The Scrutiny Support Officer presented a report to outline the purpose of the meeting which was to inform Members of the current position regarding the consideration of a Trust for leisure services in Middlesbrough.
The Executive Member for Public Health and Sport informed the Panel that the current budget position in Middlesbrough had led to consideration of a Trust for leisure services. The Health and Development Manager had been asked to research different Trust models. The Executive Member was due to meet with the Mayor to consider the next steps.
The Health and Development Manager gave a PowerPoint presentation that focussed on three areas, including what sport and leisure services Middlesbrough had, budget issues, what the appropriate operating model could be, and where savings could be made and standards improved.
A survey completed in 2011 showed that 25% of Middlesbrough residents regularly used Council owned leisure centres and they welcomed over one million customers per year. Customers tended to be low-income users and 70% of gym users received concession prices. Private sector provision usually offered higher priced annual memberships.
Details of the current Council provision were outlined and it was highlighted that Acklam Pool and the Ormesby Centre had closed and Mill Hill, Pallister Pavilion and Thorntree Pavilion sports sites had been asset transferred to local sports clubs.
According to National Indicator 8, about 20% of the population in Middlesbrough exercised three times a week for at least 30 minutes. This had increased from 17%. The average across the country was 25%.
The Revenue Budget for the current year for the Sport and Leisure Service was £4.37 million expenditure and £2.73 million income, giving a net subsidy of £1.64 million. In addition building running costs, were met centrally and actual cost for 2011/2012 was £1.02 million. The current years subsidy was projected to produce a £70,000 surplus after corporate savings. In Middlesbrough the subsidy equated to £2.60 for every visit and the national average subsidy was £2.15. This was due to fees in southern England and more affluent areas generally being higher and also Trusts having lower operating costs due to being able to retain the VAT.
There had been twelve staffing and expenditure reviews in the last three years and a robust management structure had been established with staffing costs reduced by over £1 million.
Development work was ongoing to cut the subsidy further and this included:
· Increasing income through diversification, staff engagement and marketing.
· Externalising services to cut costs, maximise tax savings, and achieve a more entrepreneurial approach; for example, a Trust model.
· Increasing participation in sport and leisure.
· Encouraging ambition and aspirational behaviour.
· Linking to the Vision to make the town a better place, branding as a healthy town.
It was highlighted however, that further efficiencies were more difficult and that closures and eventual cessation of services were alternatives.
It was explained that a Trust was a non-profit making organisation (NPDO). A charitable Trust would be independent from the Council and the annual subsidy would be paid as a management fee. Buildings could be leased to the Trust for a fixed term. There were currently 120 leisure Trusts operating in the UK, 57% of which covered single local authority areas. It usually took about eighteen months to set up a Trust and there were significant tax benefits to be gained.
The Council could continue with the local authority run service or consider forming a Trust or consider other options. There were different types of Trust including a single authority Middlesbrough based Trust with a local management board, or a partnership with another Trust or the private sector. A Trust could be single purpose, for example for sport and leisure, or multi purpose, for example for leisure, cultural services, community centres and libraries.
Forming a Trust would require formal optional appraisal and the procurement of expertise on finance and legal issues. The scope and remit of a Trust would need to be defined with a strategy to manage risk in place. Business rate savings could be made although it was anticipated that this would be reduced by a forthcoming Central Government review. Savings could also potentially be made through a reduction in Central Support costs.
Details of the Sport England model for the acceptable facilities in a town such as Middlesbrough were detailed. Most facilities were adequate although another swimming pool and some additional cricket pitches would meet deficiencies.
A consultant had been engaged by the Council from KKP to undertake some exploratory work on the proposed Prissick Sports Village. Initial findings were that the Village should include a skate park, road cycling, BMX track, velodrome, multi-use indoor facilities including tennis, track and athletic events, a 100 station gym, outdoor pitches, a commercial centre incorporating a cafe and a pharmacy, and potentially a swimming pool. The Village would need to be financially viable in revenue terms and based on a Trust model. An additional 350,000 visits would be needed to raise £1 million revenue assuming some closures. The Village must be iconic and attractive and satisfy Sport England requirements in order to attract funding. Capital funding would be required to build the Village.
The next step for the Council was to decide whether or not the Trust model was the best way forward. It was estimated that buying-in expertise to manage the risks would cost around £80,000 and the whole process would take about 18 months.
1. the information provided be received and noted.
2. arrangements would be made for a legal representative to attend the next meeting to discuss the possible risks of entering into a Trust as well the financial benefits.