U-turn over post office card account

Leeds protest to stop Beeston post office closures, photo Nigel Poustie

In a delayed and surprise announcement last week, arch-Blairite Work and Pensions secretary James Purnell announced that the government is abandoning the competitive tendering process and awarding the continuation of the Post Office Card Account (POCA) contract to the post office for a further five years from 2010.

Alistair Tice, Sheffield Communities Against Post Office Closures

The POCA distributes pensions and benefit payments to 4.3 million people, making a £200 million a year profit for the post office. It is a key part of the post office's income as well as bringing customers in to spend money on other purchases.

It was widely expected that the contract would be awarded to private company PayPoint backed by Citibank. The National Federation of Sub-Postmasters warned that the loss of the contract would lead to the closure of another 3,000 post offices on top of the 2,500 already being closed.

Purnell cited the "exceptional circumstances" of the economic crisis for making this u-turn. Certainly it would have been hard to justify further cuts to the publicly-owned post office when New Labour has just bailed out private banks to the tune of £37 billion. This is a 180 degree turnaround from a government that has withdrawn many services and contracts from the post office.

It is a victory for post office campaigners around the country. Protests over the last 12 months have put the government under enormous pressure. Two million people signed petitions to retain POCA, leading 265 MPs to sign an Early Day motion in parliament and the prospect of a Labour backbench rebellion.

The scrapping of the competitive tendering process sets a highly significant precedent. If the government can be forced to scrap one privatisation, why not others?

Leeds protest to stop Beeston post office closures, photo Nigel Poustie

And if the government has reversed its policy then why should any more post offices close? There should be an immediate moratorium on closures. The £37 billion handed over to the banks would keep all post offices open for 250 years!

But we shouldn't be fooled into thinking that this government volte-face means that New Labour has changed its 'privatisation' spots. The Communication Workers Union and post office campaigners must remain vigilant with the imminent Hooper review of Royal Mail likely to recommend mail centre closures and an injection of private capital.

BUSINESS SECRETARY Lord Mandelson attempted to take the credit for the volte face over the POCA contract. In reality though it was the protests and petitions (including those initiated by the Socialist Party) - set against the background of the billions of pounds of public money given to the bankers - that forced New Labour's hand.

Indeed such was the scale of the opposition to awarding the POCA contract to the private company PayPoint that Labour cabinet ministers, including Jack Straw, Hazel Blears and Tessa Jowell, hypocritically campaigned against closures of their local post offices having voted for the closure programme in the cabinet!