The Post Office’s has had its contract to distribute benefits to over four million people renewed despite competition from the private sector.
The Post Office Card Account (POCA) was introduced to replace giros and payment books, allowing pensioners and people claiming benefits to collect their money from Post Office branches.
In December 2006, the government opened a tender process to find a successor. However, amid concerns that thousands of jobs could be lost if the contract was awarded elsewhere, the government has now cancelled the competitive tender and renewed its contact with the Post Office until March 2015.
James Purnell, secretary of state for work and pensions, says this is the right thing for people using POCA as well as the Post Office and sub-postmasters.
"The Post Office is a cherished national institution at the heart of many communities,” he adds. "Global economic events have made people, particularly the most vulnerable in our society, more concerned about financial transactions. The Post Office is a trusted brand, and is seen as a safe, secure and reliable provider of services in these turbulent times.”
Citizens Advice has also welcomed the decision. Tony Herbert, a policy officer at Citizens Advice, says: "Had the contract gone to another provider the outcome would have been disastrous for the Post Office network, with many more post offices facing closure and people on low incomes, the elderly and those in rural or deprived areas among the worst affected."
However, the Conservative Party has criticised the government for not making the decision earlier.
Alan Duncan, shadow secretary of state for business, argues that the competitive tender brought uncertainty to the Post Office network, which is already demoralised by branch closures.
“This process has been a humiliation for the Government and a deeply destabilising waste of time for everyone else,” Duncan says. “Post offices, communities and many of the country's most needy people will today be breathing a sigh of relief that the Card Account has been re-awarded to the Post Office.”