The European Commission yesterday authorised UK government funding of EUR 460 million for publicservices performed by Royal Mail’s post office network, saying they complied with state aid rules.
Losses incurred by Post Office Ltd. for providing cash and bill payment facilities, andaccess to Royal Mail’s universal service, have been covered by the government with the EC’sapproval since 2003.
The latest authorisation allows funding of GBP 313 million (EUR 460 million) for thefinancial year beginning 1 April 2007 and lasting till 31 March 2008. The Commission approved aseparate EUR 300 million package to maintain loss-making rural post offices last year.
“Public services are a vital part of the European economy, and the Commission recognisestheir importance. Aid can therefore be approved where the amount is strictly limited to what isnecessary to cover the costs of public service obligations,” explained EU competition commissionerNeelie Kroes.
Post Office Limited is a subsidiary of Royal Mail, the UK’s state-owned postal servicesprovider, and operates the UK’s network of around 14 000 post offices – 2,500 of which are to closeunder plans drawn up in December. The network made a loss of some GBP 4 million a week last year,despite subsidies.
The Commission is still to give its decision on whether a further EUR 2.65 billion of loansand facilities made available to Royal Mail by the government since 2001 are legal.
Yesterday’s was separate from the main investigation and concerned only the compensation ofcosts specifically incurred by Post Office Ltd., the Commission said in a statement.
