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'Only realistic solution' to save Post Office Network is State funding of €17m

The report, which doesn’t take in the warns starkly of the need for this action to be taken within months.

Image: Eamonn Farrell via RollingNews.ie

THE STATE SHOULD provide the Post Office Network with €17 million a year from next year through a Public Service Obligation (PSO), an independent report by Grant Thornton has concluded.

It costs around €70 million to run the Post Office Network, the Network generates around €53 million in revenue, which leaves a shortfall in €17 million. 

The Post Office Network is at a “critical juncture”, the report said, and the financial viability of the Network is being “challenged like never before”.

The report warns starkly of the need for this action to be taken within months as the Network “faces significant levels of unrestrained closures by the end of 2021”.

The main findings include:

  • The report projects the annual cost of running the Post Office Network in 2021 at €70m generating a retail revenue of €53m, leaving a €17m shortfall. 
  • Average losses of €19,181 are forecast per Post Office per annum from 2021 impacting all Offices small, large, urban and rural.

A €17 million Public Service Obligation contract – which the report found is the “only realistic solution” support the Post Office Network – would involve the Post Office delivering services of a general economic interest.

The Grant Thornton report argues that this “would result in an estimated Social Value for Ireland of between €344 million and €776 million”.

The Irish Postmasters Union (IPU), the body representing independent postmasters, commissioned the report ‘Review of the economic contribution and financial sustainability of the Irish Post Office Network’.

The Postmasters are arguing that under a Public Service Obligation, this €17 million could be granted. General Secretary of the Irish Postmasters’ Union Ned O’Hara said that the Post Office Network do provide “a lot of services that they don’t get paid for”.

Post Office Network Source: Grant Thornton report

45 offices belong to An Post and the rest are contracted to 899 postmasters. O’Hara said that postmasters would resign or retire or leave the industry if this shortfall is not met.

The Postmasters has argued that they have not been given new government services, but this alone wouldn’t be enough to meet this shortfall at this stage.

An Post released a statement to say that it notes the report from the Irish Postmasters’ Union, and that both of An Post’s networks – the delivery network and the Post Office network – are performing “very well” through the crisis.

An Post added that it does recognise that postmaster incomes and footfall into post offices have come under increased pressure due to the double social welfare payment schedules during Covid-19 and is working with Government to restore these.

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During the pandemic, the collection of all social protection payments at Post Offices were reduced from every week to every two weeks. The Postmasters have called for it to return to a weekly collection. 

The report identified the pandemic as an added difficulty, after postmasters reported a 25% reduction in transactions in August 2020 compared to 2019.

“Covid-19 undoubtedly places a further strain on the network due to the dramatically reduced levels of economic activity, changes in the frequency of social welfare payments and the resulting customer footfall which generates vital ancillary revenue streams upon which the network relies,” the report reads.

Ned O’Hara added that postmasters want to stay in business and serve the public long into the future. He said the public favours the Government financially supporting the network.

“Independent research carried out by RED C in February found that: 91% said their Post Office provided a valuable service to the local community, 86% support the Government providing financial support to keep their Post Office open and 86% want more State services available at their Post Office,” he said.

With reporting by Garreth MacNamee

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