COMMONS BUSINESS COMMITTEE WARNS OF NEW THREAT TO POST OFFICE NETWORK
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COMMONS BUSINESS COMMITTEE WARNS OF NEW THREAT TO POST OFFICE NETWORK

The Commons Business and Enterprise Committee, chaired by Mid Worcestershire MP Peter Luff, warns of the consequences for the Post Office network and for vulnerable customers if a major contract is not awarded to Post Office Limited.

"The contract award for the replacement Post Office Card Account (POCA) is substantially overdue," explains Peter Luff, "and this is raising increasing fears that the Post Office has not won it - or that the contract may be split between it and another bidder. The consequences for the post office network of losing all or part of the POCA business could be exceptionally serious."

The Post Office card account is officially described as

" an ultra simple account that can only be used to receive benefit, state pensions and tax credit payments. No other payments, such as Housing Benefit, occupational pensions, or wages can be paid into it. You can only collect payments over the counter at a Post Office branch. This account may suit you if you want a simple account that won't let you go overdrawn or incur any charges. No credit checks will be carried out when you open this account."

The report, entitled "Post Office Card Account: successor arrangements", explains,

Post Office Ltd receives funding from the Department for Work and Pensions which is linked to the number of people who choose to open and use card accounts. The first contract for the Post Office Card Account expires early in 2010. On 16 May 2007 the Government issued a tender in the Official Journal of the European Community for provision of simple card based customer owned bank accounts similar to existing card accounts."

"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. The General Secretary of the National Federation of Sub Postmasters has said,

"Losing POCA will deal a body blow to every sub postmaster and I have no doubt it will directly result in the unmanaged closure of at least 3,000 post offices"

"Despite the availability of basic bank accounts, the Treasury Committee report noted take up for the POCA was far higher than expected, 4.3 million people [are] currently using the POCA to receive benefits, including 2.3 million pensioners. This appears to reflect both the difficulties in opening basic bank accounts and the perceived advantages amongst benefit claimants of using the Post Office.

"In other words, the POCA caters for precisely the people who do not want to, or cannot, use conventional bank accounts: in the very nature of things, they are disproportionately likely to be poor or elderly. Similarly, they are likely to live in rural or deprived urban areas. They are less likely to have access to private transport, and less able to afford the cost of public transport. They need access not just to the underlying finance provided by benefits, but to those benefits in cash form.

"A tender which offered far more teller outlets than the 10,000 specified, but could do so only in urban or relatively densely populated areas would not, in our view, meet the needs of POCA users. As the Communication Workers Union told the Trade and Industry Committee:

"customers living in a village or a more rural area are less likely to withdraw their benefits from a cashpoint or a bank or building society and they are more likely to withdraw their cash over the counter at Post Offices. The stats are that just 4% of rural areas have a bank, whereas 60% of rural areas have a Post Office, so it is a given that people in rural communities will draw their money at the Post Office."

"The contract has been advertised on the basis of the most economically advantageous tender. This allows the Government to take a wide range of criteria into consideration. It must do so, to ensure that easy and reliable access to cash and access to benefits remains possible for those who currently use the Post Office Card Account."

ENDS


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