Agenda item

The Executive received the report on the recovery of the Council’s leisure services as a result of the impact of COVID-19 and the requirement to secure a long term future for the Council’s leisure services. The report set out a proposal for permanently in-sourcing the leisure service to create a new pathway to rebuild the Council’s leisure offer to ensure a viable and sustainable long term future.

The Director (JY) set out the background research, rationale and future scenarios for opting to take the service back in house. Financial modelling for the in house option had been based on the operator’s 2018/19 data with particular regard given to the UKactive June COVID-19 Impact Report which, drawing on a body of research including that of Sport England, highlighted future uncertainty given the extreme volatility in the leisure sector. This was anticipated to continue for up to two years. Although there was continuing dialogue nationally within the sector, Government guidance was awaited on a pathway to the safe re-opening of facilities. A resurgence of infections would have a further impact bringing more restrictive lockdown. 

With behavioural change anticipated, affecting, for example, budget gyms and a high risk associated with a procurement approach as operators were unlikely to put forward a financially viable bid, the in-sourcing model proposed provided more direct control and was considered to be a safer approach given the high level or uncertainly caused by the pandemic. Many factors had to be taken into consideration in determining a net budget figure such as additional staffing, the need for social distancing of customers and environmental factors including stringent testing of plant to industry standards. This, however was a best estimate given the ever changing dynamic.

The initial transfer of the service would take place on 1 September 2020 with staff transferring to the Council to be under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE). A business case for the longer term governance options would be brought to a future meeting of Executive.

During discussion the following points were raised:-

·         It is important to recognise other options but these contain a high level of risk for the Council and its finances;

·         bringing the service in house was considered an exciting option which provides a greater opportunity to integrate with the Sport England Local Delivery Pilot;

·         it was the best deal for the city to ensure the continuation of the service and to support staff within the service; and

·         Members welcome the insourcing proposal and commend the swift action of officers in working towards opening the facilities as soon as the centres are safe and can meet Covid-19 secure guidelines.

The following responses were given to Members’ queries:-

·         a subsidy would be in place for an initial period during the phased opening but, because of the volatility of the sector and uncertainty over the changing landscape of Covid-19, it was not possible to estimate how long the subsidy would continue. The current model was based on an 18 month period and an update report following a detailed assessment of assumptions would be brought to the December Executive meeting;

·         it was hoped to reduce subsidies by adopting innovative ideas to better meet the needs of communities; and

·         the Government had not identified any specific funding to support the leisure industry but was being lobbied nationally by local authorities and operators.

The Director (JY) also stated that existing strategic work in bringing forward the Physical Activity and Built Facilities Strategies for leisure, which includes significant development plans for the Wonford and Exeter Arena sites, had been accelerated, and business cases were under development which, if successful, offer positive opportunities in the medium and long term future. Similarly, the Council had healthy partnerships with national governing bodies who are assisting in these developments and work was progressing on the flagship St Sidwell’s Point Swimming Pool and Leisure Centre and the refurbishment of the Riverside Swimming Pool and Leisure Centre both of which had continued throughout the pandemic with careful control of activity on site to ensure safe social distancing. Current estimates were, in both cases, for a 2021 opening, subject to how the pandemic plays out.

RECOMMENDED that Council:-

(1)        agree to the permanent in-sourcing of the Leisure Services when the current contract terminates on 31^st August 2020 and the abandonment of the procurement process;

(2)        agree to officers effecting an expedient transfer of staff and services into the Council and bringing forward a detailed business plan by 31 December 2020 setting out governance options for the future operation of the service;

(3)        support the allocation of a supplementary budget of up to £270,000 to allow the cost recovery agreement to be settled;

(4)        allocate a revenue budget of £1,542,310 to cover the costs of the transfer and the re-launch of the services;

(5)        allocate a capital budget of £330,000 towards the costs of re-opening facilities in a COVID-Secure environment, ICT systems and equipment and re-branding; and

(6)        allocate a capital budget of £1.5 million for the fitting out of St Sidwell’s Point Swimming Pool and Leisure Complex.

RESOLVED that:-

(1)        the staged re-opening of leisure services take place from September 2020 when it is safe and cost-effective to do so; and

(2)        the cost recovery payment of £337,833 agreed with Parkwood Leisure which terminates the contract on 31^st August 2020 be noted.