MIDDLESBROUGH COUNCIL

AGENDA ITEM

Future Delivery Model for Sports and Leisure Services

Executive Member for Environment: Tracy Harvey

Executive Director of Corporate and Commercial Services:
Tony Parkinson

9th December 2014

PURPOSE OF THE REPORT

  1. The purpose of this report is to update the Executive on progress with the Change Programme Project which is examining Alternative Delivery Models (ADMs) for the future provision of the Council’s Sports and Leisure Services, and to seek approval to test the market with a view to the services being transferred from the Council to an external trust.
SUMMARY OF RECOMMENDATIONS
  1. That Executive approves:
  1. The outcome and preferred option from the ADM options appraisal process

Ii.The Marketing of the services with a view to transferring them to an external trust

  1. The removal of Hemlington Recreation Centre and Lake from the scope of facilities to be included in the procurement exercise

IF THIS IS A KEY DECISION WHICH KEY DECISION TEST APPLIES?

It is over the financial threshold (£150,000) / X
It has a significant impact on 2 or more wards / X
Non Key

DECISION IMPLEMENTATION DEADLINE

  1. For the purposes of the scrutiny call in procedure this report is

Non-urgent / x
Urgent report

If urgent please give full reasons

BACKGROUND AND EXTERNAL CONSULTATION

  1. The Council’s sportsand leisure services provision is included within the Council’s change programme, with a remit to carry out an examination of Alternative Delivery Models (ADMs) for the future provision of these services.
  1. In order to progress this project, a comprehensive appraisal of ADM options for the future provision of these services was carried out in August / September 2014 by an independent Leisure Consultancy Expert(Max Associates).
  1. The primary outcome of the exercise is to reduce the financial subsidy from the Council for the provision of these services as far as practicably possible.
  1. Whilst delivering this reduction in subsidy, the future service delivery model also needs to achieve some key deliverables, to ensure that the services are effectively meeting the requirements of the Middlesbrough’s‘Leisure Needs Analysis’, and contributing to the Council’s strategic outcomes for the town.
  1. The key deliverables can be summarised as follows:
  • Deliver an increase in the uptake in sport and physical activity in the town.
  • Deliver an increase in the provision of underrepresented sports in the town
  • Contribute to the delivery of the key public health outcomes for the town.
  • Deliver an increase in leisure opportunities to all residents and visitors.
  • Maximise commercial opportunity and income generation whilst retaining a focus on the above outcomes.
  1. The options appraisal was carried out using the appraisal criteria which were agreed at a multi-agency workshop, which included representation form sport governing bodies, leisure staff, other key stakeholders, and Members from the Community Safety and Leisure and Overview and Scrutiny boards.
  1. The agreed criteria were predominantly based upon the ability of an option to meet the key deliverables mentioned in paragraph 9, the Council’s strategic outcomes and the Mayor’s Vision for Middlesbrough
  1. The subsequent appraisal concluded that the most effective model to achieve a significant reduction in the subsidy, whilst meeting those key deliverables and contributing to the Council’s strategic outcomes would be to move the service into an external trust model. Such arrangements are already in operation in both Stockton and Redcar & Cleveland Councils.
  1. Following this initial appraisal, a corporate approach to the ADM options appraisal process was agreed by the Council’s Executive on 4th November 2014. This details the process to be followed, the criteria upon which each ADM option should be assessed, and the level of importance weighting which should be applied to each criterion when scoring each of the options.
  1. This ensures that through the application of a standard approach to all ADM projects within the Council, the recommended option will support the principles of the Change Programme and deliver the strategic outcomes to ensure the maximum levels of benefit to the Council and the town.
  1. The Leisure services options have subsequently been appraised against the new corporate evaluation criteria, and the preferred option remained the same.
  1. In proposal 7 of his budget statement on 22nd October 2014, the Mayor announced that the Council would transfer management responsibility for the Council’s sports and leisure services to an external trust, saving £430,000 in 2015-2016, and up to £1.66m over a full year period. The current subsidy is £2.1 million per annum.
  1. The £430,000 saving for 2015-2016 will be made by the in house service in preparation for moving into a trust arrangement.
  1. In order to ensure the Council achieve the desired strategic outcomes, and retain an appropriate level of control in respect of future service planning and delivery, such an arrangement would be managed and governed by the Council through an appropriate board arrangement, with high level member and officer representation at board level, and an agreed balanced scorecard approach to performance and financial management.
  1. Subject to Executive approval, in order to attract a range of prospective bidders for the future provision of these services, the Council now needs to develop a detailed tender specification and carry out a full OJEU procurement exercise. An OJEU Notice has recently been issued in advance of this process.
  1. The scope of facilities to be included in the procurement exercise has been discussed during the options appraisal process, and will also need to be formally agreed prior to beginning the detailed procurement and competitive dialogue stages.
  1. It is therefore proposed that bidders are given the opportunity to bid for managing the following facilities:
  • Neptune Centre
  • Rainbow Centre
  • Southlands Centre
  • Middlesbrough Sports Village
  • Middlesbrough Golf Centre
  1. This would provide like for like bids to be evaluated against the Council’s current sports and leisure provision and range of facilities.
  1. It is proposed that in addition to bidding for the above facilities, bidders are also invited to provide more commercially focussed bids for a mixture of facilities. This could attract alternative proposals for the Council to further consider, such asfor example the golf centre as a stand-alone bid.
  1. Such an approach may also offer additional savings by bidders proposing a different facility mix, for example by closing a facility or through further investment in existing or new facilities.
  1. The Hemlington Recreation Centre and Lake have not been included within the project scope as it is considered that these facilities are more suitable to offer for a potential Community Asset Transfer as a separate project.
  1. A detailed tender specification which will form the basis for the procurement, bidding and subsequent tender evaluation processeswill berequired, taking into account current service provision, the Council’s future strategic requirements, and the views of stakeholders and partners, including the Community Safety and Leisure Scrutiny Panel.
  1. In developing the specification, a number of issues have arisen, which needed to be considered, to ensure that both the Council and the prospective bidders fully understand what will or will not be included within a trust arrangement.
  1. Having given these issues due consideration, the following arrangements are proposed to be included within the detailed tenderspecification which will form the basis for proposed bids:
  1. A range of public health outcome programmes are currently beingcarried out within leisure facilities through the ‘Health Through Activity Programme’. This involves activities like GP Referral sessions, and New Life New You.

These programmes need to be continued by any external trust to ensure that the Council’s strategic outcomes in terms of the wider public health and physical activity needs of the Town and its residents are delivered in the future.

Ongoing funding from public health budgets for the continued provision of these activities within a trust arrangement will therefore be made specific within the tender specification.

  1. A subsidised pricing structure, which supports the use of leisure facilities by the whole community, especially those from the most deprived wards is currently in place across all leisure facilities.

This subsidised pricing structure ensures that sports and leisure services are accessible to all residents, and this also needs to be continued. This requirement will therefore be made specific within the tender specification.

  1. The Council currently provides free provision of facilities and activities for other Council services within leisure facilities, where such activities make a significant contribution to the strategic outcomes and objectives of those service areas.

An example of such provision would be working in partnership with Children with Disabilities to enable access to a range of activities for disabled children from 5 to 16 years old utilising all of the Council Leisure venues across Middlesbrough.

The sessions and activities give these children the opportunity to engage in physical activity, provide an environment for social interaction and provide the parents of these children respite whilst the children are attending.

The activities are delivered four times per week at The Neptune Centre, and three times per week at Southlands Leisure Centre, in addition there are also large seasonal events, and full weeks of activities in the school holidays

The cost of such provision is currently absorbed within the baseline budgets for sport and leisure serviceswhich will be used in the evaluation and comparison of tender bids.

It would be expected that this element of free provision would continue under a trust arrangement, therefore this provision will be quantified and made a specific requirement within the tender specification.

  1. The ‘Run Middlesbrough’5k and 10K event is extremely popular and well supported politically. The event has grown at a steady pace over recent years, however it currently relies heavily on an element of public health funding, external sponsorship and leisure services staffing resources, and could therefore pose a financial risk to the Council.

An external trust provider would be well positioned to promote and deliver such a high profile event in the future and would have the potential to grow the event commercially and eliminate the financial risk attached to it.

A requirement to continue to deliver the ‘Run Middlesbrough’ event within the external trust budget will therefore be included in the tender specification, with a proviso that the Council receive an equitable share of any profit or surpluses from the future growth of the event.

  1. The libraries at The Rainbow and The Neptune Centres are situated within the leisure venues and are managed by library service staff working in partnership with leisure staff.

Appropriate arrangements for the library service to continue to operate within these venues will therefore be included within the tender specification.

  1. In addition to the trust board, which will ensurethat the Council will retain effective governance of the trust agreement as mentioned in para 18 of this report, there is a need to retain the strategic and political responsibility for sports and leisure provision in Middlesbrough within the Council.

This willensure the Council meets the statutory requirement for the future development and delivery of the Town’s ‘Leisure Needs Analysis’ and ‘Playing Pitch Strategy’.

The Council will also retain responsibility for health development initiatives through a retained position within the public health structures

Retaining these functionswithin the Council will ensure effective future working with the trust provider, sportsgoverning bodies, other local leisure providers and key strategic partners, which will be vital to the Council in ensuring that its strategic outcomes in terms of the wider public health and physical activity needs of the town and its residents continue to be delivered in the future.

These functions will therefore remain within the Council, and their associated costswill be taken into account as part of the tender evaluation process.

  1. Where appropriate, the planned actions which resulted from the recommendations in the final report of the Community Safety and Leisure Scrutiny Panel which are referenced later in this report will also be included within the tender specification.
  1. A comprehensive exercise has been undertaken to understand the currentfull cost of the current in house provision for each of the Council’s sports and leisure facilities, in order that a fair assessment against an agreed cost baseline for either the full service or a more tailored andcommercially focussed modelfor future service provision can be made.
  1. Following the thorough evaluation of all bids, a further report will be brought to Executive, recommending the future provider for sports and leisure services, the scope of facilities, the anticipated cost savings to the Council, and the timescale for mobilisation of the new service provision following the Executive decision to proceed.

IMPACT ASSESSMENT (IA)

31.Initial proposals to look at alternative delivery models for services within the scope of this proposal were impact assessed. A further impact assessment will be undertaken as part of the procurement process prior to any contract award. The information required to complete an Impact Assessment will continue to be gathered and analysed as part of the overall procurement process to ensure that consideration is given to where impacts on individuals or groups may differ because they hold a protected characteristic and due regard is given to the equality duty throughout the process.

OPTION APPRAISAL/RISK ASSESSMENT

  1. A range of ADM options for sports and leisure services were considered during the options appraisal process, which concluded that an external trust provider would be the most likely model to deliver the desired reduction in financial subsidy, whilst contributing to the Council’s strategic outcomes.
  1. A detailed tender specification will be developed, the procurement process will seek to attract bids from a range of leisure trust providers, and these will be subjected to competitive dialogue and full evaluation through the procurement process prior to a preferred provider being recommended to the Executive.
  1. A robust tender procedure will ensure that a successful bid for future provision of these services would meet the key deliverables mentioned earlier in this report, ensuring that any recommended provider would meet the requirements of the Middlesbrough’s‘Leisure Needs Analysis’, and contribute to the Council’s strategic outcomes.
  1. A risk log and assessment process will be developed by Max Associates, in consultation with the project team, and this will be applied to all aspects of the procurement process.

FINANCIAL, LEGAL AND WARD IMPLICATIONS

  1. Financial –The full procurement process, including the competitive dialogue, cost of external legal support and the mobilisation stages is expected to be £197,400.An amount of £65,000 has already been funded from the Change Fund, and it has been confirmed that the remainder of £132,400, to include estimated legal costs of £60,000 will also be funded from this budget.
  1. The full savings which will be achieved through moving to an external trust will become clear through the bid evaluation process, but are currently estimated as £430,000 in 2015-2016, and up to £1.66m over a full year period.
  1. The above figures being the current service subsidy less an amount of £500,000, this being an estimate of the subsidy which could remain with the Council, and is included in the medium term financial plan as a contingency, pending full evaluation of the tender bids.
  1. The £430,000 saving for 2015-2016 will be made by the in house service in preparation for moving into a trust arrangement.
  1. The financial risk attached to the ‘Run Middlesbrough’ event would also transfer to the external trust provider.
  1. A detailed analysis of the current cost of support services for sports and leisure services, and the effect of other change programme projects on these costs will need to be carried out. A full understanding of this effect will be vital in the evaluation and comparison of tender bids against the cost of in house provision.
  1. Ward Implications – Sport and Leisure Services are accessed by residents from all wards of the town and beyond and contribute to a range of the Council’s strategic outcomes.
  1. Consultation –The options appraisal process was carried out in consultation with the Executive Member for Environment, and the Community Safety and Leisure Scrutiny Panel.
  1. Legal Implications – The procurement process will require both internal and external legal support to ensure the final recommendation for future service provision is robust and defensible in the event of challenge.

SCRUTINY CONSULTATION

  1. The Community Safety and Leisure Scrutiny Panel included the subject of ‘Future ADMs for Sports and Leisure Services’in their work programme for 2014-2015.
  1. Scrutiny Panel Members and the Chair of OSB attended an options appraisal workshop, and the Scrutiny Panel Chair consulted with Stockton and Redcar and Cleveland Councils in respect of their leisure trust arrangements as part of the scrutiny examination.
  1. The final report from the panel made the following recommendations:

a)That if the proposal to transfer the management of sports and leisure services to an external Trust is taken forward a commitment is made not to ‘claw back all the possible savings’ but to provide the Trust with the necessary resources to grow and improve for the long term benefit of all Middlesbrough residents.

b)That the panel’s preference is for the procurement of a ‘not for profit’ Established Trust, as opposed to a private sector operator, however the panel acknowledges that inviting variant bids will encourage innovation and enable the Council to benefit from the most cost effective option.

c)That if the option to procure an Established Trust is taken forward the current terms and conditions of staff working in sports and leisure services be protected and retained. This should be done in line with nationally recognised best practice approaches and go beyond the minimum legal requirements of TUPE.