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 firstname.lastname@example.org Eamonn Boylan 234 3280 email@example.com Sara Todd 234 3286 firstname.lastname@example.org Elaine Weinbren 234 3315 email@example.com 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.