Securicor to collect 1bn pounds Post Office deal

Securicor is set to win a major contract, worth up to 1 billion pounds, to deliver cash and stamps to Post Offices, it was announced today.

The company has been selected by postal services group Consignia as its preferred supplier of cash management and transportation services throughout the UK.

Consignia currently employs 3000 workers and has 700 vehicles in its cash-handling operations but has been looking to outsource services as part of its drive to cut costs.

A spokeswoman for the group, which is changing its name back to Royal Mail, said the deal would be one of the largest outsourcing contracts it has ever signed.

In May, Consignia awarded a £700 million contract to Schlumberger Sema, which will provide occupational health services for all its staff.

A deal with construction group Balfour Beatty, which will form a joint venture with Consignia subsidiary Romec to provide facilities management services such as engineering, maintenance and cleaning, has been valued at £1bn, but the spokeswoman said this had not yet been finalised.

Deutsche Post signed a deal with Consignia in August for a short-term licence to begin mail services in the UK. The industry’s regulator, Postcomm, said the company will be able to provide a mail service to a small group of new and existing clients.

But Royal Mail also faces competition from other rivals such as Hays, Business Post Group and Dutch postal operator TNT Post.

The 365-year-old firm is losing £1.5m a day, and is cutting 32,000 jobs in a bid to return to profitability and survive increased competition. In June, Consignia announced a full-year loss of £1.1bn.

Chairman Allan Leighton recently insisted he did not believe the service should be privatised, adding he was “confident” his business plan would turn the company around.

A number of staff will be transferred to Securicor if today’s deal goes ahead, but Consignia said their pay and conditions will be protected and there will be no redundancies.

Securicor said once the contract was finalised, it would process £37bn in notes and over £2bn in coins and will carry out 1.6 million cash transportation services every year.

The deal is subject to detailed negotiations, which will involve union representatives.

A Securicor spokesman said the key terms of the deal have been agreed, but the transaction is subject to due diligence and the relevant industry approvals, and the contract is expected to be signed in December.

He said: “Securicor will provide cash transportation and cash management services to Post Office Ltd and Royal Mail customers throughout the UK, including deliveries to and collections from some 17,500 Post Office branches.”

The contract will run for ten years and will be worth between £800m and £1bn to Securicor, the spokesman said.

A spokesman for Consignia said a heads of agreement document has been signed.