Post Offices

							Manchester City Council                                        Agenda Item 13
Executive                                                     22 October 2008

                          MANCHESTER CITY COUNCIL
                           REPORT FOR RESOLUTION


REPORT TO:                   EXECUTIVE

DATE:                        22 OCTOBER 2008

SUBJECT:                     POST OFFICES

REPORT OF:                   CHIEF EXECUTIVE


PURPOSE OF REPORT

To consider the options available to the Council to keep open the five post
offices earmarked for closure in the national Post Office Network Closure
Programme.

RECOMMENDATIONS

The Executive is requested to:

   a) Note the work undertaken to explore the potential of the Post Office
      Local Funding Option for the five post offices proposed for closure;
   b) Note that, as set out in Section 4 of the report, Post Office Limited has
      not generated a viable solution to fund the Post Office branches due to
      be closed in Manchester and other local authority areas in the region
      and;
   c) Support ongoing efforts to regenerate existing district and
      neighbourhood centres to underpin the sustainability of the remaining
      58 post offices in Manchester.


FINANCIAL CONSEQUENCES FOR THE REVENUE BUDGET

There are no consequences for the Revenue budget arising from this report.

FINANCIAL CONSEQUENCES FOR THE CAPTAL BUDGET

There are no consequences for the Capital budget arising from this report.


CONTACT OFFICERS:

Howard Bernstein    234 3006             h.bernstein@manchester.gov.uk
Eamonn Boylan       234 3280             e.boylan@manchester.gov.uk
Sara Todd           234 3286             s.todd@manchester.gov.uk
Elaine Weinbren     234 3315             e.weinbren@manchester.gov.uk
Manchester City Council                                         Agenda Item 13
Executive                                                      22 October 2008

BACKGROUND DOCUMENTS:

Motion to Full Council 8th October 2008 Post Office Closures

Report To Communities And Neighbourhoods Overview And Scrutiny
Committee 15th July 2008 Post Office Network Change Programme 2008

Report to Executive 25th June 2008 Post Office Network Change Programme
2008

Motion to Full Council 26th March 2008 Post Offices

Report to Communities and Resources Overview and Scrutiny Committee on
5th February 2008 Post Office Network Change Programme 2008

Information Item to Resources and Governance Scrutiny Committee on 6th
September 2007.

Report to Executive 14th February 2007 ‘The Last Post Report’ by New
Economics Foundation and Department for Trade and Industry (DTI)
Consultation regarding the future of the Post Office Network.


WARDS AFFECTED:

Crumpsall
Didsbury East
Gorton South
Harpurhey
Withington

IMPLICATIONS FOR:

 Anti-Poverty      Equal             Environment          Employment
                   Opportunities

 Yes               Yes               Yes                  Yes
Manchester City Council                                        Agenda Item 13
Executive                                                     22 October 2008

1.0   Introduction

1.1   This report is produced for Executive following a motion made and
      seconded at the Council meeting on 8th October 2008 in relation to the
      planned closure of five post offices in Manchester. At the meeting, the
      Council unanimously resolved to:

      a) Ask the Chief Executive to write a report to Executive listing the
         options remaining to the Council of keeping these five post offices
         open including the use of Council grant or subsidy.
      b) The report should examine the Post Office Limited Local Funding
         Guidance document and developments in Essex and should
         explore the viability and cost of the Council keeping open these five
         post offices and re-opening other post offices closed since 2003.


2.0   Background

2.1   Alistair Darling, the then Secretary of State, launched a consultation on
      the future of the Post Office Network in December 2006. One of the key
      proposals in the Network Change Programme consultation was that
      Post Office Limited would close 2,500 branches nationally and this
      would be spread equally across the country and between rural and
      urban communities. The Post Office was given guidelines to close an
      average of 18% in each Area Plan. This was confirmed in the
      consultation response early in 2007.        Members will recall that the
      Council submitted a detailed report to Post Office Limited in February
      2008 that highlighted our vision for the City and detailed plans as set
      out in the Strategic Regeneration Frameworks and which sought to
      make the case for all Manchester Post Offices.

2.2   Post Office Limited published the Area Plan for Greater Manchester
      and High Peak on 10th June 2008. The plan proposed to close 5 of the
      63 post offices in Manchester, which are as follows:

             •   Lower Crumpsall PO, 80a Waterloo Street;
             •   Harpurhey PO, 500-504 Rochdale Road;
             •   Ladybarn PO, 106 Mauldeth Road;
             •   Parrswood PO, 841 Wilmslow Road;
             •   Barlow Road PO, 2 Byrom Parade, 201 Barlow Road

      This represents a closure rate of 7.9% of all post offices in the City,
      substantially less than the national average of 18% and the Greater
      Manchester and High Peak Area Plan which has an average 17.6%
      branch closure rate.

2.3   The City Council made a further detailed submission to Post Office Ltd
      during the ensuing consultation period providing information which
      made the case for keeping open all five of the post offices. During this
      period, thousands of Manchester residents signed petitions urging Post
Manchester City Council                                           Agenda Item 13
Executive                                                        22 October 2008

      Office Ltd to keep these post offices open. The consultation period
      concluded in July and on 12th August 2008, Post Office Ltd announced
      its final decision on the Area Plan. In Manchester they proposed to
      close the five post offices identified in 2.2 above.


3.0   Council Policy and Post Offices

3.1   The City Council commissioned a report by nef (New Economics
      Foundation in 2006 which analysed the economic and social impacts
      of post office closures in Manchester. The report revealed that the
      closure of a single urban post office can have a significant knock-on
      impact for local businesses, service providers, community groups, the
      local economy and for local people, particularly the most vulnerable. It
      can be the ‘tipping point’ triggering a downward cycle in urban areas,
      with the impact on other businesses. The report found that local trade
      associations noted a knock-on impact of reduced footfall on shops
      located in the vicinity of the closed post office, with the businesses
      themselves reporting significant loss of custom. The danger is that
      when amenities like the post office, banking facilities or retail outlets
      disappear from a community, the financially mobile are more likely to
      leave, leaving higher concentrations of deprivation, which can in turn
      lead to further loss of amenities. The study has been a key driver in
      shaping Council policy.

3.2   The City Council has five Strategic Regeneration Frameworks that set
      out the regeneration plans for each part of the city and together outline
      how the Council, its partners and residents can deliver the Sustainable
      Community Strategy in the city. These frameworks recognise the
      importance of district and local centres as fundamental to the
      sustainability of neighbourhoods. Two studies have been
      commissioned over the last four years that have investigated the likely
      capacity for new retail development over the next 15 years and the
      qualitative aspects of the City’s existing district and local centres. This
      has led to clear Council policy that the existing district and local centres
      should continue to be the focus for the clustering of retail development
      and service provision since these centres are in the most accessible
      locations and already contain a range of facilities. The logic is clear –
      investing in centres and keeping local shops and services together,
      enhancing the offer where possible, increases footfall and creates
      sustainable, thriving centres. The Council considers that post offices
      are a core part of this offer.

3.3   The Council has followed this policy through into implementation
      across the city and over the last three to four years has facilitated over
      £108m of public and private investment in district and neighbourhood
      centres. A further £65m of public and private funding is committed to
      regeneration schemes in centres over the next three years or so. One
      example is Harpurhey District Centre, now North City where £15million
      private and £13million public funding has delivered 3 phases of
Manchester City Council                                            Agenda Item 13
Executive                                                         22 October 2008

       improvements creating new shopping and public service facilities. The
       most recent phase included Harpurhey 6th Form College and North
       City Library which opened in 2006, the cost of which was in the region
       of £7 million with a Council contribution of £450,000. A busy post office
       is at the heart of this regeneration scheme. This policy approach has
       undoubtedly supported the sustainability of the Post Office network in
       the city and may well have contributed to the lower proportion of
       closures (7.9%) than the national and Area Plan average of circa 18%.


4.0    Post Office Limited Local Funding Option

4.1    Following the Area Plan announcement, Council officers entered into
       further discussion with Post Office Ltd (POL) to investigate the
       feasibility of a locally funded option for the affected Post Office
       branches.

4.2    Following discussions with POL, it became clear that they would not
       consider a locally funded option for one of the branches in Manchester
       due to the adverse impact on the viability of the rest of the network.
       This meant that a locally funded option could be considered for four of
       the five post offices earmarked for closure.

4.3    POL have now provided the Council with the financial information
       relating to the four branches. This information was provided under a
       non-disclosure agreement and so cannot be made public. The basis
       of each local funding option is that it should be cost neutral to POL and
       each contract must be until March 2011. The costs involved in keeping
       each of the post offices open include an annual service charge,
       provision of a working cash float (by way of a loan), set up and running
       costs and training.

4.4    The subsidy required from the Council to deliver the local funding
       option to make it cost neutral to POL would be significantly in excess of
       the projected income for each of the four branches, in three cases
       around double that income. The fixed costs remain the same over the
       life of the contract making the potential for any one of the post offices to
       become profit making nil. Essentially, the proposal would involve
       substantial Council subsidy with no possibility of the post offices being
       viable at the end of the Local Funding contract.


5.0.   Post Office Plans for other Councils

5.1    Members will be aware that of all the post office closures proposed as
       part of the national closure plan (in excess of 2000 branches
       earmarked for / already closed to date with the final figure due to reach
       2500 by the end of the year) only one post office in Essex has been
       saved from closure, with a further two planned to re-open there in mid-
       November. Details as to how this has been achieved are limited at the
Manchester City Council                                        Agenda Item 13
Executive                                                     22 October 2008

      moment, potentially due to the commercial confidentiality of the
      agreements. Costs vary considerably and the County Council were not
      able to state any specific figures. The contracts with providers are
      annual but they have a three-year indicative commitment to each grant
      recipient.

5.2   Officers have been working closely with other local authorities in
      Greater Manchester during the closure programme and, indeed, joint
      AGMA responses to the consultation and planned closures have been
      submitted. None of the GM authorities has been able to reach an
      agreement with POL about Local Funding although several have
      explored the option. In Rochdale, the Council was initially very keen to
      try and retain their six post offices earmarked for closure. However,
      when they entered a dialogue with POL, only one could be considered
      for local funding and when the Council received the costs, concluded
      that it was not a viable option and recommended not to progress with
      the proposal.


6.0   Conclusion

6.1   As outlined in the nef report, the loss of a post office can have a
      significant knock-on impact for local businesses, service providers,
      community groups, the local economy and for local people, particularly
      the most vulnerable. The Council has embarked upon a long term
      programme of investment in district and neighbourhood centres across
      the city in an effort to create sustainable places to cluster local shops
      and services. Post offices are a core part of this offer and many are
      thriving as a result of the regeneration schemes in centres.

6.2   As outlined above, the potential to enter into an agreement with Post
      Office Ltd in respect of the Local Funding Option has been explored.
      Under this option, the costs associated with keeping four of the five
      Manchester post offices open would be considerable and would require
      the commitment to a contract until March 2011 for each branch. At the
      end of this contract, none of the post offices will have been moved into
      profit and ongoing subsidy would still be required. On this basis, the
      Local Funding Option is not considered to be a viable solution to fund
      the post offices due to be closed under the Network Change
      Programme.

6.3   It is evident from the statistics - of the 2,000 plus closures announced
      since the programme began in October 2007, only one post office has
      been kept open to date – that the vast majority of local authorities in
      England have reached this same conclusion in respect of the Local
      Funding Option. It is therefore suggested that the Council’s efforts are
      best focussed on securing investment in local centres to support the
      future sustainability of our remaining post office network.