Watchdog fines Royal Mail £7.5m

Royal Mail suffered a fresh blow yesterday after the postal regulator Postcomm fined it £7.5m for poor performance.

The fine, for missing first-class delivery targets, came on the eve of a planned 24-hour strike in London by postal staff belonging to the Communication Workers Union, which could cost the loss-making Royal Mail a further £10m.

The penalty handed down by Postcomm relates to two of the mail services provided to business customers. The company was served with an enforcement order last December requiring it to raise service quality but despite this Royal Mail failed to improve performance sufficiently, falling 6 per cent below its target of delivering 92.5 per cent of post the next day.

Graham Corbett, the chairman of Postcomm, said: "Most businesses lose customers and lose money when they provide poor service. I hope this penalty will drive home to people at all levels in Royal Mail the message that customer service matters."

Adam Crozier, Royal Mail's chief executive, said the fine delivered a "stark message" to all staff and further tightened the financial pressure on the organisation, which lost nearly £2m a day last year. "It is unlikely the regulator will make any allowance for falls in customer service caused by a strike," he added.

Royal Mail avoided a nationwide strike over pay by the narrowest of margins last month.