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Royal Mail given go-ahead to scrap second-class post on Saturdays

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Tom Espiner

Business reporter

Getty Images A Royal Mail post van next to a post box where a postal worker is emptying lettersGetty Images

Royal Mail will start to deliver second-class letters on every other weekday and not on Saturdays to help cut costs, the industry regulator has said.

Ofcom said a reform to postal service was needed as people are sending fewer letters each year, so stamp prices keep rising as the cost of delivering letters goes up.

The changes mean second-class letters will be delivered either on Monday, Wednesday and Friday, or on Tuesday and Thursday, in a two-week cycle.

Royal Mail welcomed the changes, which will take effect on 28 July, but the move was criticised by some consumer and business groups.

Under the current one-price-goes-anywhere Universal Service Obligation (USO), Royal Mail has to deliver post six days a week, from Monday to Saturday, and parcels on five from Monday to Friday.

Ofcom says Royal Mail will have to continue to deliver first-class letters six days a week.

“These changes are in the best interests of consumers and businesses, as urgent reform of the postal service is necessary to give it the best chance of survival,” said Natalie Black, Ofcom’s group director for networks and communications.

However, just changing Royal Mail’s obligations will not improve the service, she said.

“The company now has to play its part and implement this effectively.”

Royal Mail estimates it will take 12 to 18 months to implement the changes across its network.

It has been piloting the changes to delivery since February in 37 of its 1,200 delivery offices, and said it was “keen to move ahead with deployment as soon as possible”.

Ofcom estimates that Royal Mail could save between £250m and £425m a year by making the changes.

Royal Mail’s parent company, International Distribution Services (IDS), said Ofcom’s announcement was “good news for customers across the UK”, and that it would support a “reliable, efficient and financially sustainable Universal Service”.

Martin Seidenberg, IDS chief executive, said the changes reflect the “realities of how customers send and receive mail today”.

Ofcom is also making changes to Royal Mail’s delivery targets.

The company will have to deliver 90% of first-class mail next-day, down from the current target of 93%, while 95% of second-class mail must be delivered within three days, a cut from the current 98.5%.

However, there will be a new target of 99% of mail being delivered no more than two days late to incentivise Royal Mail to cut down on long delays.

Ofcom has fined Royal Mail three times since 2020 for missing delivery targets – £1.5m in 2020, £5.6m in 2023, and £10.5m in 2024.

Consumer group Citizens Advice said Royal Mail had a “woeful track record of failing to meet delivery targets, all the while ramping up postage costs”.

Tom MacInnes, Citizens Advice director of policy, said Ofcom had “missed a major opportunity to bring about meaningful change”.

“Pushing ahead with plans to slash services and relax delivery targets in the name of savings won’t automatically make letter deliveries more reliable or improve standards,” he said.

The UK Greeting Card Association also criticised the move, saying it was “concerned that a reduction in the second-class service, would lead to a reliance on uncapped, unregulated first-class mail that is increasingly unaffordable for businesses and consumers alike”.

The Liberal Democrats said Ofcom’s announcement was a “deeply worrying decision that could leave countless people who rely on these deliveries in the lurch”.

“People need to know that their post will arrive on time so they can go about their lives, and this move flies right in the face of that,” said the party’s business spokesperson, Sarah Olney.

The Department of Business and Trade, which oversees Royal Mail, said: “The public expects a well-run postal service, with letters arriving on time across the country without it costing the earth.”

People now use the postal service in a different way, so “it’s right the regulator has looked at this,” it said.

“We now need Royal Mail to work with unions and posties to deliver a service that people expect, and this includes maintaining the principle of one price to send a letter anywhere in the UK,” a spokesperson added.

The number of letters Royal Mail delivers has fallen from a peak of 20 billion in 2004-05 to 6.6 billion in 2023-24.

Since 2008, Royal Mail’s revenues from letters have fallen from £6.9bn to £3.7bn.

However, the price of stamps has continued to rise. Since 2022, Royal Mail has hiked the cost of a first-class stamp from 85p to £1.70.

Despite pushing up prices, in 2023-24, Royal Mail made a loss of £348m.

Alongside the delivery changes, Ofcom also said it had launched a review of pricing and affordability on Thursday, “which will consider concerns that many people and organisations have raised about stamp prices”.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said the change to less frequent second-class deliveries “will be music to the ears of Royal Mail’s new owner”.

The £3.6bn sale of Royal Mail to Czech billionaire Daniel Kretinsky’s EP Group was cleared by shareholders in April.



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Business

No imminent change to tax-free allowance

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There will be no immediate changes to cash Individual Savings Accounts (Isas), the BBC understands.

Chancellor Rachel Reeves was widely expected to announce plans to reduce the £20,000 tax-free allowance.

The move was aimed at encouraging more investment in stocks and shares, which the goverment says it will still focus on.

“Our ambition is to ensure people’s hard-earned savings are delivering the best returns and driving more investment into the UK economy,” a Treasury spokesperson said.

The Treasury is expected to continue to talk to banks, building societies and investment firms about options for reform.

An Isa is a savings or investment product that is treated differently for tax purposes.

Any returns you make from an Isa are tax-free, but there is a limit to how much money you can put in each year.

The current £20,000 annual allowance can be used in one account or spread across multiple Isa products as you wish.



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UK economy shrank unexpectedly in May

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The economy shrank by 0.1%, the second month in a row it has contracted.



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Trump threatens 35% tariffs on Canadian goods

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US President Donald Trump has said he will slap a 35% tariff on Canadian goods starting 1 August, even as the two countries are days away from a self-imposed deadline to reach a new deal on trade.

The missive came as Trump also threatened blanket tariffs of 15% or 20% on most trade partners, and said he would soon notify the European Union of a new tariff rate on its goods.

Trump announced the latest levies on Canada on Thursday in a letter posted to social media and addressed to Prime Minister Mark Carney.

The US has already imposed a blanket 25% tariff on some Canadian goods, and the country is feeling the pain of the Trump administration’s global steel, aluminium and auto tariffs.

The letter is among more than 20 that Trump had posted this week to US trade partners, including Japan, South Korea and Sri Lanka.

Like Canada’s letter, Trump has vowed to implement those tariffs on trade partners by 1 August.

The US has imposed a 25% tariff on all Canadian imports, though there is a current exemption in place for goods that comply with a North American free trade agreement.

It is unclear if the latest tariffs threat would apply to goods covered by the Canada-United States-Mexico Agreement (CUSMA).

Trump has also imposed a global 50% tariff on aluminium and steel imports, and a 25% tariff on all cars and trucks not build in the US.

He also recently announced a 50% tariff on copper imports, scheduled to take effect next month.

Canada sells about three-quarters of its goods to the US, and is an auto manufacturing hub and a major supplier of metals, making the US tariffs especially damaging to those sectors.

Trump’s letter said the 35% tariffs are separate to those sector-specific levies.

“As you are aware, there will be no tariff if Canada, or companies within your country, decide to build or manufacture products within the United States,” Trump stated.

He also tied the tariffs to what he called “Canada’s failure” to stop the flow of fentanyl into the US, as well as Canada’s existing levies on US dairy farmers and the trade deficit between the two countries.

“If Canada works with me to stop the flow of Fentanyl, we will, perhaps, consider an adjustment to this letter. These Tariffs may be modified, upward or downward, depending on our relationship with Your Country,” Trump said.

President Trump has accused Canada – alongside Mexico – of allowing “vast numbers of people to come in and fentanyl to come in” to the US.

According to data from the US Customs and Border Patrol, only about 0.2% of all seizures of fentanyl entering the US are made at the Canadian border, almost all the rest is confiscated at the US border with Mexico.

In response to Trump’s complaints, Canada announced more funding towards border security and had appointed a fentanyl czar earlier this year.

Canada has been engaged in intense talk with the US in recent months to reach a new trade and security deal.

At the G7 Summit in June, Prime Minister Carney and Trump said they were committed to reaching a new deal on within 30 days, setting a deadline of 21 July.

Trump threatened in the letter to increase levies on Canada if it retaliated. Canada has already imposed counter-tariffs on the US, and has vowed more if they failed to reach a deal by the deadline.

In late June, Carney removed a tax on big US technology firms after Trump labelled it a “blatant attack” and threatened to call off trade talks.

Carney said the tax was dropped as “part of a bigger negotiation” on trade between the two countries.

The Prime Minister’s office told the BBC they did not have immediate comment on Trump’s letter.



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