Post Office Card contract renewed by government (UK)
It has been announced that there will be no change to the running of The Post Office Card, which distributes benefits to 4.3 million claimants.
After a government review, it has been announced that The Post Office will continue to run the card account which distributes benefits to 4.3 million claimants.
It had faced competition for running the Post Office Card Account from a private firm, but ministers have decided to close the bidding process.
Work and Pensions Secretary James Purnell told MPs he would do “nothing to put the network at risk”.
The National Federation of Sub Post Masters had warned 3,000 post offices would close if the contract was lost.
The account, used by more than four million people, was brought in to end the need for giros and payment books for pensioners and benefit claimants, while still allowing them to use post offices to collect money.
The Post Office had faced competition to run it from the private company PayPoint.
Mr Purnell’s announcement comes two weeks earlier than expected after criticism from MPs that delays in deciding if the Post Office would retain the contract were “destabilising”.
He told MPs the account was “central to the viability of the network” and said the next contract would run initially from April 2010 to March 2015 with “the possibility of an extension beyond that”.
Mr Purnell added that PayPoint would be “compensated their reasonable costs”.
For the Conservatives, shadow business secretary Alan Duncan said the announcement was a “humiliating climbdown for the government, who have done everything they possibly can to find a way of awarding it (the contract) to somebody else”.
Earlier, Business Secretary Lord Mandelson told peers: “I believe very strongly that we have an opportunity here for the future of the Post Office – one that has been enlarged by the turbulence elsewhere in the financial services sector.”
He said the government’s closure programme, which will see 2,500 branches shut down by the end of year, had not been painless but “had placed the entire network on a much firmer footing”.
