Post office network faces collapse without support, report warns

The post office network will collapse if State support is not put in place urgently, a new report has found.

The report, carried out by consultants Grant Thornton and commissioned by the Irish Postmasters' Union, recommends that the State should introduce €17 million in annual public service obligation (PSO)funding.

It says the Government should invest with urgency in the post office network, as it provides a multi-fold economic and social return to communities, far in excess of the PSO requirement.

The report warns that without State support within the next few months, the network “faces significant levels of unrestrained closures by the end of 2021”.

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“The Irish post office network is at a critical juncture. The financial viability and sustainability of the network is challenged like never before in its history. Many local post offices, large and small, urban and rural, will likely be forced to close if the financial conditions under which they operate do not change in the short-term,”it says.

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,” it says.

The report says that PSO funding models for post office networks have already been introduced in the UK, France, Spain, Belgium, Italy, Finland and Poland with the approval of the European Commission. It urges the Government to follow this model.

The report says the financial shortfall is largely driven by the ongoing transfer of traditional post office services to online providers and a reduction in traditional mail business.

However, the report says that the post office network remains a highly valuable national asset which contributes far more to the economy than the cost of the PSO.

The report suggests that based on a model used in the UK to calculate the social value of the post office network there , “an estimated annual social value of the Irish post office network is €334-€776 million”.

It says that 28 per cent of the population (1.3 million people) continue to use the post office every week, including the distribution of €4.6 billion of social welfare payments.

The report says post offices play a crucial role in spin off support to other local businesses and economies, offer a service for those who are financially or socially excluded and provide a difficult to measure but real social contribution to communities

Post offices are run by postmasters who are independent providers under contract to An Post. There are currently 899 postmaster and 45 An Post operated post offices in the country.

The report warns that the problem is due to reach crisis point by mid 2021 as new contract payments paid by An Post to postmasters end.

“An Post financial supports are unsustainable in anything but the short term. Establishing alternative funding options to maintain a sustainable future for the post office network and for postmasters is now essential.”

The report also points to additional difficulties caused by the Covid-19 pandemic. Postmasters have reported a 25 per cent reduction in transactions in August 2020 compared to 2019.

The president of the Irish Postmasters' Union Sean Martin said the Government needed to act with urgency - and no further review, report, or working group process was now needed.

"We have already had the Bobby Kerr led independent review in 2016, followed by a detailed working group including Irish Postmasters' Union , An Post and Government in 2018. And there has been further review group process in 2020 and now we have a comprehensive financial, economic and social analysis from Grant Thornton."

“A Post Office PSO needs to be sanctioned this year and implemented by mid-2021. We do not have time to delay and do not need further evidence. The level of closures next year is potentially so significant as to mean a collapse of the Irish post office network as we know it.”

Irish Postmasters’ Union general secretary Ned O’Hara said postmasters wanted to stay in business and serve the public long into the future.