The Isle of Man Post Office will report a loss on its service obligation for the first time in its history.

Julie Edge, Post Office chairman, outlined a number of contributory factors and revealed plans to produce a new pay structure to ’attract and retain high-calibre new entrants’ and drastic changes to the pension scheme.

Confirming the intention to review its services and how to make the post office network ’affordable’, Ms Edge, pictured, said: ’The universal service obligation is actually operating at a loss and it is the commercial business that is subsidising the universal service obligation by, last year, £1.524 million.

’So although the Post Office itself operates at a profit, it is actually the commercial aspects of the business that are propping up the universal service obligation.’

In her statement, Ms Edge said the ’digital revolution’ had caused huge changes to customer habits, particularly in favour of online services. There had been dramatic falls in letters and post office transactions.

There was also a ’negative effect’ from the low-cost gig economy in parcels, plus an impact from a contraction in the finance sector, impacting on corporate printing and postage series.

She said: ’Ultimately all of these factors have had an impact on the business’s finances and for the first time in the Post Office’s history this year, we will be reporting a loss.’

A review of the pension scheme last year highlighted the need to increase contributions, which was putting the ’long-term sustainability of both the Post Office and pension scheme at risk’, she admitted.

’We wish to be fair to all our valued employees, continuing to retain and attract employees, ensuring fairness and transparency, whilst balancing costs with the need to be competitive and offer value for money services.’

Following a consultation it was proposed to keep the current defined benefit scheme for existing members, subject the funding gap being bridged, but close it to new entrants.

’We plan to introduce an attractive defined contribution scheme for new entrants,’ she said. ’The proposed changes are being discussed with the respective unions.’

Ms Edge said that current staff pay was not aligned to the market, making the Post Office pricing ’uncompetitive when challenging for new business and retaining existing business’.

Dr Alex Allinson (Ramsey) asked Ms Edge whether should thought executives’ salaries at the Post Office were fair.

She replied: ’I do not believe that the executive pay at the Post Office is high in comparison to other areas of government, when it is a £26.35 million business.

Reduction

’They have been assessed and they have come out at a fair salary. We have reduced the executive down to three members - it was four - so there has actually been a reduction in the size of the executive and also the costs.’

Meanwhile, Tynwald later voted in favour of amendment to a motion that called for recognition of the ’unique attributes and social value’ of the Post Office and show concern at its future prospects.

The amendment adds a line to recognise the importance of ’putting aside’ any pursuit of corporatisation.

The amendment was tabled by Chris Robertshaw (Douglas East). Chief Minister Howard Quayle was among seven MHKs to vote against it. The others were Kate Beecroft (LibVannin, Douglas South), Rob Callister (Onchan); Ray Harmer (Peel and Glenfaba), Lawrie Hooper (LibVannin, Ramsey), Ralph Peake (Douglas North) and Bill Shimmins (Middle). In the Legislative Council, Bill Henderson was the only member to vote against.

The original motion, from Tim Baker (Ayre and Michael), called upon Council of Ministers to report back by December with plans for the Post Office. But Ms Edge successfully amended that so it will be the Post Office that reports back.

Jobs

The Communication Workers’ Union has already warned the Post Office shake-up, under the banner of a five-year-plan could lead to job losses and a poorer service for customers, including a letter delivery service reduced to five days.

Union members expressed their ’complete lack of confidence’ at the board’s planned approach at a meeting last month.