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Post Office 'will keep contract' Post Office 'will keep contract'
(about 3 hours later)
Three thousand post offices could be saved from closure under plans to be unveiled later by the government.Three thousand post offices could be saved from closure under plans to be unveiled later by the government.
The Guardian says ministers are set to announce that the Post Office can retain its £1bn five-year contract to distribute benefits to 4.3m claimants. The Guardian says ministers are set to announce that the Post Office can retain its £1bn benefits contract which faced competition from a private firm.
The Post Office Card Account faced competition from private firm PayPoint. A Commons statement from Work and Pensions Secretary James Purnell is expected at about 1220 GMT.
There is expected to be an announcement later - probably in the form of a House of Commons statement from Work and Pensions Secretary James Purnell. It comes as Lord Mandelson announced a plans to explore new business opportunities for post offices.
The National Federation of Sub Post Masters warned that 3,000 post offices would close if the service was taken away. The business secretary 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."
Some 2,500 branches will already have been closed by the government by the end of this year under plans to streamline the network. 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".
'Trusted provider' 'Nebulous' plan
In a letter earlier this week to the prime minister, Lord Mandelson said he believed post offices had a future as "trusted" sources of financial products and government services, with the face-to-face contact they offer "becoming an increasingly important and reassuring factor for many people".
And he told peers: "I am going to convene a group of government departments to identify the potential additional work the Post Office may do. I think there are opportunities there and I want to examine them closely."
But Tory peer Lord Hunt said the government's proposals were "nebulous" and "raised more questions than they answered" and he called for more detailed plans and for the publication of the Hooper report into the future of the network.
Lord Mandelson replied that the Hooper report would be published "very shortly".
Ministers are set to announce shortly that the Post Office can retain its £1bn five-year contract to distribute benefits to 4.3m claimants, beating competition from private firm private firm PayPoint,.
Uncertainty
The National Federation of Sub Post Masters warned that 3,000 post offices would close if the Post Office Card Account service was taken away.
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.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.
The face-to-face contact which a post office offers is becoming an increasingly important and reassuring factor for many people Lord Mandelson
The government is to make an announcement on the contract two weeks earlier than expected after criticism from MPs that delays in deciding if the Post Office will retain the contract were "destabilising".The government is to make an announcement on the contract two weeks earlier than expected after criticism from MPs that delays in deciding if the Post Office will retain the contract were "destabilising".
The business and enterprise select committee said the longer uncertainty continued, the harder it was for the network to develop long-term plans.The business and enterprise select committee said the longer uncertainty continued, the harder it was for the network to develop long-term plans.
The Conservatives said the delay raised doubts about Labour's support for the network.The Conservatives said the delay raised doubts about Labour's support for the network.
But earlier this week, Business Secretary Lord Mandelson urged the prime minister to save the Post Office network by allowing it to provide government services and financial products.
In a Letter to Gordon Brown, leaked to The Guardian, Lord Mandelson says the economic downturn and "recent events in the financial services" could give the network a new lease of life as a "trusted provider of a broader range of financial service".
'Face-to-face contact'
In the letter, dated 30 October, Lord Mandelson said: "We should examine the prospects for POL [Post Office Ltd] becoming a much more significant player in financial services - offering a wider range of attractive products within easy reach of the whole population, available from an institution they can trust."
He added: "POL has two real strengths. The first is the trusted 'post office' brand. The second is the fact that it offers direct physical contact across its widely accessible network with the 24 million people who visit a post office each week.
"As recent figures show, many savers have demonstrated their trust in the Post Office by moving their savings into accounts it offers.
"Similarly, the face-to-face contact which a post office offers is becoming an increasingly important and reassuring factor for many people - especially when many private companies, as well as many government agencies, are seeking to reduce their own face-to-face contact points."
Lord Mandelson said there was a case for building up the Post Office's role as the main contact point many people had with the government, raising the prospect of it taking on new business.