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Post Office awarded card contract Post Office card contract renewed
(20 minutes later)
Three thousand post offices could be saved from closure under plans unveiled by the government. The Post Office will continue to run the card account which distributes benefits to 4.3 million claimants.
Work and Pensions Secretary James Purnell said the Post Office would retain its £1bn benefits contract which faced competition from a private firm. It had faced competition for running the Post Office Card Account from a private firm, but ministers have decided to close the bidding process.
He told MPs post offices were "at the heart of the community" and he would do "nothing to put the network at risk". Work and Pensions Secretary James Purnell told MPs he would do "nothing to put the network at risk".
It comes after Lord Mandelson announced plans to explore new business opportunities for post offices. The National Federation of Sub Post Masters had warned 3,000 post offices would close if the contract was lost.
Mr Purnell said the Post Office could retain its £1bn five-year contract to distribute benefits to 4.3m claimants, beating competition from private firm private firm PayPoint,. The account, used by more than four million people, was brought in to end the need for giros and payment books for pensioners and benefit claimants, while still allowing them to use post offices to collect money.
Uncertainty The Post Office had faced competition to run it from the private company PayPoint.
The National Federation of Sub Post Masters has warned that 3,000 post offices would close if the Post Office Card Account service was taken away. 'Viability'
The account, 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.
Mr Purnell's announcement comes two weeks earlier than expected after criticism from MPs that delays in deciding if the Post Office would retain the contract were "destabilising".Mr Purnell's announcement comes two weeks earlier than expected after criticism from MPs that delays in deciding if the Post Office would retain the contract were "destabilising".
He told MPs the account was "central to the viability of the network". He told MPs the account was "central to the viability of the network" and said the next contract would run initially from April 2010 to March 2015 with "the possibility of an extension beyond that".
Mr Purnell added that PayPoint would be "compensated their reasonable costs".
For the Conservatives, shadow business secretary Alan Duncan said the announcement was a "humiliating climbdown for the government, who have done everything they possibly can to find a way of awarding it (the contract) to somebody else".
Earlier, Business Secretary Lord Mandelson 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."Earlier, Business Secretary Lord Mandelson 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."
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".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".
'Nebulous' plan'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". In a letter to the prime minister leaked earlier this week, 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."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.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".Lord Mandelson replied that the Hooper report would be published "very shortly".