Price of postage stamp to rise by more than 20 cent

The cost of a standard postage stamp is likely to rise by more than 20 cent next year as a result of the Government’s decision to remove the price cap.

This would represent the third rise in the price of stamps in the past two years but David McRedmond, chief executive of An Post, said the increase coupled with cost savings of €10 million should enable the company to reach breakeven in 2017.

An Post is set to record a loss of between €12 million and €15 million in 2016 and would lose about €40 million next year without implementing the price rises and costs savings, he added.

A standard stamp to Ireland costs 72 cent. This is likely to rise to between 90 cent and €1, subject to changes in legislation and the approval of the board of An Post.

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Businesses who send letters in bulk and can avail of discounts will face price rises of about 15 per cent, Mr McRedmond said. The price changes are likely to be introduced in the first quarter of 2017.

Universal service obligation

The An Post CEO accepted that volumes would continue to decline but said the increase was necessary to counter the rising costs of its universal service obligation, which requires it to deliver mail to every house in the State every weekday for a set price.

“It will accelerate volume decline [in mail] but hopefully not too much,” Mr McRedmond said.

An Post expects to record a loss of around €50 million this year on its USO ( universal service obligation) services, up from €32 million in 2015. Until now, An Post has been in a position to subsidise the loss from other income but is no longer able to do so.

The company has also appointed international consulting group McKinsey to carry out a strategic review of the business and to advise the State company on its future structure.

Price cap

The Minister for the Environment Denis Naughten defended the decision to remove the price cap. He said the alternative was to reduce its five-day postal services across the country or to implement cuts to the network itself.

The minister said reduced mail volumes coupled with the impact of a 2.5 per cent increase in staff pay this year has led to a deterioration in An Post’s financial position.

Mr Naughten said he would draft legislation to allow for changes to be made to the Communications Regulation Act to remove the price cap.

The general secretary of the Irish Postmasters’ Union warned that increasing the price of stamps would reduce the volume of business and threaten the postal service.

"The network is in grave danger that it will disappear," Ned O'Hara said on RTÉ's Today with Sean O'Rourke. "We are a key resource for urban and rural communities. We want to do more for communities."

The Programme for Government commits to the retention and expansion of services at post offices.