The European Commission has authorised a further £180 million (€212million) of public assistance to the UK Post Office Ltd for the funding of its branch network forthe coming financial year.
The Commission concluded that the aid was compatible with EU rules “because it does not over-compensate the net costs of the important public service tasks entrustedto Post Office Ltd, and so does not give the Post Office Ltd any unfair competitive advantage”.
The payment covers a period of one year, starting 1 April 2011. TheCommission also authorised the continuation, over the same period, of existing loan facilitiesfunding the provision of cash services at post office counters.
Joaquín Almunia, Commission vice president in charge of competitionpolicy, said: “The aid will enable the UK post office network to continue performing itsfundamental social and economic role and important public service tasks, without unduly distortingcompetition.”
Post Office Limited (POL), a subsidiary company of Royal Mail Group,operates a nationwide network of around 11,500 post office counter outlets. These outlets provideover-the-counter access to social benefit payments, basic banking services and other services inthe UK, and therefore act as focal points for the communities they serve, the Commission pointedout.
“The proposed measures would prolong by one year a Network Subsidy Paymentof £180m (€211m) to keep open unprofitable offices, for example in rural areas, and a WorkingCapital Facility up to a ceiling of £1.15 billion (€1.35 billion), which enables POL to hold enoughcash to carry out its public service obligations”, the Commission said. The current authorisationof these measures expires on 31 March.
“The one-year extension is necessary for POL to continue carrying outservices of general economic interest entrusted to it by the UK government,” the Commissionadded.
The UK authorities also notified the terms of the Post Office Card Account(POCA) contract signed between POL and the Department of Work and Pensions (DWP) on 5 March 2009.The POCA is a basic current account run by POL on behalf of DWP which is used for paying socialbenefits to people who do not have any other bank account.
The Commission concluded that the continuation of the Network SubsidyPayment and the Working Capital Facility, as well as any aid contained in the terms of the POCAcontract is, until 31 March 2012, compatible with the EU’s Internal Market (Article 106(2) of theTreaty on the Functioning of the European Union (TFEU)).
“The aid did not exceed the cost for fulfilling the services liable to becompensated under the framework and the net cost for providing access to universal postal servicesfor Royal Mail constitutes an ‘unfair financial burden’ for POL in the meaning of Annex I of thePostal Directive,” the Commission said.
