Royal Mail fined £7.5m for missing targets

The Royal Mail was fined £7.5m yesterday for missing targets on two of its business services, hours before a planned 24-hour strike by postal workers.

Postcomm, the industry's regulator, said that the company's performance on postage-paid services had failed its customers. The fine, one of the biggest handed out by a regulator, was described as "heavy" by the Royal Mail, which is losing £750,000 a day.

The company will lose up to £10m today when 25,000 postal workers in London stage a strike over allowances.

Adam Crozier, Royal Mail's chief executive, said that the strike was "madness" given the financial pressure the company was under. The fine related to two business services that handle more than 6.7 million items of pre-paid letters a day, such as envelopes for film processing and bills. The target was to deliver 92.5 per cent of post the next day, but the services reached about 86 per cent.

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

Royal Mail advised people not to post letters in London today and warned that the backlog caused by the strike could take several days to clear.