REPORT TO: CABINET 15 October 2012

25/11/2013

CHESHIRE EAST COUNCIL
REPORT TO: CABINET
___________________________________________________________
Date of Meeting: 15 October 2012
Report of: Strategic Director Places and Organisational
Capacity
Subject/Title: Review of Service Delivery Options – Leisure
Services
Portfolio Holder: Councillor Rod Menlove
______________________________
1.0 Report Summary
1.1 This report describes the background to the current provision of leisure
centres with the Borough and seeks Cabinet’s approval for a review of
the existing model of “in house” delivery. The report briefly outlines the
potential options for delivery currently available and in use by other
local authorities.
1.2 In order to arrive at a preferred future model for Cabinet approval and
implementation the report explains that it is necessary to employ a
suitable external consultant to quickly evaluate the most efficient and
effective delivery mechanism that will also allow the Council to still
achieve its corporate priorities.
2.0 Decision Requested
2.1 Cabinet is asked to approve the procurement and appointment of a
suitable leisure and financial consultant to quickly review the range of
potential delivery models available and recommend a preferred option.
A virement from existing budgets will cover the cost of this work which
is expected to be in the region of £30,000.
Reasons for Recommendation
3.1 There is a need to achieve best value for the services we provide and
reduce net operating costs wherever possible. The review of leisure
services and the early establishment of the most appropriate operating
model will help to achieve this.
3.2 The selected consultant will look in detail at the options currently
available to the Council and will set out the advantages and
disadvantages of each model. The final report will include the likely
cost and benefits of establishing a new model and an implementation
plan for the preferred option. It is anticipated that this will then be
Agenda Item 7
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reported back to Cabinet in December for final consideration and
approval.
3.3 It is essential that whichever delivery model is established, a detailed
performance regime will be needed to ensure services are focused on
Council priorities with any ‘grant aid’ (or reducing subsidy) explicitly
linked to the achievement of these outcomes.
4.0 Wards Affected
4.1 All Wards are affected.
5.0 Local Ward Members
5.1 All Local Ward Members.
6.0 Policy Implications
6.1 The Council’s Sustainable Community Strategy directly identifies the
need for a ‘wide range of accessible and excellent leisure, sporting and
cultural facilities and activities for all people to enjoy’. Further to this,
the provision of high-quality leisure facilities and services will contribute
directly to key agendas in creating safer communities, supporting
active lifestyles and improving the health and wellbeing of our
communities, particularly children and young people.
6.2 The Council’s Business Plan identifies efficiency savings linked to
Leisure services, which will be delivered by the operational changes
recommended in the report from the specialist consultant
7.0 Financial Implications (Authorised by the Director of Finance and
Business Services)
7.1 The review of service delivery models will enable the implementation of
the most efficient, cost effective way of delivering leisure facilities,
whilst providing opportunities for the future enhancement of assets.
The potential saving that can be achieved will be dependent on the
model selected and this will be established as part of the options
review by the consultant.
7.2 It is anticipated that savings can be identified from a number of
sources, including financial benefits from a charitable structure (namely
VAT and mandatory business rates relief), savings derived from a
greater focus on operational efficiency (including a review of terms and
conditions) and greater freedom around income generation. All of these
measures could be delivered as part of a partnership with the private
sector or a Council established company model.
7.3 The total cost of implementation of the preferred model will be
confirmed following the work of the specialist consultant. Examples
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from other authorities have indicated that this could be in the region of
£250 -300k.
8.0 Legal Implications
8.1 None directly associated with this report. This will be considered further
once the preferred model is known.
8.2 Transferring service delivery to an alternative model would involve HR
issues including TUPE transfer of existing staff from the Council to the
new organisation.
8.3 The procurement of consultants to support this process will be
discussed with the Procurement Unit and Legal Services to ensure
compliance and ensure best value is achieved.
9.0 Risk Management
9.1 Early and continued engagement with trade unions and the existing
workforce even at this early stage will be key to successfully delivering
the outcomes of the review and also in transitioning to a new delivery
model.
9.2 Irrespective of the model selected the consultant will be required to
look into the potential transfer of property leases. This will require input
from Legal and Assets Services to ensure the Council’s ownership is
protected with whichever model is selected and also to provide
certainty over future use of the assets for leisure and recreational
purposes.
9.3 There will be a number of Procurement issues that will need to be
considered further as part of the in-depth review including current
regulations that address asset and service transfer.
9.4 The Council’s physical asset stock for leisure is ageing and continues
to require increasing spend on both planned and reactive maintenance.
In addition, the recent feasibility work on the concept of ‘Lifestyle
Centres’ suggested significant revenue savings can be made by a
programme of capital investment in new facilities and integrating
services. The review of service options will need to be mindful of the
Council’s wider asset strategy, current service reviews and major
investment plans and provide clarity around the impact of these on the
business case for the range of alternative models.
10.0 Background and Options
10.1 The Council’s leisure facilities are currently delivered ‘in-house’
employing over 400 full-time equivalent staff. In line with the need to
deliver efficiencies in future service provision, this report outlines
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potential options and seeks approval for further detailed work to be
undertaken to assess the range of alternative delivery models currently
available.
10.2 The current service is an amalgamation of those inherited from the
three former district councils including fifteen facilities (including 8 jointuse
centres shared with high schools): of these, nine sites have
swimming pools and two have athletic stadiums. Annual attendance
visits for 2011/12 were over 2.7 million with almost 1 million of these
being young people under 16.
10.3 Gross expenditure was £7.89M in 2011/12 with income of £5.85M in
the same year. Council Tax payers currently subsidise the service by
just over £2M per annum (or £0.75 per visit). Recent harmonisation of
staff terms & conditions has increased the employee costs budget by
approximately £650k – 700k (circa 15%) This may rise further as a
result of the potential costs through increments in pay. Added to the
recent increases in energy bills this will mean that the subsidy level is
likely to continue to rise.
10.4 It is expected that any proposed model will aim to move this position
towards break-even through a combination of cost reductions
(including a review of terms and conditions), increased income and
taking full advantage of any financial benefits arising from a new
business model (including VAT and NNDR)
10.5 The establishment of a ‘charitable trust’ to deliver leisure operations
was considered in the early life of CEBC and was deemed to be the
preferred delivery model at that time. This option was not progressed
due to the difficulties of reducing the Council’s overhead costs.
However, with the current financial challenges facing the Council and
the drive to ‘deliver more for less’, the time is right to revisit this as well
as explore the viability of the range of models now available. The
consultant’s review will recommend the most appropriate model which
gives maximum flexibility to the Council, whilst at the same time
reducing the burden to the Council Tax payer.
10.6 A significant amount of work has already been carried out to establish
the service baseline and its current effectiveness. There are a number
of different management options available to operate the Council’s
leisure facilities including:
•
Community Interest Company
•
Charitable Trust
•
Social Enterprise
•
Joint Venture
•
Public Sector Subsidiary Company
•
Limited Liability Partnership
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These will form the basis of the review and will be further expanded on
and reported back to Members to agree a preferred model.
10.7 Consideration will also be given to the scope of services that could
constitute the makeup of the preferred business model, for example the
inclusion of the Sports Development service, depending on the appetite
for further change.
10.8 The transfer of leisure facilities to a new or existing charitable trust has
been the preferred option for many Local Authorities and is likely to
provide the greatest potential for savings in VAT and Business Rates.
However, CEBC has a one-off opportunity to get this right and test the
feasibility of a range of current options to ensure we capture the
service benefits and improve customer satisfaction for the longer-term.
11.0 Access to Information
Name: Peter Hartwell
Designation: Head of Community Services
Tel No: 01270 686639 begin_of_the_skype_highlighting 01270 686639 FREE  end_of_the_skype_highlighting
Email: peter.hartwell@cheshireeast.gov.uk
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