Royal Mail’s parent company blamed the budget for its failure to return to profitability and warned it could not ignore price rises and redundancies in response.

International Distribution Services (IDS) said it had set aside £134 million in the first half of its financial year, £120 million of which was directly linked to Chancellor Rachel Reeves’ increase in employer national insurance contributions (NICs).

The Budget increased NICs by 1.2 percentage points to 15% from April 2025 and also reduced the threshold at which firms will start paying from £9,100 per year to £5,000.

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The company’s complaints echo those of other large employers; The retail industry claims it faces a £7bn rise in costs next year alone due to budget measures. The hospitality industry fears a £3.5bn hit.

Royal Mail It has 130,000 personnel. Chief executive Martin Seidenberg claimed the increase in NICs was uncompetitive because it employed many more people than its rivals.

He said this would accelerate the need for Royal Mail to seek greater automation and service reform.

Industry regulator Ofcom is currently investigating whether Royal Mail should be allowed to abandon Saturday deliveries for second-class letters.

Mr Seidenberg added: “We are seeing quite a significant burden from the national insurance increase.

“We are working on a range of measures but it is too early to say what we will do. These will relate to pricing, cost efficiency and other ways we can move forward.”

He concluded: “Anything that would affect our people would be a last resort, but we are working on it.”

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He said the budget-related loss meant IDS made a loss of £26 million in the six months to September 29; because the £134 million provision swallowed up the operating profits made in that period thanks to rising revenues.

The company has spoken of the challenges it faces as it continues to await the outcome of a government review into its proposed £3.6bn acquisition. Czech billionaire Daniel Kretinsky.

Terms The deal was announced in May however, it is currently subject to review under the National Security and Investment Act.

This is opposed by the postal workers’ union, which has long been at loggerheads with Royal Mail and IDS management.

The Communications Workers Union claimed that the company’s results announcement amounted to muddying the waters.

Deputy general secretary Martin Walsh said: “Royal Mail and IDS should never have been split as a company.

“This was done by the board to present Royal Mail as a no-brainer and create a false narrative that would lead to reduced postal services in the UK and the loss of tens of thousands of jobs.

“The fact that the overall company is already at break-even after years of gross mismanagement is testament to how well every postal worker in the UK is doing.

“It also shows that the company can have a brighter future if the focus is on properly rewarding its employees and serving its customers.”