remain unsettled. Ofcom’s audited figures for 2025/26 show 75.7% of First Class mail arrived the next working day, against a 93% target; 90.2% of Second Class mail arrived within three working days, against 98.5%. It is formally investigating that year’s target compliance. Those figures predate any final assessment of DM26 and do not isolate the model’s effect.

Ofcom says Royal Mail expects DM26 to produce £300m in savings, while whether or when those savings will materialise remains uncertain. Royal Mail has also committed to reinvest £500m of reform savings over five years and set out a quality-improvement path toward regulated targets by April 2027. The cap decision sits between those claims: removing the safeguard too early could expose users to price risk before service improves, while retaining it can constrain revenue during a period when the universal service’s sustainability is already under strain.

The proposed long-term review is still planned for later. Ofcom says it expects to consult on universal-service and access pricing in the first quarter of 2027/28, with a decision in the third quarter. For now, the relevant test is whether rollout resumes, whether deployed units operate long enough to yield stable cost evidence, and whether measured delivery outcomes improve. None of those results is settled by the consultation.

Sources