3,000 more post offices could close if Royal Mail loses pensions contract (UK)

Three thousand more post offices could close if the Government does not award a major benefits contract to the Royal Mail in the next few weeks.

The latest uncertainty to the post office network hinges on whether the Department for Work and Pensions extends the Post Office Card Account (POCA) after 2010.

The card account is a lifeline for many branches as it pays out benefits and pensions to four million people and cannot be used in other banks or shops.

Pressure is already building on ministers with over 170 MPs signing a Commons motion urging the Government to keep the contract with the Post Office.

Ministers are insisting that any decision is taken on commercial grounds. PayPoint, the UK’s biggest payment network, with 20,000 outlets in shops across the country, is believed to be the favourite to replace the Post Office in supplying the pension and benefit service.

But they are very worried about the fall-out from taking away the contract from the Post Office.

The Department for Work and Pensions said the contract would be awarded in “early Autumn” but declined to comment further.

Three thousand more post offices could close if the Government does not award a major benefits contract to the Royal Mail in the next few weeks.

The closures are in addition to the current highly controversial programme which will see 2,500 out of 14,000 branches shut for good by the spring, despite fierce opposition from hundreds of thousands of people.

The latest uncertainty to the post office network hinges on whether the Department for Work and Pensions extends the Post Office Card Account (POCA) after 2010.

The card account is a lifeline for many branches as it pays out benefits and pensions to four million people and cannot be used in other banks or shops.

Some industry sources said the decision could come as soon as this week, when MPs return to work. But there were reports yesterday that it would be moved to after the Glenrothes by-election, expected to be on November 6.

Pressure is already building on ministers with over 170 MPs signing a Commons motion urging the Government to keep the contract with the Post Office.

Peter Luff MP, the Conservative chairman of the select committee on business and enterprise, said it would be a “catastrophe for the entire Post Office network”, adding: “It would be quite appalling. The entire Post Office network would be in near meltdown.”

Billy Hayes, the head of postal workers union CWU, has written to pensions secretary James Purnell, warning that 3,000 post offices could be closed if the Post Office loses the contract.

He said: “The POCA is vital for the future stability of the Post Office. Losing the POCA contract would undermine the sustainability of the post office network and would inevitably lead to the closure of around 3,000 post offices.”

Ministers are insisting that any decision is taken on commercial grounds. PayPoint, the UK’s biggest payment network, with 20,000 outlets in shops across the country, is believed to be the favourite to replace the Post Office in supplying the pension and benefit service.

But they are very worried about the fall-out from taking away the contract from the Post Office.

One Government Minister told The Observer newspaper: ‘It is a nightmare decision. If it goes against the post offices, there will be thousands more closures.”

The Department for Work and Pensions said the contract would be awarded in “early Autumn” but declined to comment further.

So far 2,360 branches have been definitely told that they will close, with 1,769 shutting up shop for the final time. Just over 400 branches were spared the chop after local protests.

The final consultation to shut 56 branches in the west Midlands, Hertfordshire and Worcestershire closes tomorrow night, with a final decision on these branches due in the new year.