Post Office boss takes 22pc pay cut as revenues fall

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Paula Vennells, chief executive of the Post Office, took a 22pc cut in her total pay package last year revenues fell in all four of the state-owned network’s key business areas.

The former Whitbread executive, who is leading a radical modernisation of the Post Office, was awarded a total of £544,000 last year, down from £698,000 the year before. The decline is due to Ms Vennells achieving just 38pc of the targets set by the short term incentive plan and 59pc of the long-term incentive plan, compared to 79pc and 89pc last year, according to the annual report and accounts.

The Post Office said annual revenues fell £55m during the year, including a £10m reduction in the state subsidy, to £1.2bn. Operating profits before exceptional items increased to £107m to £94m.

The group, which remained in state ownership when Royal Mail was privatised, was hit over the year by industrial action by the Communication Workers Union. The union protested at the closure of Crown offices - the larger branches usually found on high streets.

However the Post Office said trading was tough due to competition too. Revenues in the core mails and retail division dropped £19m to £390m, due to “intensifying competition and increasing customer demands.” The sale of Lottery tickets fell by £1m.

Financial services revenues fell £2m to £279m but the Post Office insisted that the drop “masks a transformation” in the division to include a broader offering of personal finance products. In Government Services, revenues from DVLA services dropped £14m due to a cut in fees but passport revenues rose by £2m. Telecoms revenues also dropped 3.9pc from £129m to £124m.

“The decline in Mails revenue was, of course, disappointing,” said Ms Vennells. “But we remain confident that we have the right commercial strategy in place, and importantly the right retail mind-set, to ensure we respond to changing customer requirements.”

She said she had “put in place the mechanisms which will allow us to build and open up new revenue streams in the future”, including more financial services products and a bigger range of Government services. Around 2,000 branches, of a network of 11,500, were modernised over the year, offering an increase of 50,000 opening hours a week. This week, the Post Office announced plans to launch its own mobile services network.

Even so, Ms Vennells said it had been a “challenging year” for the Post Office. “It is clear we must operate at greater pace than ever before – and focus more on our customers and commercial realities,” she said.