Call for input: Review of postal regulation – pricing and affordability

Royal Mail is required as the universal service provider to deliver a range of postal services to homes and businesses at affordable prices which are uniform throughout the UK. Postal services remain a vital communications tool for many people and businesses, and we know, from our research on user needs, that an affordable service is particularly important to people. At the same time, the number of letters being sent has halved over the past decade and continues to decline, driving up unit costs. The changing market dynamics have weakened Royal Mail’s financial position and threaten the sustainability of the universal postal service. In July we set out our decision to reform the universal service to give it a better chance of survival but consider that there remains a material risk to its sustainability. It is in this context that we are carrying a new review of our approach to pricing and affordability.

In January 2024 we concluded our previous review of affordability. We decided to continue our approach of imposing a safeguard cap on Second Class letters to ensure people retain access to an affordable service, while leaving Royal Mail with pricing flexibility for its other universal services. We set the cap at the current price at that time, increasing it in line with inflation (Consumer Price Index (CPI)). We decided to put this measure in place for three rather than five years because of evidence that from April 2027 a cap at this level might have a greater impact on the financial sustainability of the universal service.

We also noted that a safeguard cap was not the only way to address the affordability risk and said we would engage with Royal Mail to consider alternative approaches to ensuring affordability, for example a targeted discount scheme for vulnerable customers. We have undertaken further work on such a scheme to explore whether it could be the answer, or part of the answer, to addressing affordability risks in the future. In this Call for Input (CFI) we set out our early thinking on this, including the key elements required for an effective scheme.

We also set out other issues relating to affordability and pricing, and possible regulatory responses, seeking stakeholder input on these.

Responding to our call for input

Please submit responses using the response form no later than 5pm 5th December 2025.