Delays in awarding POCA contract 'destabilising' Post Office » Communities » 24dash.com

Delays in awarding a contract to handle millions of pension and benefit payments through a card account are "destabilising" the Post Office, MPs warned today.

A Government decision is eagerly awaited on the future of the Post Office Card Account (POCA), which more than four million customers use to receive benefit payments and pensions

The contract for the account runs out early in 2010 and ministers will soon announce whether it will be retained by the Post Office or given to a rival.

A leading Labour MP has warned that up to 6,000 post offices would be forced to close if the organisation does not retain the contract to run a card account.

John McFall (West Dunbartonshire), chairman of the Treasury Select Committee, said up to 3,000 branches could close even if the Post Office suffered a partial loss of the contract.

The Business and Enterprise Select Committee said in a report today that it was concerned about the Government's approach to the contract, which had been advertised on the basis of the most "economically advantageous" tender.

"Although our primary concern is for those who need access to benefits, we are also concerned that the delays are destabilising Post Office Ltd, and for communities in rural and deprived urban areas, which rely on the Post Office for access to basic services," said the report.

"The longer uncertainty continues, the harder it is for the Post Office to develop its long-term plans. Whoever wins the contract, existing POCA customers will need to be transferred to a successor account.

"There is very little time for the Secretary of State (for Work and Pensions) to come to a decision, but when he does so he must take the needs of POCA users and of the community as a whole, fully into account."

The MPs said they were "naturally concerned" about the effects of the possible loss of the contract on the Post Office, which is already closing 2,500 branches this year, as well as on the taxpayer because of possible increased subsidises to maintain a national network of offices.

"It is widely recognised that a decision to award the contract to an organisation other than Post Office Limited would have grave effects on the Post Office network. Even after the network change programme, more sub-post offices would almost certainly close," said the report.

The MPs said of speculation that the contract could be split between the Post Office and another provider: "This situation is destabilising for the Post Office network and we are disturbed that the Government has allowed it to continue."

Committee chairman Peter Luff (Conservative Mid Worcestershire) said: "This report sets out in detail the committee's concerns about the implementation of the award of this contract for the services to the Post Office Card Account, which is expected to be announced shortly."

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

A spokesman for the Work and Pensions Department said: "The contracting process remains under way. No decision has yet been made. An announcement on the outcome will be made as soon as possible."

The National Federation of SubPostmasters has sent every UK post office a poster urging customers to lobby their MP about the importance of retaining the contract.

The federation said the delay in the announcement, originally expected in the summer, was causing uncertainty and worry among sub-postmasters nationwide that the crucial work will be taken away from the Post Office.

The NFSP, which has warned that a further 3,000 more post offices face closure if the contract is lost to a competitor, said its executive council is to hold an emergency meeting today to discuss the issue.

General secretary George Thomson said: "Losing the POCA would be devastating for the national Post Office network, sub-postmasters and their customers.

"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."

The Post Office is facing competition from the private company PayPoint, the country's biggest private payment network with 20,000 outlets in shops across the country, and another bidder, believed to be a bank.