Cabinet gets PO advice today

Legal advice to be given by the Attorney General to the Cabinet today could decide the future of more than 1,000 post offices throughout the State.

Mr David Byrne will say if the £35 million contract held by An Post to provide social welfare payments can be exempted from an EU directive requiring that large State contracts be subject to competition. If, as was speculated last night, his advice is that the payments are a social rather than an economic service, it will allow An Post to retain the contract.

The prospect of putting the payments out to tender threatens the economic viability of many rural post offices and confronts the Government with an embarrassing and potentially damaging controversy in the run-up to the European and local elections.

It has been claimed that the loss of the Social Welfare contract could lead to the closure of up to 1,500 of the 1,911 post offices.

The Minister for Public Enterprise, Ms O'Rourke, and the chief executive of An Post, Mr John Hynes, had a 45-minute meeting yesterday to discuss the company's proposed "voluntary downgrading" of several hundred rural post offices, to curb losses expected to amount to £3 million this year. No statement was issued.

The voluntary downgrading would mean that existing sub-post offices would become "postal agencies", opening for limited hours and offering a limited range of services. The postmasters who opted for the new arrangement would be given a severance payment by An Post and in future would be paid only for business conducted, rather than a salary.

The Minister for Social, Community and Family Affairs, Mr Ahern, said yesterday the Government would make a decision on the social welfare payments contract before the European and local elections on June 11th.