PayPoint awarded contract to pay out benefits in shops, off-licences and petrol stations
A quarter of a million benefit recipients, including pensioners and those on disability allowances, will have to cash in their giro cheques at off-licences and petrol stations under government plans.
Unions and consumer groups united to condemn the decision to remove the contract to process the benefit cheques from the Post Office and give it to private sector company PayPoint. The move also flies in the face of ministers' promises to protect the Post Office by making it the "front office" for government business.
The Communication Workers Union (CWU), which represents postal workers, said that the contract award spelt "disaster for the future of the Post Office" and could lead to further branch closures, adding that it "is a betrayal of Britain's most vulnerable".
The 12,000-branch network already faces an uncertain future with the imminent privatisation of parent company Royal Mail, on which it relies for a third of its revenues. The Post Office will remain in public ownership, but there are fears there could be widespread closures if the Royal Mail uses other outlets to provide services such as posting packages.
An estimated 250,000 benefit recipients ? mostly people on jobseeker's allowance but also including pensioners or those on disability payments ? still cash in their "green giro" cheques at Post Office counters rather than have them paid directly into a bank account. From next year, they will only be able to do so at the 22,000 PayPoint outlets around the country, which include off-licences, convenience stores and petrol stations.
The five-year contract is worth �20m a year, but the Post Office is likely to lose even more revenue because of the reduced "footfall" resulting from benefit recipients going elsewhere.
The National Federation of SubPostmasters (NFSP), which represents the independent owners of local branches and the CWU and Unite, which represent postal managers, all say PayPoint is not suitable for dealing with potentially vulnerable benefit recipients.
George Thomson, the general secretary of the NFSP, said that the contract terms for PayPoint did not include a "cash mechanism" requiring all of its outlets to have a minimum amount of cash on the premises to ensure that there was always enough available to pay to benefit recipients. A spokeswoman for the Department of Work and Pensions, which awarded the contract, would not comment on the details of it, but said that officials had looked at the "cash management" of all bids.
The Post Office has processed benefit payments such as giros for the government for more than 40 years. But in 2008, the contract to pay out "green giros" was put out to tender for the first time, inviting bids from the private sector, which were submitted last summer. The Post Office made an unsuccessful bid to retain the contract.
Thomson added: "We must be clear that if we are to maintain a network of 12,000 Post Office outlets, subpostmasters need significant volumes of work in order to survive, including regular repeat transactions such as benefits payments. Ministers have to deliver new government work to post offices, not more broken promises. As the government plans to remove Post Office Ltd from Royal Mail Group and make it a standalone company, this imperative is even greater."
Andy Burrows, post expert at watchdog Consumer Focus, said: "Our research suggests that people, particularly those on a low income, value the security and privacy that post offices provide. We are concerned that many convenience stores will not be able to provide the kind of service many consumers need."
Source: http://www.guardian.co.uk/business/2011/mar/03/claimants-will-have-to-cash-giros-at-off-licences
Awards and prizes Celestine Babayaro Global economy Cornwall Students Eric Pickles
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