By Steve Bargeton, political editor

THE THREAT of closure for hundreds of Scottish post offices was lifted yesterday when the UK Government announced they would continue to run the card account (POCA) that distributes benefits to more than four million claimants across the UK.

The National Federation of Sub-Postmasters had warned 3000 post offices would close if the contract were lost.

Some 462,000 people in Scotland access benefits using POCA, including almost 63,000 in Tayside and Fife.

The Post Office faced competition to run the service from the private company PayPoint, which said it was “disappointed by this decision.”

At Westminster yesterday, work and pensions secretary James Purnell ended months of uncertainty when he told MPs the Post Office organisation would get a new contract running for five years from 2010, with the possibility of an extension beyond that.

“I firmly believe that this is the right decision for our customers, the Post Office and sub-postmasters,” he said.

“The Post Office is a cherished national institution at the heart of many communities.

“The card account is an important source of income and brings customers through the doors of post offices across the country.”

Mr Purnell added, “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.

“Now is not the time for the government to do anything to put the network at risk, particularly as post offices are often the only providers of financial services in remote areas.”

Around £80 million is paid out through the card account system in pensions, jobseeker’s allowance, child benefit and other allowances.

The card accounts for one in four visits to post offices, rising to one in two in rural areas and is regarded as a lifeline by workers in the industry, with many recipients spending some of the money in post offices or shops run by sub-postmasters.

Managing director of the Post Office Alan Cook said, “We very much welcome this decision, which enables us to achieve our goal of maintaining a branch network of around 11,500 outlets for the foreseeable future.”

The decision was widely welcomed across Tayside and Fife where it was feared there would be a new wave of post office closures had the decision gone against the Post Office.

The issue was hotly contested during the Glenrothes by-election where, at The Courier hustings, the victorious Labour candidate Lindsay Roy predicted the Post Office would keep the contract.

Visiting Holyrood yesterday, the Glenrothes MP said, “I am delighted at this decision, which is very welcome for the future of the Post Office in Scotland.

“This was a big issue in the recent by-election and I am delighted that James Purnell, who came to Fife to campaign in my election, has made this announcement today.”

Central Fife SNP MP Tricia Marwick said, “This is a very welcome decision, although it has been a long tine coming.

“There is no doubt that the strength of feeling expressed during the Glenrothes by-election moved the Westminster government to act.”

North East Fife MP Sir Menzies Campbell said, “Thank goodness for an outbreak in common sense on the part of the government.

“The Post Office network has taken too many blows in recent years and if the card account had gone elsewhere the consequences would have been dire.

“This decision is a tribute to the pressure exercised by the public who have made their feelings known at every level of government and has strengthened the arm of MPs like myself.”

SNP postal affairs spokesman and Angus MP Mike Weir said, “Today’s long-awaited announcement is a victory for people power against a dithering Labour government that was determined on privatisation.”

Mr Weir added, “It is still not clear why we had to endure months of delay and confusion over the award of this vital contract, and I welcome the fact the uncertainty has now been ended.

“The UK Government has presided over a programme of cuts and confusion that has threatened the future of the Post Office network and to lose the card account contract would have been devastating.

“In these days of financial uncertainty, the Post Office is uniquely placed as a trusted and accessible local service, and there is a real opportunity to secure the networks future as an essential local service.”

The news was welcomed by Perth SNP MSP Roseanna Cunningham and Perth and North Perthshire MP Pete Wishart.

“It is with a great sense of relief that I welcome a victory for people power in the news that the Post Office Card Account has been awarded to the Post Office,” said Mr Wishart.

“If the Post Office had lost the tender, it would have left huge numbers of people both financially and socially excluded.

“The Post Office is a lifeline service and, with soaring energy prices, increasing pensioner poverty and the credit crunch taking its toll, the ongoing threat to the future of the post office has been just unacceptable.”

Ms Cunningham said, “There should never have been any question about who would be awarded this contract.

“It is the elderly and vulnerable who would have borne the brunt if the Post Office had lost the DWP contract.

“The fact is that the card account primarily caters for the elderly and people on low incomes in rural or deprived urban areas who do not have a car or cannot afford public transport to access services elsewhere.”

“Despite the recent closure programme, there remain far more post offices in villages than there are banks, so there can be absolutely no doubt this is a service that the Post Office is best placed to deliver.

“The Westminster Government has presided over the closure of post offices the length and breadth of the country and the loss of the card account would have been the last straw for many more.”

Conservative MSP for Mid-Scotland and Fife Liz Smith said, “This is a victory for Conservatives and community campaigners against the worst instincts of a weak government.

“If giving POCA to another provider was not Labour’s intention, then why start a tendering process that it now claims is unnecessary?

“I am glad that this has been averted for the time being.

“However, the government deserves no congratulations for the worry that it has caused rural communities, vulnerable POCA users and sub-postmasters and for the way it has wasted taxpayer’s money on a botched tendering process.”