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November 15, 2008 11:23 AM

Newcastle Liberal Democrats in have welcomed a decision by the Government to abandon proposals to hand over the payment of pensions and benefits from post offices to a private company.

Thousands of elderly people, carers, disabled people and claimants across Newcastle currently use their local post offices to receive their pensions and benefits through the Post Office Card Account.

But earlier this year ministers invited bids from private companies as well as the Post Office for the contract to pay out pensions and benefits from 2010.

Had the Post Office lost the contract, up to 6,000 more post offices could have gone to the wall as a result of the lost business. These unmanaged closures would have been in addition to the 2,500 "managed" closures that the Government has already announced.

"The Government's u-turn is welcome here in Newcastle," said Newcastle North Parliamentary spokesman Ron Beadle.

"It means our post offices have a better chance of staying open.

"But this is a u-turn that should never have had to happen in the first place. The Government should have realised the importance of post offices to communities and awarded the new contract to the network without these months of delay.

"Instead, local branches have had to deal with the uncertainty that ministerial dithering and unnecessary contracting processes has caused.

"Hopefully, local branches can now plan ahead knowing they will continue to pay out pensions and benefits. But we are also calling on the Government to carry out another u-turn.

"They must stop putting pressure on pensioners and benefit claimants to get their cash paid through the banks. People should have a choice."

Liberal Democrats from across Newcastle have come together for one final push to save nine of Newcastle's post offices - just days before their future is decided.

In Newcastle nine post offices have been axed and a 10th - in Walker - is also under threat.

Newcastle Labour MPs Doug Henderson, Nick Brown and Jim Cousins voted against the motion and backed the closure programme.