MIDDLESBROUGH COUNCIL

Southlands Centre – Withdrawal of Leisure Services Provision

Executive Member for Culture, Leisure and Sport: Councillor Lewis Young

Executive Director of Corporate and Commercial Services: Tony Parkinson

26th January 2016

PURPOSE OF THE REPORT

  1. The purpose of this report is to seek Executive Member approval for the withdrawal of Leisure Services provision at The Southlands Centre, following the removal of the facility from the scope of the leisure trust arrangement.
SUMMARY OF RECOMMENDATIONS
  1. It is recommended that the Executive Member approves the withdrawal of Leisure Services provision from The Southlands Centre,with the exception of the 3G synthetic playing pitches, in advance of the commencement of the leisure trust contract, which comes into effect on 1st April 2016.
  1. That delegated authority is given to the Council’s Strategic Sport and Leisure Officer to enter into dialogue with the trust provider to establish as the most appropriate model for the future management of the remaining 3G synthetic playing pitches.

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

It is over the financial threshold (£150,000)
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

5.The Southlands Centre is a converted former secondary school in thePark End and Beckfield Ward from which the Council operates both Leisure Services and a business and enterprise centre housing approximately seventy small and medium sized private businesses.

6.In 2013 the Council’s Change Programme established significant savings potential in relation to the delivery of the Council’s Sport and Leisure Services.

7.At the start of 2013 - 2014 financial year, the net cost of Sport and Leisure Services to the Council was £2,667,000;this was excluding central support costs of £350,000 which are provided from within other Council departments.

8.In year savings of £153,000 were made by the service, therefore at the commencement of the 2014-2015 financial year, the net cost of these services had reduced to £2.514, 000.

9.Further savings of £804,000 were made by the service area during 2014-2015, with a further £430,000 planned for 2015-2016 leaving a net cost for these services of £1,280,000,

10.Following a unit cost based exercise during 2014-2015; an ongoing revenue budget for the delivery of these services was set at £400,000 per annum. This resulted in a budgeted savings target of £880,000 being set for these services for financial year 2016-2017 against the Sports and Leisure budget, with no further plans for budget reductions from an in-house operation.

11.In accordance with Change Programme principles, an alternative delivery model(ADM) appraisal was undertaken to identify and implement the best value option for the future delivery of Sport and Leisure Services, whilst achieving the savings required to meet the budget reduction identified by the Change Programme.

12.In accordance with the ADM Policy approved by Executive, a comprehensive option appraisal was carried out, utilising the Councils ADM framework.

13.A full evaluation of each of the short listed management options against the agreed criteria was undertaken. The outcome of the options appraisal was that the preferred option for the future delivery of sport and Leisure Services in Middlesbrough Council was to transfer them into an established leisure trust organisation.

  1. At this stage of the process The Southlands Centre was included within the scope of the tendering exercise.
  1. All bidders were consistent in their view that with the exception of the playing pitches; the required level of savings could not be backed up by a business case which included the continued operation of The Southlands Centre as a leisure facility.
  1. The Southlands Centre had seen a significantly diminishing demand for sport and leisure activities following the significant investment in the Neptune and Rainbow Centres and the newly built Middlesbrough Sports Village (MSV).
  1. Daytime provision had been reviewed during financial year 2013-14 and Executive approved the removal of daytime provision as part of the budget reduction programme for 2014-2015.
  1. At this point in the procurement process there are only 2.4 full time equivalent employees covering all leisure activities at the facility.
  1. Following Executive Member consultation, bidders were subsequently informed by the project steering group that with the exception of the management of the 3G synthetic playing pitches, they shouldnot include The Southlands Centre within the scope of facilities for the next stages of bidding.
  1. This did not represent a decision to close the business enterprise element of the venue, simply that the continued usage of Southlands for leisure provision is no longer viable.
  1. It was however estimated that savings in the order of £300,000 could be made by removing leisure provision from The Southlands Centre, providing this at alternative facilities and seeking alternative uses for the vacated space at The Southlands Centre in the future.
  1. This reduced the savings target required from Sport and Leisure Services to £580,000 which will be achieved through moving into the trust arrangement with additional savings being made over the duration of the contract.
  1. The withdrawal of leisure provision from Southlands presents an opportunity for a full market testing exercise and an appraisal of bids from interested parties for the ongoing management and future use of the site.
  1. This process will be carried out in consultation with the existing businesses on the site, and result in a further report being brought to the Executive once expressions of interest have been sought, bids from all interested parties have been evaluated, and a recommended option for the site has been established.

IMPACT ASSESSMENT (IA)

  1. Please see the Impact Assessment attached at Appendix A.

OPTION APPRAISAL/RISK ASSESSMENT

OPTION 1 – Continue to operate as a leisure facility

  1. This is not recommended.Memberships at The Southlands Centre have dropped by almost 30% from 474 in 2014-2015 to a projection of 340 at the end of this year.
  1. Recent investment in The Neptune and Rainbow Centres, along with the further investment in MSV is seeing more members moving to these facilities.

OPTION 2 – Withdraw Leisure Services provision from the venue

  1. This is the recommended option. As demonstrated in the tendering process, with the exception of the playing pitches, leisure provision at the venue is not financially sustainable given the close proximity of much more attractive facilities.
  1. The Council can achievesignificant financial savings by withdrawing sport and leisure provision from The Southlands Centre, and seeking expressions of interest from the open market to utilise the vacated facilities for a more commercially sustainable purpose.
  1. Consideration will be required in conjunction with the leisure trust provider as to the most appropriate model for the future management of the remaining 3G synthetic playing pitches.

RISKS:

  1. There is a risk that existing members might choose not to transfer their memberships to an alternative Council facility, however initial consultation with members and user groups indicates that this is not a significant risk.

FINANCIAL, LEGAL AND WARD IMPLICATIONS

Financial

  1. Projected Income at The Southlands Centre has reduced by £117,000 against last year’s actual income and user visits are projected to reduce by 65000 visits, which equates toa 29% reduction in usage of the facility.
  1. Staffing costs have been reduced by £155,000 with many members of staff moving into vacancies in other facilities. The remaining Southlands Centre staff will transfer into the leisure trust and work in other venues.
  1. The facility is in relatively poor condition, showing signs of age and lack of investment. It has a current maintenance backlog in the order of £1,500,000.
  1. The estimated savings from removing leisure provision from The Southlands Centre, providing this at alternative facilities and seeking alternative uses for the vacated space at The Southlands Centre in the future will contribute to the financial savings of £880,000 required from Sport and Leisure Services which are identified within the Council’s Change Programme and Strategic Plan 2015-2018.

Ward Implications

  1. The Southlands Centre is situated in the Park End and Beckfield Ward, but members and users do not necessarily reside in the ward.
  1. Alternative leisure facilities are located within easy reach with the Neptune Centre in Berwick Hills and Pallister Ward, Rainbow Centre in Coulby Newham Ward and MSV in the Marton East Ward.
  1. The Golf Centre, which is also in the scope of the leisure trust arrangement, is situated within the Ladgate Ward.

Consultation

  1. The options appraisal and procurement process which resulted in the Southlands Centre being removed from the scope of the leisure trust, and the recommendation to cease leisure provision at the facility was carried out in consultation with the Executive Members for Sport, Leisure and Culture, and the Executive Member for Environment.
  1. Consultation with Members and users of the facility, including the business community is ongoing.

Legal Implications

  1. Leisure Services are not a statutory provision; there are no legal implications in withdrawing provision from the facility.

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. The panel have received further updates during 2015-2016, however due to the requirement for confidentiality during the procurement processthe removal of The Southlands Centre from the scope of the leisure trust procurement was not discussed, this was due to the officerspresenting to the panel not being sufficiently aware of the latest position.
  1. The outcome of the procurement process was presented to Executive on 9th December 2015; the Assistant Director of Environment, Property and Commercial Services has subsequently briefed the Chair of the Scrutiny Panel on the content of this report and is attending the January meeting of the panel.
RECOMMENDATIONS
  1. It is recommended that the Executive Member approves the withdrawal of Leisure Services provision from The Southlands Centre,with the exception of the 3G synthetic playing pitches, in advance of the commencement of the leisure trust contract, which comes into effect on 1st April 2016.
  1. That delegated authority is given to the Council’s Strategic Sport and Leisure Officer to enter into dialogue with the trust provider to establish as the most appropriate model for the future management of the remaining 3G synthetic playing pitches.
REASONS
  1. To contribute to the delivery of the financial savings of £880,000 required from Sport and Leisure Services which are identified within the Council’s Change Programme and Strategic Plan 2015-2018.
  1. To seek alternative use for The Southlands Centre as a commercially sustainable business centre.
BACKGROUND PAPERS
  1. The following background papers were used in the preparation of this report:

Executive Report - Future Delivery Model for Sports and Leisure Services – 9th December 2014

Middlesbrough Council Strategic Plan 2015-2018

CONTACT OFFICER: Tom Punton

TEL NO: 728300

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