Page last updated at 20:39 GMT, Monday, 10 November 2008

MPs voice Post Office delay fears

Post Office (generic)
The Post Office Card Account is used by more than four million people

Delays in deciding if the Post Office will retain the contract to handle pension and benefit payment card accounts are "destabilising", MPs say.

The business and enterprise select committee said the longer uncertainty continued, the harder it was for the network to develop long-term plans.

In the Commons, Tory spokesman Chris Grayling said the delay raised doubts about Labour's support for the network.

But Pensions Secretary James Purnell said a decision was due "very soon".

He added that the proper legal process for awarding the contract had to be observed.

Awarding the contract to a body other than the Post Office would lead to the closure of further outlets, MPs said.

The Post Office Card Account (POCA), which is used by more than four million people, was designed to do away with the need for giros and payment books for pensioners and benefit claimants, while still allowing them to use Post Offices to collect money.

Licence fee

The contract for the account runs out early in 2010 and ministers are required by competition law to put it out to tender with at least two other providers competing for the business.

The Post Office faces competition from PayPoint, the country's biggest private payment network, which won the contract for the BBC licence fee payment system.

The National Federation of Sub Post Masters, which is urging customers to lobby their MPs about the importance of retaining the contract, warned that 3,000 Post Offices would close if the service was taken away.

Some 2,500 branches will already have been closed by the government by the end of this year under plans to streamline the network.

The MPs' committee said in its report it was concerned the delays in deciding on the contact were "destabilising Post Office Ltd and... communities in rural and deprived urban areas, which rely on the Post Office for access to basic services.

"The longer uncertainty continues, the harder it is for the Post Office to develop its long-term plans."

'Critical importance'

It urged the government to take the needs of POCA users and those of the community as a whole "fully into account".

"It is widely recognised that a decision to award the contract to an organisation other than Post Office Ltd would have grave effects on the Post Office network," MPs said.

"Even after the network change programme, more sub-post offices would almost certainly close."

The general secretary of the National Federation of Sub Post Masters, George Thomson, warned that losing the POCA would be "devastating" for the network.

Thompson General Secretary of the National Federation of Sub Postmasters

"Sub-postmasters and their customers will regard it as the ultimate act of betrayal if the government fails to award the contract to Post Office Ltd," he said.

A spokesman for the Post Office added: "The decision on the card account contract is of critical importance to Post Office Ltd going forward and it is central to the future of the Post Office branch network, and we have submitted a very competitive bid."

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