EU approves Government funding of Post Office in the UK

Government funding to the Post Office worth more than GBP 600 million was approved by the European Commission today.

Brussels has the power to block state aid it considers breaches EU rules on fair competition.

But EU Competition Commissioner Neelie Kroes said the UK government’s cash backing for the UK post office network satisfied the rules for aid to support national public services.

“I am very aware of the importance of the post office network and of the services it provides” she said this afternoon.

“This aid will enable the network to continue to provide those services under the new terms defined by the UK Government”.

The Post Office, now a subsidiary of the Royal Mail, runs about 14,000 post offices throughout the UK, the majority separate businesses contracted out to sub-postmasters.

Last July the Government announced funding over three years starting next April of GBP 634 million, to help cover the cost of loss-making parts of the service.

And although the funding has been approved today, the Commission is still conducting an inquiry launched last February into wider Government funding arrangements for Royal Mail totalling more than GBP 2.5 billion.

“The measures authorised today are separate and concern only the compensation of costs specifically incurred by Post Office Limited,” said a Commission statement.