BOROUGH OF POOLE
ENVIRONMENT OVERVIEW & SCRUTINY COMMITTEE
27 JANUARY 2011
REPORT OF THE HEAD OF LEISURE SERVICES
UPTON COUNTRY PARK
PART OF THE PUBLISHED FORWARD PLAN - Yes
STATUS –SERVICE DELIVERY1 / Purpose
1.1 / To inform members of learning from market sounding exercise,the results of the detailed financial analysiscompleted for Upton Country Park and the outcome of benchmarking undertakenwithfour similar sites.
1.2 / To seek a Member recommendation to Cabinet for the management option to be pursued to best achieve savings identified in the Medium Term Financial Plan and approved outcomes for Upton Country Park.
2 / Decision Required
2.1 / To recommend that Cabinet approve the option for an improved in-house management solution for Upton Country Park.
3 / Background
3.1 / The Future Direction of Upton Country Park report was adopted by Cabinet in June 2009 with an agreed Mission of:
‘Caring for Upton Country Park and House, now and for the future, improving public access and value for money through events and opportunities for recreation and learning’
3.2 / The Council is under considerable pressure to achieve significant financial savings, with the additional challenge of increasing income and improving asset optimisation to better support its future financial positionand ensure Value for Money for the public. In December 2010 Cabinet approved the following outcomes to pursue at Upton Country Park:
a)Provide a premier and dynamic country park, as an important sub regional destination greenspace, increasing use of the park
b)Provide additional new greenspace (Suitable Alternative Natural Greenspace) to allow development of Hamworthy and Regeneration Area
c)Reduce the revenue required, develop income generation opportunitiesand attract investment to the site
d)Full cost recovery of site expenditure plus the aim to achieve a financial surplus
4 / Learning from the Market Sounding Exercise
4.1 / The market sounding exercise combined with the financial analysis and benchmarking has helped to influence the assessment of the management options and the officer recommendation.
4.2 / Specific feedback from the market sounding of greatest relevance at this stage is;
a)There are limited providers, other than local authorities, who are able to manage the entire Country Park which may limit the progress of pursuing options 3 and 4 (options outlined in section 8.1).
b)There are a number of external providers who offer elements of service delivery eg events, educational programmes, weddings, catering. Therefore some elements of service delivery could be delivered well by working in partnership with others under option 2.
c)There is some excellent expertise available from some external organisations which could help the adopted outcomes for the site.
d)The future provision of greenspace at Upton Park Farm would benefit from working in partnership with others to create an exciting destination for Poole residents and visitors focusing on the natural environment and providing new greenspace as per adopted planning policy.
5 / Key findings from financial spend analysis and benchmarking
5.1 / Detailed financial spend analysis (for financial years 2007/08 to 2010/11) has been completed for Upton Country Park by Financial Services. This captures and summarises how much the Council spends on the Country Park, and how much of this spend is recovered through external fees and charges (i.e. how much net subsidy is required). Benchmarking work with similar authority run sites has also been undertaken to understand how Upton Country Park’s net subsidy compares with others, and also preferred ‘management options’ (i.e. in-house v externalising) used by other local authorities.
5.2 / This work has raised a number of issues that need to be addressed:
a)Current use of the asset does not maximise income generation – Only 30% of Upton Country Park spend is recovered through fees and charges (compared with an average 80% for benchmarking sites)
b)Not all of the income currently generated at Upton Country Park is received by the Borough or is within the Borough’s control. For example income generated by the Friends of Upton Country Park and Poole & East Dorset Arts Society.
c)Sites used in benchmarking are more commercial and customer focussed, and this is reflected within their management and staffing structures.
d)Some of the benchmarking sites benefit from a sizeable volunteer base, recruited and managed directly by the local authority teams and integral to staffing arrangements and that focus on a ‘hands –on’ supportive role on sites.
e)Benchmarked sites have received significant investment from local authorities, concessions or grant such as Heritage Lottery Fund, to invest in the site, improve recreational offer, and assist in income generation
f)Improved income generation at Upton Country Park will require capital investment to bring the park up to a standard that assists income generation. Depending on preferred management option, this may need to be sourced through Council borrowing or external grants
g)Benchmarking sites all operate as a single facility entity, with a certain degree of freedom from corporate approaches to topics such as marketing, governance with stakeholders and setting fees.
h)Six different service units have budgets that relate to the site, which means that a co-ordinated approach to the use of resources has not always been in place.
6 / Financial Spend Summary
6.1 / Analysis carried out by Financial Services shows that (between 2007/08 and 2010/11) Upton Country Park was subsidised by the Council by around £500k per year.This is a relatively high level of subsidy (in comparison with benchmarking group) because other sites are better able to recover spend through external sales, fees and charges. From 2008/9 to 2009/10 the level of income generated increased. Overall, around 30% of Upton Country Park spend is recovered through external sales, fees and charges, compared with an average 80% cost recovery within comparator group.
Fig 1: Borough of Poole Upton Country Park financial summary 2007/08 (actual) to 2010/11 (budget). Information from Financial Services management accounts.
6.3 / The Country Park’s main components (Upton Country Park, Upton House and Peacock Tea Rooms) requires subsidy from the Council. No single component is currently surplus generating. Figure 2 demonstrates the extent of annual subsidy required across each core component:
Fig 2: 2009/10 subsidy of £500k split between Upton Country Park, Upton House and Peacock Tea Rooms. Information recreated from Financial Services management accounts.
6.4 / Employee spend (which for 2009/10 accounts for 41% of gross spend) includes costs of employees directly employed to manage the Park’s facilities and apportioned management salary costs
Upton Country Park4 FTE
Upton House 3.5 FTE
Tea Rooms2 x FT Employees and 14 PT staff working hours equivalent to further 2.77 FTE
Employee Spend / 2010/11
£ / 2009/10
£ / 2008/09
£ / 2007/08
Upton Country Park / 108,330 / 101,154 / 77,639 / 42,904
Upton House / 68,100 / 56,492 / 90,334 / 65,271
Peacock Tea Rooms (Social Services £118.5k plus apportioned Leisure management time). Social Services budget includes £25k Agency Spend / 126,200 / 135,186 / 114,168 / 117,930
302,630 / 292,832 / 282,141 / 226,105
Current staffing levels and arrangements will need to be considered fully within any future management option.
6.5 / Income from Fees, Sales & Charges – external fee income only
Upton Country Park generates around £200k external fee income a year (the majority of which is from catering sales at the Peacock Tea Rooms). Based on average revenue spend of £700k per annum, this means £500k Borough funded spend on the Park is not recovered from sales, fees and charges. External income is generated from Catering (Tea Rooms), Upton House Room Hire (includes weddings, events and office rental), Farm Rent, Schools Income and Lodge Rents, as shown in Fig 3:
Fig 3: 2009/10 Upton Country Park external fee income of £212k by income source
6.6 / In addition Upton Country Park has a number of concessions and events in place,as set out below.The Borough receives no letting income from these and all income generated from the concessions is retained by the operators.
- Catering Kiosk (operated by Friends of Upton Country Park)
- Plant Centre (operated by Friends of Upton Country Park)
- Upton House Rooms (used by Friends of Upton Country Park)
- Art Gallery (operated by Poole & East Dorset Arts Society PEDAS – the Borough has a Service Level Agreement but receives no income for PEDAS use of the gallery)
6.7 / Upton Country Park is unusual in having an active Friends Group that raises large sums of money by utilising Council assets, however the Council has no control over spend of the money raised as the Friends of Upton Country Park Trustees allocate funding to projects. The Friends of Upton Country Park total funds carried forward for 2009 was £300,626 with income in year end in 2009 at £64,345 and spend £41,718.(source - Charities Commission website)
6.8 / The Country Park has benefitted from significant improvement funded by the Friends of Upton Country Park over the years. The Friends of Upton Country Park have spent over £80,000 between 2005 – 2010 to support projects in UCP. In summary the funding includes:
Refurbishment of the East Wing Toilets£20,000
New Oak Notice board£ 554
Domed Lantern Repair (interim repairs)£ 2,500
Replacement Waste Bins in Park£ 7,500
Peacock Gallery Lift £14,500
Frame Signs for Upton House£ 375
Redecoration of the 1st floor of Upton House £ 5,000
New Flag Pole for Greenflag £ 800
Moth Trap and the six bat detectors £ 650
Domed Lantern Repair (long term)£ 3,100
Decoration of Hall, Lobby & Stairs £ 3,750
Decoration of Drawing Room £ 5,233
Plant Centre Upgrade Project £ 8,500
New Display Stand for Upton House £ 326
Allocated FUCP Funds awaiting payment: -
Carpet - stairs and landing + stripping of paint to treads,
risers and sides of staircase. £12,000
Cabling Walled Garden / Plant Centre £ 4,500
Night Vision equipment £ 650
In practice it is not always possible to match the Friends of Upton Country Park spend priorities with those of the Council.
7 / Benchmarking with Similar Sites
7.1 / Benchmarking was completed with 4 comparable local authority run sites to better understand opportunities to generate income and ensure that (where applicable) achievable and realistic income targets are set for Upton Country Park. Appendix One summarises results of financial comparison and shows that, whilst gross spend is not significantly higher than other sites, other sites generate significantly more fee income than Upton Country Park, and so require much lower annual subsidy.
7.2 / The sites chosen are those that operate similar facilities and activities to Upton Country Park. All sites are under local authority management and therefore face similar challenges and opportunities.
7.3 / Upton Country Park’s annual fee income of £200k is equivalent to recovery of 30% of related expenditure on the Park. This is a low level of cost recovery in comparison with similar sites who are better able to generate income to offset spend. The average cost recovery rate (through fees and charges) of the four benchmarking sites is 80%.
Fig 4: Upton Country Park 2009/10 actual and 2010/11 budget percentage of spend recovered through external fees, sales & charges – in comparison with 4 other local authority run sites
7.4 / The higher level of cost recovery shown by the 4 benchmarking sites suggests that local authority management (the ‘in-house’ option 2) with a focus on income generation can create popular dynamic country parks that do not need significant levels of subsidy.
7.5 / The key point from the bench marking is that, whilst these sites maintain responsibility for overall management of their sites, their management structures, governance arrangements (including financial management), and business plans/vision are different to Upton Country Park in thatthey are more commercially focussed. Benchmarking shows us what could be done through in-house management – but also highlights the significant challenges and changes required in order to make this a viable option for Upton Country Park.
8 / Management Options to Deliver the Outcomes for Upton Country Park
The possible management options are listed below. In December 2010 Cabinet agreed that options 1 and 5 should not be pursued. Cabinet approved the investigation of management options 2, 3 and 4 – each of which has been assessed for their advantages and potential barriers to achievement (outlined in Appendix Two).1)Continued current arrangements of Council management
2)Improve Council management with primary focus on cost reduction and income generation
3)External delivery – the Council establishes an arms length third sector organisation/work with private sector
4)Council contract – outsource day-to-day running/site development to a contractor (managed part or whole of site)
5)Sale of the site – the sale of the House and existing Country Park - sale of any part of the site has been ruled out but a long lease for the farm buildings or land would be considered.
8.2 / Appendix Two shows that whilst Option 2 may be the lowest risk option thecurrent management arrangements need significant reshaping to deliver improvements, investment would be required and changes on site would be needed in order to improve the range of recreational activities. The results of the market sounding exercise demonstrated that potential partners exist who can offer expertise, investment and activities – and pursuing Option 2 is likely to involve working in partnership with others, responding to the market sounding submissions.
9 / Financial Implications
9.1 / Existing and anticipated budgetary pressures will make it increasingly difficult to maintain current levels of subsidy for Upton Country Park. With significant change the Country Park has the capacity to generate sufficient income to recover operational spend – and possibly generate surplus for the Council. It is vital to take a more positive approach to managing the site to increase income generation and make the Country Park financially viable over the longer term, which will also improve the recreational offer to visitors. This strategy is also in line with the Borough’s corporate review of income generation (a specific project within the Efficiency Review Programme).
9.2 / There would be a financial impact of pursuing any of the 3 management options. Option 2 may require Prudential Borrowing in order to invest in the site to start generating income.
9.3 / A full business case will be prepared to support necessary investment requirements prior to any financial commitments being made.
10 / Legal Implications
10.1 / The Council has a legal duty to protect the Grade II* Listed Building of Upton House and its curtilage and the Biodiversity of Poole Harbour adjacent to Upton Country Park and protected species.
11 / Policy Implications
11.1 / The work at Upton Country Park must deliver a Suitable Alternative Natural Greenspace as per the adopted Core Strategy (2009) and the emerging Site Specific Allocation Development Plan Document.
12 / Risk Management Implications
12.1 / Risk was included as part of the assessment of each management option in Appendix Two. Option 2 is the lowest risk option to pursue.
13 / Equalities Implications
13.1 / Anyfuture management option will include an assessment of community benefits in line with the council’s Fairness for All policy for Equalities and Diversity. In addition there are a number of current stakeholders on site such as Adult Social Care who will have an opportunity to be actively involved as this process progresses to ensure that the site remains inclusive for all.
14 / Environmental Impact
14.1 / There are no environmental implications at this stage. The work to date has highlighted the environmental value and designations of the area.
15 / Staffing Implications
15.1 / There are staffing implications of pursuing any of the three management options.
a)Option 2 would involve staff re-structuring as per the adopted Council policy with potential job role changes to focus on income generation and may involve potential redundancies and recruitment to ensure the relevant income generating skills exist in the team.
b)Option 3 and 4 may involve staff being transferred across to other organisations, potential job role changes and potential redundancies.
16 / Planning Implications
16.1 / There are no planning implications at this stage. The planning designations and constraints are well documented and understood.
17 / Officer Recommendations
17.1 / Based on the assessment set out in Appendix Two, officers consider Option 2 offers the lowest risk with the potential for the Council to retain a larger share of any income generated.
17.2 / Officers therefore recommend that Option 2 – the improved in house management with a focus on income generation is pursued, recognising the challenges that will need to be addressed in Appendix Two.
17.3 / For practical reasons of financial pressures and in order to ensure service cuts are not implemented improvements in the management of the Country Park need to be progressed immediately. It is therefore recommended that if Option 2 is pursued this is progressed for the existing greenspace and House. Work to progress improvements at Upton Park Farm and to establish new greenspace is a more lengthy process so it is recommended that this is progressed in parallel, but does not hold up improvements to the existing Country Park and House.
In order to progress Option 2 a detailed business plan will be compiled, that incorporates the adopted plans for the site, setting out the actions required to deliver the agreed outcomes, the level of investment required, the potential returns and the timescale in which it will be progressed.
18 / Conclusion
18.1 / Officers recommend that management option 2 “Improve Council management with primary focus on cost reduction and income generation” is recommended to Cabinet, in order to realise the savings identified in the Medium Term Financial Plan. The challenges as outlined in Appendix Two should be noted by Members, as these will need to addressed in order to achieve the approved outcomes for Upton Country Park. Officers recommend that further work is undertaken to provide new greenspace at Upton Park Farm, exploring working in partnership with others in response to the market sounding responses.
HEAD OF LEISURE SERVICES
Clare Freeman, Greenspaces Manager– (01202) 261377