Royal Mail is back in the black, borrowing costs put pressure on the Chancellor, and consultations on the new Data (Use and Access) Act 2025
Lessons have been learnt by the Royal Mail as they seek a welcome return to profit, the Chancellor feels under pressure as borrowing costs continue to rise, and we review the upcoming consultations on the new Data (Use and Access) Act 2025.
Six Lessons for Businesses from Royal Mail’s Return to Profit
After three years of losses, it’s been reported that Royal Mail has returned to profit under its new owner, Czech billionaire Daniel Kretinsky.
While the £12m profit (excluding redundancy costs) is modest compared to the £336m loss the year before, it marks an important shift for a company that has faced falling demand, rising costs, and hits to its reputation.
Royal Mail’s story provides food for thought on what it takes to adapt and grow your business in tough market conditions. Here are five lessons.
1. Shift Focus to Growth Areas
Royal Mail recognised that letter volumes are in long-term decline (down 4% in the latest year), but parcel volumes are rising (up 6%). By pivoting investment and strategy towards parcels – where customer demand and profitability lie – the business is working to realign itself with market reality.
The lesson? Analyse your income streams to see if there are any areas where customer demand is increasing. Then focus more resources in that area, even if it means letting go of parts of the business that once seemed core.
2. Streamline Operations
Royal Mail has already stopped second-class letter deliveries on Saturdays to save costs. The Universal Service Obligation (USO) requires Royal Mail to deliver letters six days per week, Monday to Saturday, and parcels Monday to Friday.
However, the USO is currently being reviewed and Royal Mail has argued that reducing second-class deliveries to every other weekday would save up to £300 million a year. It feels this would give it a “fighting chance.”
The lesson? Regularly review the way your business operates to see if you’re doing work that drains resources but adds little value. Small changes in the way you do things could unlock big savings.
3. Innovate for Customer Needs
Royal Mail plans to install 3,500 solar-powered parcel post boxes across the UK. Solar panels on the top of the post boxes will power a digitally-activated drawer allowing for the posting of items as large as a shoebox.
Customers will be able to use the Royal Mail app to use the service and can request proof of posting and tracking of their parcel, making it a more convenient way for customers to send small parcels.
The lesson: Innovation not only can improve your reputation as a sustainable business but also help you better meet the needs of your customers. Innovation doesn’t have to be high-tech or complicated. Ask: ‘What small changes would make my customers’ lives easier?’
4. Invest in Brand and Trust
Despite foreign ownership, Royal Mail kept its name, UK headquarters, and tax residency for at least five years. This was an agreed condition when Royal Mail was bought out, and the government has kept a so-called “golden share” that allows it veto rights on certain changes. However, this requirement has helped to maintain continuity and trust with customers.
The lesson? In times of change, you can reassure your customers by keeping the things they rely on most consistent – whether that’s your level of service, how you communicate with them, or the quality of your products. Familiarity helps build trust and loyalty.
5. Be Willing to Make Tough Calls
Royal Mail has shed staff, absorbed strikes and endured reputational knocks. Yet leadership has made difficult and sometimes unpopular choices to put the company back on a sustainable path.
The lesson? Growth often requires tough decisions, whether on staffing, pricing, or cutting loss-making activities. Avoiding them only delays how long it can take to put the business back on a positive footing.
6. Adapt Business Models to Long-Term Trends
The shift from letters to parcels reflects a deeper societal trend – digital communication replacing paper. Royal Mail’s survival depends on embracing this shift rather than resisting it.
The lesson? Take time to examine what the long-term trends in your industry are. Are you positioned to thrive in five or ten years’ time, or might you be clinging to models that show signs of being in decline?
What’s the key takeaway from all this?
Royal Mail’s modest profit shows that even a 500-year-old organisation can adapt when forced to. Focusing on growth areas, cutting what no longer works, innovating around your customers’ needs, investing in trust, making tough calls and staying in touch with long-term trends can help your business continue to grow and thrive.
If you’d like to talk through how these kinds of lessons could apply to your own business – whether that’s managing costs, adapting services, or keeping customers onside – we’d be happy to help!
See: https://www.bbc.co.uk/news/articles/cger3w129l0o
Rising Borrowing Costs Put Pressure on the Chancellor
The UK government is facing a fresh financial squeeze after long-term borrowing costs climbed to their highest level in a generation. The yield on 30-year government bonds (known as gilts) has reached 5.72% – the highest since 1998.
For the government, this means it is now significantly more expensive to borrow money, adding pressure on Chancellor Rachel Reeves to increase taxes ahead of the Budget later this year.
For businesses, tighter government finances could shape tax and spending decisions over the coming months.
Why borrowing costs matter
Governments raise money by selling bonds to investors, promising to repay them in future with interest. The yield on those bonds – effectively the interest rate – has been rising for months. Higher yields mean the government must spend more just to service its debt, reducing the funds it has available for day-to-day spending or investment.
Rachel Reeves has set herself two “non-negotiable” fiscal rules:
- By 2029–30, all day-to-day government spending must be funded through tax income rather than borrowing.
- Government debt must be falling as a share of national income by the same year.
The challenge is that her buffer – the margin of safety built into her plans – is slim at around £10bn.
Why are costs going up?
The UK is not alone. Yields have been climbing in Germany, France, the Netherlands and the US. Several factors appear to be driving the change.
The World Trade Organisation has said the world is currently “experiencing the largest disruption to global trade rules” in 80 years, with the impacts from the US tariffs perhaps not likely to be fully felt until next year.
It also appears that investors may be selling off UK government debt due to concerns over the government’s financial plans, and this increases the rates that need to be offered to attract investors.
What this means for the Autumn Budget
One economist has estimated that Reeves may need to find between £18bn and £28bn in extra revenue at the Budget to avoid breaking her own fiscal rules. That raises the likelihood of tax rises.
The government has so far stuck to its manifesto pledge not to raise income tax, VAT, or national insurance for “working people”. Assuming this continues, that limits the options available for raising taxes, but several possibilities are being speculated on. These include:
- Extending the freeze on income tax thresholds – this so-called “stealth tax” drags more people into higher tax bands as wages rise.
- Reforming property taxes and stamp duty.
- The introduction of National Insurance for landlords.
At this stage, these remain as speculation but they indicate that the Autumn Budget could be a challenging one. For the Chancellor, the challenge is not only meeting her fiscal rules but doing so in a way that maintains confidence in the UK economy.
What this could mean for your business
For business owners, the headlines about bond yields and borrowing costs might seem distant, but the consequences could well be felt over the coming weeks:
- Potential tax changes – measures could be introduced to raise revenue.
- Economic headwinds – higher borrowing costs for the government may translate into higher financing costs across the economy, including for businesses seeking loans or investment.
- Policy uncertainty – until the Budget is delivered, businesses may find it harder to plan for tax and cost pressures.
Looking ahead
For businesses, the best approach for the next few months may be to plan cautiously. For instance, it would be worth stress-testing your business finances to see how they would cope with possible tax rises or higher borrowing costs.
The Budget later this year will set the direction for government finances and, by extension, the business environment. Rising borrowing costs have narrowed the Chancellor’s options, meaning that decisions in the autumn could well have direct consequences for businesses across the UK.
We will continue to keep you posted on the Budget news, but in the meantime, if you would like any help looking at how your business finances may be affected, please give us a call. We would be happy to help you!
See: https://www.bbc.co.uk/news/articles/cy989njnq2wo
ICO Launches Consultations on New Data Protection Rules
The Information Commissioner’s Office (ICO) has begun consultations on two important changes coming into force under the new Data (Use and Access) Act 2025 (DUAA).
The consultations focus on:
- Recognised legitimate interest – a brand new lawful basis for handling personal information.
- Data protection complaints – new requirements for all organisations to have a process in place for handling complaints.
Recognised legitimate interest
This new lawful basis is separate from the existing “legitimate interests” ground and allows organisations to use personal information more confidently for certain pre-approved situations. These include:
- Crime prevention and public security.
- Safeguarding and emergencies.
- Sharing information to help another organisation carry out its public tasks.
The ICO will be providing detailed guidance and examples to help organisations apply this new lawful basis correctly. Public authorities, however, are expected to continue using the existing “public task” lawful basis.
The consultation on this area closes on 30 October 2025.
Data protection complaints
By June 2026, every organisation must have a process in place for handling data protection complaints. Complaints could come from anyone unhappy with how their personal information has been used.
The new Act requires organisations to:
- Give people a way of making data protection complaints to them.
- Acknowledge they have received a complaint within 30 days of receipt.
- Take appropriate steps to respond to a complaint, including making appropriate enquiries and keeping people informed, without undue delay.
- Telling people the outcome of their complaints, also without undue delay.
The ICO’s draft guidance explains the new requirements and what organisations must, should and could do to comply. Helpful tips and practical advice are included.
The consultation on this guidance is open until 19 October 2025.
What next?
Deputy Commissioner Emily Keaney emphasised the importance of these consultations: “These consultations provide us with a real opportunity to listen, learn and lead with clarity and we encourage all interested parties to engage with our consultations and help shape our final guidance to ensure it is robust and fit for purpose.”
Whether you plan to respond or not, reviewing the draft guidance could help you plan ahead for the June 2026 deadline as you assess whether you already have a clear process for handling complaints and, if not, what changes are needed.