First-class news as U-turn saves 3,000 post offices

Published on Thursday 13 November 2008 21:05

THOUSANDS of post offices were effectively saved from closure yesterday, when the UK government announced that the network had retained a contract to pay pensions and benefits to more than four million Britons.

To a huge cheer in the Commons, James Purnell, the Work and Pensions Secretary, scrapped the contest for the Post Office Card Account, which pays people their state benefits over a post office counter, rather than via a bank account.

Three million people had called for the Post Office to retain the account. The National Federation of SubPostmasters had warned that 3,000 branches – on top of the 2,500 being lost in the current restructuring – would close if the contract went to a rival. The network will now stabilise at 11,500 outlets.

The card account is used primarily by pensioners, those on low incomes, or the long-term unemployed. As well as paying subpostmasters a fee for each transaction, it also guarantees customer footfall. The new contract will run from 2010 to 2015, and may be extended.

Mr Purnell said the global "financial turbulence" meant that there was an increased need for a "trusted brand" to provide key services in exceptional times.

"Now cannot be the time for the government to do anything to put the network at risk, particularly as post offices are often the only providers of banking services in both rural and deprived urban areas," he said.

But Alan Duncan, the shadow business secretary, accused the government of a "humiliating climbdown" in response to a national outcry.

He suggested that rival bidders, such as PayPoint – who will be paid "reasonable" compensation following the scrapping of the tender process – may fight Mr Purnell's decision in court.

Labour's John McFall, the MP for West Dunbartonshire, said: "This is excellent news for rural and low-income communities."

PROFILE

A SUB-postmaster from Hawick was praised in the Commons yesterday for leading the campaign highlighting the lifeline that the Post Office Card Account provides in thousands of rural outlets.

Mervyn Jones, who is also the President of the Postmasters' Union, was commended by his local MP in the Borders, Liberal Democrat Michael Moore.

More than 450,000 Scots rely on the card to obtain their benefits, and Mr Jones personally delivered protest cards to the Prime Minister last month while fronting the campaign. Mr Moore said: "He and his colleagues around the country deserve a great deal of recognition for their work in briefing Members of the House on this matter."