Post Office to lose £20m contract

 

The Post Office network is on the verge of losing a crucial contract to process benefit cheques worth £20m a year.

Trusted service: Government is warned vulnerable people won't feel confident using new technology to collect benefits

Ministers are set to hand the work to Paypoint, denying post offices the chance to provide the vital service for the hundreds of thousands who lack a bank account.

The move will mean 331,490 vulnerable people - including pensioners, the disabled and unemployed - would no longer be able to cash benefit cheques at their local post office.

They will instead have to find a shop that takes Paypoint, a system accessed through a swipe card or barcoded bill.

Post offices will also come under threat of closure, having already lost out as payments and renewals of many licences and services switch to the internet.

Consumer Focus, a watchdog group, wrote to pensions minister Steve Webb yesterday telling him that post offices are the most trusted institution for those on pensions or benefits.

It also warned that the most vulnerable in society did not feel confident when asked to use new technologies.

Spokesman Andy Burrows said: 'Losing this £20m-a-year contract would be another significant blow for the post office network.

'It makes most sense for the post office to keep the contract for paying benefits cheques so benefit recipients get a service they have come to know and trust.

'Post offices often provide the heartbeat for a community and people want to see them thrive. The Government should be looking to offer more services through post offices, not fewer.'

George Thomson, of the National Federation of SubPostmasters, said it would be extraordinary for the government to fail to even maintain existing contracts, when it had promised to find new ones.

A Post Office spokesman said: 'We want to continue to do this work. We have a good proposition and have been successfully serving the needs of these customers for many years.' The Department for Work and Pensions said that no decision had yet been reached on the contract.

In the past three years, around 2,500 post offices have been closed.

  This Is Money blog: Does the Post Office even know what to do with customers?