MANY would say that the demise of some post offices has had a significant impact on local communities.

Rural villages in particular suffered a sense of loss when around 5,000 post offices closed due to streamlining and cost-cutting in recent years.

Now a new £250m seven-year contract has been agreed by the Government to help safeguard the future of the post office network as well as protect a valuable service for vulnerable pensioners and benefit claimants.

DWP Minister Steve Webb recently announced in Parliament the signing of a new deal with Post Office Limited to ensure the Post Office Card Account remains available until at least November 2021. The service was previously due to be withdrawn in March 2015.

The new contract realises efficiency savings of 10 per cent compared to the previous contract – saving the taxpayer millions of pounds – but the amount of money paid to sub-postmasters per transaction will remain the same.

The Post Office Card Account provides simple banking services for people without a traditional bank current account, to ensure they can receive the benefits, tax credits, state pensions or war pension to which they are entitled. Around 2.5 million people currently hold one.

People with a Post Office Card Account can withdraw money or check their balance at any of the Post Office’s 11,500 branches or by using one of a network of almost 2,500 Post Office ATMs spread across the UK branch network.

Andrew Teeman, postmaster at Girlington who is also President of the West Yorkshire branch of the Federation of Sub-postmasters, the branch's acting secretary and also president of the North East branch, welcomes the move.

"I think it is a bigger benefit to the community than it is to postmasters. Had it not gone through I suspect more post offices would have closed."

He says many post offices are 'on a knife edge.' "The Government doesn't send business through the post office any more," says Andrew, referring to the recent tax disc reform.

"Once upon a time we were the front office for Government and it doesn't provide us with business, things we can do to make a living. A lot are in a precarious position financially."

Welcoming the new contract, Andrew adds: "It puts a little bit of a floor under the business and stops it going into free-fall completely and it will bring people into the shop and keep the shop going," he says, adding that it also helps support surrounding businesses.

He also welcomes the benefits it will bring to the customers who need it the most.

Steve Webb, Minister for Pensions, says: “I am very pleased that we have secured this new contract, which provides good value to the taxpayer, ensures the continuation of a valuable service for pensioners and benefit claimants, and helps safeguard the future of the Post Office network.

“Although most people have a bank account, there are certain groups for whom this is not viable and, for them, the Post Office Card Account provides an important lifeline. This new agreement will also help sub-postmasters to retain footfall and generate income for their important local businesses."

Whilst the vast majority of pensions and benefits are paid directly into recipients’ bank accounts, many older pensioners prefer to collect their pension over the counter at their local Post Office. The Post Office Card Account enables them to do this.

Paula Vennells, Post Office Chief Executive, says: “This is welcome news for the millions of people across the country who rely on their local Post Office to provide access to their pensions and benefits. It is also great news for our 11,500 branches and our postmasters as providing access to the Post Office card account is a key part of their service offering. We have cemented our network as the infrastructure for community banking. Continuing to offer access to this vital service is a key element of this role.”

The Post Office network is at its most stable for decades. It remains at the heart of communities and is investing in its network to build a sustainable future. It is transforming around 10 branches a day into new modern retail outlets, with many offering longer opening and over 2,000 open on Sunday. These branches are offering an extra 90,000 hours a week for their customers.

George Thomson, General Secretary of the National Federation of SubPostmasters, said:

“We welcome today’s announcement by the Government, which is good news for our post offices and for the millions of people who rely on them. The renewal of the Post Office Card Account will help provide the Post Office network with a more stable future and we look forward to working with the Government to explore other ways it can make use of the network.”

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