Appendix 4

Area Committee Well-being Fund – Project Proposal Outer West Area Committee

Project Name: BRANCH FOR PUDSEY & SURROUNDING AREAS

Lead Organisation: CITY CREDIT UNION LTD.

Project Delivery - How will the project be delivered? (List any partners involved in the project):

Through our project we are seeking to provide local access to credit union services, advice and support for the many households that are facing the daily problems of financial exclusion. With local branches in the heart of our communities we can provide access to financial products, especially to those most in need.

The project will be delivered through the utilisation of the former LCC cash office in Pudsey Town Hall.

The partners in the project are:

LCCU – the service delivery partner, providing access to affordable financial services to all residents in the area, especially those who cannot or do not access mainstream finance and those who are financially excluded.

LCC Customer Services – providing the ITC link into LCC’s WAN and advice to clients, linking with the services available through the credit union

WNWHL – providing the accommodation for the credit union by providing the cash office and back office space and contributing to the staffing costs for a minimum of two years

DWP – providing the capital for the credit union to offer affordable credit and some funding towards staffing costs

Project Summary (include a brief description of the main activities, why the project is needed and links to key priorities):

Research commissioned by LCC has highlighted a wide range of financial inclusion issues in the city’s deprived communities. The study recommended that the Credit Union should be the lead body for a new initiative targeting financial exclusion in Leeds, with the City Council’s One Stop Shop network as the community presence of the project. The research also recognised that developing local branches of the Credit Union will require significant new funding.

Leeds City Credit Union, in partnership with (LCC), has expanded its services across the city through the utilisation of the former Cash Offices within LCC’s One-Stop Shops. This major development project is underpinning significant growth of LCCU and its services across the city.

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To date, new branches have been opened in , , Dewsbury Road, Great George Street, Morley, Belle Isle (with the support of BITMO) Halton Moor and Wetherby, bringing the branch network up to 10 outlets.

The establishment of these branches has been supported by funding from Leeds City Council, local people (through ward budgets), the DWP Growth Fund, East North East Homes Leeds and the Esmee Fairbairn Foundation. LCCU is keen to continue this programme of growth and if target levels for new members, savings and loans are achieved at the branches, they will be self-sustaining by the end of two years and no further grant support will be needed.

Our services include the opening of accounts (including our new Current Account), cash transactions, and applications for loans. We also offer support to people who are currently financially excluded, helping them to engage with modern financial services. This will include advice on money management and the possibility of paying off existing loans through our loan funds. With the introduction of our new banking service from November 2006, we are now able to offer current accounts in addition to normal credit union services. These accounts are particularly good for low-income consumers in that they do not have an overdraft facility and have much lower charges than standard bank accounts.

Other services available to residents include: • Safe Savings, including a Christmas Club, Child Trust Fund and a variety of children’s savings accounts • Budget Accounts, to manage all those household bills and help families to manage their money better by linking with our Money Management Service • Insurance services – all account holders have life and loan insurance provided by the credit union free of charge

The LCC research found that access is an important issue for low-income groups. Research has shown that it is the face-to-face approach of many licensed moneylenders that is valued by these groups. A presence in the area is essential from the outset to build membership and to provide the face-to-face, one-on-one service that low-income consumers value.

The establishment of a branch in Pudsey will increase credit union coverage to the west of Leeds and relieve the pressure on Armley Branch, one of the busiest in our network.

Pudsey is a target area for the credit union as it has a broad socio-economic mix of residents, many of whom can afford to save a little, providing a pool of additional funds to lend to those in need and enabling the credit union to assist more low-income families across the area. Without savers the credit union cannot generate the funds it needs to make loans and develop other services. To be sustainable we require a good mix of members from a variety of financial and social backgrounds.

The project will improve access to financial services for individuals who are unable to use traditional sources of finance through providing a local credit union counter service backed-up by advice and support at Council One Stop Centres. This is an innovative means of promoting financial inclusion and represents a step-change in the level of services that the Credit Union, already the biggest “live or work” credit union in the country, will be able to offer to financially excluded communities in Leeds. LCCU were a major contributor to the award of Beacon Status to LCC for their work on Financial Inclusion with our branch expansion programme and partnership working being a unique D:\moderngov\data\published\Intranet\C00000183\M00002955\AI00010679\Item12dwellbeingapplication4binyards0.doc feature of this work.

Outcomes (summarise the main outcome/output/benefit the project will achieve):

Although local people can already access Leeds City Credit Union services through payroll deduction and bank direct debit or standing order, the council’s own research has demonstrated the need for face-to-face services in the community.

The research looked at a representative sample of 410 residents living in the seven most disadvantaged wards of Leeds. It found that 30% of people had no bank account, and a further 20% had a bank account but no cheque book or cheque guarantee card. The study went on to explore interest in local services and found that:

• 34% of people in deprived areas of Leeds would like “somewhere local where you could take out credit or a loan at a reasonable rate of interest” • 36% would like “somewhere local where you could save small amounts of money” • 31% would like “more knowledge and information about financial matters in general” • 30% would like “a local service where you could cash a cheque” • 28% would like “a savings account for children”

Although financial exclusion occurs to individuals and is therefore classified as a personal finance issue its impact is felt across the wider economy. The LCC research estimates that the use of doorstep lenders as opposed to more affordable credit is costing the Leeds economy between £3 million and £9.5 million per annum.

This money, which is only interest repayments, disproportionately affects the financially poorest households and communities. It reduces families’ disposable income, which in turn reduces their children’s life chances, and thus cuts the amount spent at local shops and businesses. In addition to undermining existing micro-entrepreneurs the lost money reduces the capacity of potential entrepreneurs to start businesses. This latent entrepreneurship is highlighted in the research, with 20% of those surveyed in deprived communities interested in affordable loans for business start-ups.

Comparing LCCU’s Handiloan with one from a major doorstep loan company shows that £300 from Provident Financial would cost £480 whilst the same loan from LCCU would cost just £324 , a massive saving of £156 per £300 borrowed.

Since the launch of the “Affordable Credit Scheme” in November 2006 (through the DWP’s Growth Fund Project) LCCU has lent out over £3.4 million to low-income consumers and saved the poorest communities in Leeds over £1.7 million in high interest charges in just 12 months.

We aim to help local communities become less financially excluded, build local traditions of savings and encourage prudent financial management at household level. Our target is to provide accounts for 2,000 people through recruiting them as members of the credit union.

D:\moderngov\data\published\Intranet\C00000183\M00002955\AI00010679\Item12dwellbeingapplication4binyards0.doc Identify which geographic areas will benefit: Pudsey and the surrounding areas

Project Cost. Please indicate;

How much the project will cost. (Please list all partners and their contributions)

For one year the project will cost: INCOME LEEDS CITY CREDIT UNION £ 28,000 £ 14,000 plus accommodation costs approx 4,000 per WEST NORTH WEST HOMES year OUTER WEST AREA COMMITTEE £ 21,000 DEPARTMENT OF WORK & PENSIONS £ 12,000 IN KIND SUPPORT – LCC & WNWHL (OCCUPANCY COSTS) £ 3,500 TOTAL £ 78,500

OVERHEADS SALARIES & WAGES £ 45,000 STAFF PENSION SCHEME £ 4,050 TELEPHONE £ 750 PRINTING & STATIONERY £ 2,000 OFFICE SUNDRIES £ 1,500 ADVERTISING & PUBLICITY £ 2,500 TRAINING £ 1,000 OCCUPANCY £ 3,500 GENERAL INSURANCES £ 2,000 COMPUTER MAINTENANCE £ 750 REPAIRS & CONSUMABLES £ 500 CASH HANDLING FEES £ 1,300 AUDIT CHARGES £ 650 BAD DEBT WRITE OFFS £ 1,800 BAD DEBT RESERVES £ 1,200 ITC & Furniture/Safe £ 10,000

TOTAL EXPENDITURE £ 78,500

The commitment from LCCU has been agreed by our Board of Directors. The grant from the DWP has been agreed. The grant and in kind support from WNWHL is to be considered by their Board at their next meeting.

How much Well Being Funding is sought and breakdown between capital and revenue) £42,000 Revenue funding to be split over 3 financial years:

Jan- March 07/8 = £5,250 April – March 08/9 = £21,000 April – March 09/10 = £15,750 D:\moderngov\data\published\Intranet\C00000183\M00002955\AI00010679\Item12dwellbeingapplication4binyards0.doc

Who will be in receipt of the financial order? (Name of the organisation and contact details) Leeds City Credit Union Ltd. Westminster Buildings 31 New York Street Leeds LS2 7DT

Contact: Sue Davenport, Chief Executive 0113 214 5254

Approved Date

Not Approved Date

Please return this form to Clare Wiggins, West Area Management Team, c/o Pudsey Town Hall, Lowtown, Pudsey, Leeds LS28 7BL or via email to [email protected]

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