Post Office IT project given boost by Treasury

17 Jun 99
The Treasury is to release an extra £480m to bail out the Post Office's ailing IT modernisation programme.

18 June 1999

The extra money, thought to come from the Post Office's surplus, which is paid annually to the Treasury, will allow it to go ahead with fully automating its 19,000 branches to try to increase its competitiveness with banks.

The future of its branches looked shaky last month after the Benefits Agency pulled out of a £500m Private Finance Initiative to introduce a swipe card payment system for social security benefits at post offices. ICL Pathway, the computer services company, lost £180m on the project.

The Post Office agreed to restructure the scheme, still in partnership with ICL. The revised system, which will automate all the Post Office's 170 services, will cost between £800m and £900m over six years, nearly double the original figure.

A spokesman said it wasn't yet clear how the released money would affect the corporation's finances in the long term. Speculation was mounting that its 1999/2000 accounts would show a £100m loss over the past four years.

With 5,000 post offices said to be in financial difficulties, the electronic delivery of public services through kiosks, or the National Lottery contract – available in 2001– may be other ways to boost operations.

The government is to make a statement on the future of the Post Office in a white paper soon.


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