P.O.s left to wait on red letter day

POST offices are seen as an integral part of our social network. But their very existence is under threat.

The National Federation of Sub-postmasters has warned that 40 post offices could go in the Swansea area and a further 30 in Neath Port Talbot and 30 in Carmarthenshire.

Nationwide, it is feared that another 3,000 post offices could be forced to shut up shop.

The threatened closures would come after the current 2,500 closures nationally.

So how have things come to this?

It all centres on a £1 billion contract to run the Post Office Card Account. The account is run by the Post Office for the Government to pay benefits electronically.

The accounts can only be used to receive benefits, state pensions and tax credits, but no credit checks are carried out on customers who open them. The Royal Mail is thought to face competition for the lucrative contract from US bank Citigroup and bill payment provider PayPoint.

A decision on who is to be awarded the contract is eagerly- anticipated and is expected to be announced in coming weeks.

But the federation's acting national vice-president, Keith Richards, who runs Glynneath Post Office, says concern is mounting over delays in reaching a decision on the deal.

He said: "We are being strung along and we can't invest in our businesses.

"If you don't know if you have a future or not, you can't make decisions. It is critical to give this contract to the Post Office."

The federation says around four million people "many of them vulnerable and with no other income than their pensions or benefits" use the Post Office Card Account.

Its general secretary, George Thomson, said in a letter to Prime Minister Gordon Brown: "The typical sub-postmaster earns 10 per cent of their post office income directly from card account transactions, and for some postmasters, especially in deprived areas, revenue from the account amounts to up to 20 per cent of their income.

"Many convenience stores in towns and villages operate alongside a post office and of the £27 billion paid out each year to account customers, £2 billion is spent in these businesses. Without the account, many fewer people will visit a post office and the loss of this vital contract will have a disastrous impact on post office branches, on their associated retail businesses and on neighbouring businesses."

The Government is competitively tendering the contract to run the accounts to ensure it gets the best value for taxpayers. It was reported that while the Post Office Card Account was seen as a success, it had been more expensive to run than the Government had wanted.

A Royal Mail spokeswoman said: "The decision on the card account contract to replace the current Post Office Card Accounts in April 2010 is of critical importance.

"This crucial decision is clearly central to the future of the branch network and Post Office has submitted a very competitive bid."

Royal Mail warned that it faced "huge pressure" from intensifying competition, its loss-making universal postal service and its pensions deficit, which currently stands at £3.4 billion.

But it warns this figure is expected to increase "substantially" when the scheme is revalued next spring.

Mr Thomson, in his letter to Mr Brown, states that the prospect of 3,000 more branches closing "in chaotic fashion is appalling".

He adds: "These closures would be the result of sub-postmasters facing bankruptcy because of the fall in revenue from the loss of the account at a time 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.

"We also believe further closures would result in the Post Office losing its critical mass and undermine its ability to successfully bid for future contracts."