Warning on Post Office card uncertainty

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http://www.ft.com/cms/s/0/309e1278-a43c ... ck_check=1

y John Willman, Business Editor

Published: October 28 2008 03:04 | Last updated: October 28 2008 03:04

Thousands more post offices face closure if Royal Mail loses the battle to retain the Post Office card account (Poca) which pays out pensions and benefits to 4.5m people, the National Federation of Sub-Postmasters has warned.

In a letter to the prime minister, George Thomson, chairman, said sub-postmasters were becoming increasingly concerned about the government’s delay in awarding the contract to run the successor to the present scheme which ends in 2010.

The typical sub-postmaster earns about 10 per cent of their post office income directly from card account transactions – more in deprived areas. The cardholders withdraw £27bn ($42bn) a year, spending £2bn in the sub-post offices and also shopping in their retail arms and neighbouring businesses.

Bids to run the new card account had to be lodged by the end of March, but there has been no sign a decision was imminent, Mr Thomson said. If the contract were to be awarded to a rival, another 3,000 post offices could close – in addition to the 2,500 that have already closed during the last year to streamline the network.

“This delay is fuelling uncertainty, deep concern and speculation around the Poca,” Mr Thomson added. “It is also adding to the very real pressures [that] sub-postmasters [already face] in tough trading conditions, as well as harming their confidence in their own future and the future of the Post Office.”

PayPoint, which operates a payment-terminal network through more than 19,000 outlets, has already won from Royal Mail the contract to handle the television licence fee. It has bid for the card account, which has been put out to tender under European Union procurement rules.

The Work and Pensions department said the contracting process was still under way. “An announcement [about] the outcome will be made as soon as possible. No decision has yet been made.”

“The prospect of 3,000 more branches closing in chaotic fashion is appalling,” Mr Thomson said. “These closures would be the result of sub-postmasters facing bankruptcy because of the fall in revenue from the loss of the Poca ... when business costs are already rising dramatically. Because such closures would also be unplanned, it raises the real possibility of gaps in the nationwide network.”