Mr. Bobby Kerr:

I thank the Chairman and the committee for inviting me here today.

I am the author of the final report of the Post Office Network Business Development Group that was published in December 2015. Subsequently, I was asked by the board of An Post to chair a working group of invested parties, that included directors of An Post and members of the Irish Postmasters Union, to make implementation recommendations for the future of the post office network in urban and rural Ireland. I worked from January to December 2015 on the initial report and from January to December 2016 on the supplementary report that I submitted to the company on 24 December or Christmas Eve 2016.

The board of the company has yet to consider my report so I shall give a relatively high level summary of its contents to the committee. There are 1,130 post offices in the network. It was, and still is, my stated ambition to keep open as many of them as possible to serve the needs of the community, particularly in rural Ireland, where quite often the post office is the last remaining business in a town or village. The market has changed and the product mix and service that customers require has also changed, which means the network must change to meet consumer requirements. Two thirds of business is transacted in the top 350 of the 1,130 post offices. As the cost of keeping open more than 530 offices that are not required to fulfil the social welfare contract is €10 million per annum and rising, radical action is necessary.

I can say the following having worked closely with the IPU and the company for two years. While all parties do not agree unanimously with my recommendations, there is agreement on a large element of them. Further negotiations are necessary between the company and the IPU of a contractual nature in order that a new contract can be accepted and implemented as soon as possible for anyone who wishes to take up such a contract.

In order for the post office network to transition to a new model that is more about the provision of financial services in larger offices and providing limited post office services and more community-based services in rural post offices, I propose that the Government invests €56 million over a four-year period commencing in January of this year. My overall recommendations include a proposal for three new categories of post office, in a four-year proposition with a different solution for each category of post office, and its commencement date should be now or imminent. I propose a capital investment plan for the larger offices, as well as a limited exit package for an estimated 80 offices over four years, because some post offices desperately want to leave the network and I do not believe there is real value in keeping them. I propose a co-location incentive to incentivise the relocation of offices into bigger retail formats, which is where a stand-alone post office would merge with a shop operated by the likes of Centra or SuperValu, a bonus incentive for larger offices and a financial incentive for the top post offices to move to a new contract. This would mean that post offices of the first and second categories would sign a new contact that is less favourable to them, thus ensuring savings for the company. I also propose scaled income protection to include full protection for smaller offices and limited protection on a scaled basis as revenue rises in rural offices. In addition, I have outlined a specific responsibility for An Post and the IPU in terms of receiving Government support.

On the commitment required from the postmasters, they must operate the company’s proposed basic bank account, as was referred to earlier, and I propose that all contractors must sign new contracts in grade 1 and 2 post offices. The option to co-locate is also encouraged. The commitment by An Post, as proposed, is to endeavour to keep the network open, to advertise all vacancies and to provide financial transparency for the Government and Irish Postmasters Union, accepting the principle that some matters are commercially sensitive and cannot be shared. The Government must also make a commitment in respect of my recommendations. It must make motor tax services available at all post offices. Equally, it must promote - to the Department of Social Protection - post offices as an option in the context of the collection of social welfare payments. The Government must give An Post the option of distributing additional government services and must underwrite the four-year deal.

With the support of Government during the next four years, the post office network can remain largely intact and transition to a model that is in line with customer requirements. The new grades of post office will allow for a better commercial proposition in the busier offices and offer protection on a scaled basis to the outlying rural offices. I welcome any questions that members may have and I thank the committee for listening to my proposal.