Government renews Post Office card account contract

Friday, 14 November 2008

The government has renewed the Post Office's contract to hand out benefits, a move that means 3,000 branches could potentially be saved from closure.

Procurement plans - that meant the Card Account contract could have been won by a private firm - will no longer go ahead, said Work and Pensions Secretary James Purnell.

Now the existing contract will be extended from 2010, when it was due to run out, until 2015, thanks to the circumstances generated by the global econimic turmoil, he said.

Purnell said: "The financial turbulence that began with the American banks, and the string of consequences which followed from it, have understandably made many people ... more concerned about financial transactions.

"These are exceptional times, and we believe this is a proper and proportionate response."

About 4.3 million people currently use the card to obtain pensions and other benefits at Post Office branches across the UK.

The decison by the government comes after Lord Mandleson said the Post Office network can be sustained in the future if it offers more financial services to consumers.

Writing to Prime Minister Gordon Brown, Mandleson said more products could be offered to people within easy reach of their homes.

The Post Office closure programme remains unchanged. About 2,500 outlets will still shut by the end of the year.

In September, the National Federation of Retail Newsagents gave support to sub post offices after a number of closures.