Post Office given card account

The government has handed the Post Office the Post Office Card Account (POCA) contract, ditching the tender process.

Work and pensions secretary James Purnell told parliament the Post Office would retain the contract for the provision of benefits and pensions.

"The government has decide to cancel the procurement process and award the contract to Post Office Limited.

"It is the right decision for customers around the country," he said.

He added: "The Post Office is seen as safe secure and reliable… now cannot be time for the government to do anything to put network at risk."

The minister said the decision was made in light of the recent global instability and the social role post offices play.

Mr Purnell added the decision would ensure the viable future for the Post Office and was "value for money for taxpayers".

The new contract will run to March 2015 with the possibility of extension.

Gordon Lishman, director general of Age Concern, which alongside many others had campaigned for the contract to go to the Post Office, said: "This is not just a win for the Post Office, it’s a win for the two million pensioners who have a Post Office Card Account and the many more for whom their local Post Office is a lifeline.

"Many older people rely on the post office as a one-stop shop to not only access cash and benefits but to pay bills, get advice and information, and socialise."

Peter Mandelson, the business secretary who was seen as instrumental in the decision to keep POCA with the Post Office to the point one MP sarcastically thanked him rather than Mr Purnell in parliament today, said challenges remained for the Post Office.

"The Post Office is a trusted and familiar brand for those using the Post Office Card Account and today's decision helps secure its future," he said.

"Now the challenge will be for the Post Office to broaden its offer to loyal customers and to bring in new ones to help get it on to a stable financial footing.

"There is the potential to leverage its brand to help it expand further into areas like financial services, particularly in the current financial climate, where people value trust and certainty more than ever."

Conservative shadow business secretary Alan Duncan described the move as "disarray dressed up as decision" and said it was a "humiliating climbdown for government".

"The government insisted on tender – and after months of the expensive process they have binned that tender," he added.

Mr Duncan also called for POCA to be extended so customers can use it to pay utility bills.

Liberal Democrat work and pensions spokesperson Jenny Willott said: "This announcement comes as a huge relief to the millions of Post Office Card Account holders, thousands of sub-postmasters and the countless communities that may have lost their post office if the decision had been different.

"The government has wasted time and money and caused immeasurable heartache by dragging this process out for so long."

She added: "Cancelling the procurement exercise is a peculiar means of arriving at this decision and ministers have some explaining to do."

Alan Cook, Post Office managing director, said: “We very much welcome this decision which enables us to achieve our goal of maintaining a branch network of around 11,500 outlets for the foreseeable future. It’s great news for Post Office Ltd, for our sub-postmasters and for our customers."

Mr Purnell said unsuccessful bidders will be compensated, but refused to say how much the failed tendering process would cost the taxpayer.

Payments network PayPoint, which was bidding and thought to be a front runner to gain the contract, issued a statement saying: "We are disappointed with the decision."