We can’t allow the Post Office network disappear

DECISION time is drawing in on the future of many Post Offices — and it is time for the Government to invest in and maintain the Network.

Postmasters wish to continue to serve the public, support communities and vitalise local economies — however, a new report by Grant Thornton has shown the challenges that are faced and decisions that must be made.

The report

A review of the economic contribution and financial sustainability of the Irish Post Office Network has highlighted that the reality facing the network is stark, but also gives clarity on what can be done.

The report says that the Network is not sustainable beyond 2021 — and very significant closures are inevitable across all types of Post Offices, urban, rural, large and small.

It says that Government must decide if it wishes to sustain the Network or not. If the answer is ‘yes’, then an annual Public Service Obligation (PSO) contribution of €17 million will be required. If the answer is ‘no’, then the Post Office Network will be decimated during 2021.

The findings set out very real challenges, which are too large to be addressed by any other means than a PSO:

The annual cost of running the Post Office Network in 2021 is €70m, generating a retail revenue of €53m, leaving a €17m shortfall

Average losses of €19,181 per Post Office are forecast per annum from 2021, impacting all offices small, large, urban and rural

The shortfall is driven by the ongoing transfer of services traditionally delivered by the Network to an ‘online first’ approach and a reduction in the traditional mails business

Covid-19 is placing further strain on the Network.

While this paints a sombre vista, the report also highlights what has long been known to Postmasters and businesses – that closure of Post Offices would impact very negatively on local economies.

The report shows that the amount of financial support required is small compared to the level of economic and social value which Post Offices continue to bring.

28% of the population (1.3 million people) continue to use the Post Office every week, including the annual distribution of €4.6 billion of social welfare related cash.

Recipients of social welfare payments tend to have a high propensity to spend and a low propensity to save. This means that for every € received by a social welfare recipient, a significant percentage of it is spent immediately and locally.

And it is estimated that cash spent locally then has on onward local economic multiplier of two.

Furthermore, Grant Thornton applied a model used to calculate the social value of the UK Post Office Network and estimated an annual social value of €334-€776 million for the Irish Post Office Network.

The fact is that the Post Office Network continues to contribute far more to the economy than the cost of supporting it.

Furthermore, Post Offices also provide a role for those who are financially or socially excluded and help to reduce fraud – as part of a difficult to measure but real social contribution.

The question which Postmasters are often asked is – why support the Network when many consumers are choosing online?

The answer is not a case of either or, but providing both options. Despite the growth of online transacting Post Offices continue to generate footfall and support the economic vitality of their localities.

If payments are made online, there is no need to visit the town or village – and the local economy as a whole suffers.

The problems being experienced by the Post Office Network here in Ireland are not unique. The increasingly ‘normal’ approach throughout Europe is to introduce Government backed funding supports which recognise the economic and social roles and maintain Post Office Networks. This has already been done in the UK, Poland, France, Italy, Belgium, Finland and Spain with European Commission approval.

There is also already precedent for using PSOs in Ireland, in property, agriculture, telecommunications, transport, energy and finance.

COVID-19 threatens to leave a very negative legacy on rural towns and villages. The Post Office provides a pillar business which can remain in the community during and after the pandemic.

It is important to clarify that Postmasters, who run our Post Offices, are not employees of An Post. They are independent providers under contract to An Post. The Network comprises 899 Postmaster and 45 An Post operated Post Offices in the country.

Independent research carried out by RED C in February found strong public support for Post Offices: 91% said their Post Office provided a valuable service to the local community, 86% supported the Government providing financial support to keep their Post Office open and 86% wanted more State services available at their Post Office.

The economy and society would be considerably diminished if the Post Office Network were allowed disappear, and it will disappear without support.