Two out of three post offices could close if Royal Mail loses contract and EU subsidy

The news comes as the subpostmasters’ ruling council holds a meeting to discuss the crisis. MPs in the House of Commons will also debate the future of the contract.
The Post Office Card Account contract is seen as a lifeline for many branches as it pays out benefits and pensions to 4 million people and cannot be used in other banks or shops.
The Government must decide by Dec 8 whether to keep the contract with the Royal Mail or hand it to consortium believed to comprise Citibank and PayPoint, which has 20,000 payment terminals across the UK
The state aid was given to the post office network “as a means of facilitating the payment of benefits by certain UK Government departments”.
But removing the POCA contract from Royal Mail would mean that the reasons for granting the EU cash might not apply.
The result would be the closure of potentially all of the loss-making post offices, many of which are in rural areas, cutting the network from 11,500 to just 4,000 commercially-viable branches.
Peter Luff, the committee’s chairman, said shutting 7,500 branches was a “worst case scenario”. But he said that without the POCA contract or the subsidy, most loss making branches would have to close.
He said: “There would be a real risk that we can’t justify the state aid payments.”
George Thomson, the General Secretary of the National Federation of Sub-Postmasters, said: “What it proves is a total lack of joined-up Government.
“One of the main reasons that the EU granted state aid was to make sure there was a network to pay social benefits throughout the UK.”
The committee released its report after James Purnell, the Work and Pensions secretary who will decide how to award the contract, declined to meet members to discuss the contract.
They raised concerns that if the benefits contract was removed from the Royal Mail then millions of “poor and elderly” people living in deprived urban or rural areas would lose out.
They said: “They are less likely to have access to private transport and less able to afford the cost of public transport.
“They need access not just to the underlying finance provided by the benefits but to those benefits in cash form.”
The MPs stress that the tender for the contract stipulates that the winner of the contract must have 10,000 outlets “located throughout the UK”.
They describe this clause as “vital”. Any winner of the contract would have to have “reliable” access to cash withdrawals.
This week the National Federation of Sub-Postmasters is sending out 12,000 posters to members to put in their windows calling on customers to contact their local MP to highlight how vital the POCA service is at their local post office.
So far more than two million people and more than 250 MPs have backed a campaign to urge the Government to keep the contract with the Royal Mail.
Alan Duncan, the Shadow Trade and Industry Secretary, told The Daily Telegraph at the weekend that a Conservative Government would keep the contract with the Royal Mail.
A spokesman at the Department for Work and Pensions said: “The contracting process remains under-way. No decision has yet been made.”