Banks should subsidise post offices O'Rourke

Commercial banks should pay millions of pounds each year to subsidise rural post offices, according to the Minister for Public Enterprise. The subsidies should take the form of annual cash payments over and above any transaction charges the banks agree to pay the post offices for taking over some bill-paying services.

In Luxembourg yesterday, Ms O'Rourke said that, although the major banks had signalled their intention to close many rural branches, they owed a debt of honour to the communities that had supported them over the years.

"In the vein of social-economic integration, the banks should seek to give subvention to the upkeep of post offices where they are pulling out, far above the payment of transaction fees," Ms O'Rourke said.

Adding that the big banks had reported profits exceeding £1 billion (€1.27 billion) last year, Ms O'Rourke said they stood to benefit handsomely from a cut in the corporation tax rate from 36 per cent to 12.5 per cent. The lower tax rate could contribute £200 million a year to each bank's profits.

Ms O'Rourke declined to say how much the banks should contribute but officials suggest the annual post office subsidy could amount to £10 million a year. In a deal to be announced next week, the banks are likely to agree to pay the post offices transaction fees for services such as bill-paying. Ms O'Rourke this week announced the establishment of an inter-Departmental group of experts to look at ways of stemming An Post's losses. A report on An Post has predicted that the postal service will soon be bankrupt unless the State changes the way it is funded.

The report by Mr Phil Flynn, an industrial relations consultant, suggested An Post would need a subsidy of £83.2 million by 2005 to keep its entire post office network open.

The Minister said she would present her proposal to the inter-Departmental group but insisted she was not attempting to coerce the banks into action. "I am not putting pressure on the banks. I am putting forward my opinion. I think it's feasible and possible," she said.

Ms O'Rourke was in Luxembourg for a meeting of EU ministers to discuss the deregulation of Europe's telecommunications industry. She said that, although the Government had hoped to award 3G mobile phone licences by next month, the announcement could be delayed by discussions with the telecoms regulator over how high the licence fee should be.

The EU Telecommunications Commissioner, Mr Erkki Liikanen, said yesterday that many new telecoms companies had no incentive to pursue access to phone lines connecting individual homes and offices. These local connections, also known as the local loop, are generally owned by former national monopolies and Mr Liikanen said the liberalisation process should be speeded up.