Agenda item

Considered – Report of the Assistant Director of Culture, Leisure, Archives and Libraries setting out the key findings from the first phase of the Strategic Leisure Review (SLR).

 

Some of the key points highlighted in the covering report and presentation are as summarised below:

 

·         The work of the SLR has been supported by a cross party member working group to help shape the review recommendations with their valuable insight and perspective.

 

·         Physical activity levels as a population are now lower than they have been in previous decades, so enabling citizens to get active is key to improving the physical and mental health of individuals.

 

·         In North Yorkshire, there are some great leisure assets, physical facilities, skilled staff and significant programmes and outcomes, but we could do a lot more to positively impact on the health of the population and tackling health inequalities.

 

·         The original scope of the Strategic Leisure Review was outlined, with a focus on the three pillars of ‘Built Facilities’, ‘Community Sport & Outreach’ and a wider system piece of ‘Active Environments’.

 

·         Phase one of the SLR has been the development of a clear, long-term vision and delivery model, to shape what North Yorkshire Council want our future leisure service to look like. Recommendations are also made on the management model for how leisure services are delivered going forwards.

 

·         Phase two (from the new year onwards) is the development of a Leisure Asset Investment Strategy, which will set out options for individual sites around future investment, rationalisation and other options (asset transfer etc).

 

·         North Yorkshire Council has the largest local authority leisure portfolio in the country. The council leisure budget for 2023/24 is £7.1 million, with an income of around £16.1 million across all sites. The portfolio comprises 23 leisure centres and 16 pools, with a developing health and wellbeing offer alongside a strong sports development offer in some parts of the county. This shows the size and scale of the service area but also the opportunities that brings.

 

·         North Yorkshire currently has a complex mix of leisure providers, consisting of five different operators. Whilst this adds complexity, the breadth of expertise, experience and good practice across the county is a real strength. The current leisure service operators across North Yorkshire are already delivering a range of universal and targeted services that are in line with the new delivery model. There is a focus on inclusion and tackling inequality, and this forms a strong foundation upon which we can build on in the coming years.

 

·         There is a varied condition of facilities, but condition surveys have indicated the portfolio overall is not bad, with asset condition and maintenance liabilities lower than in other similar local authority areas.

 

·         Extensive consultation has been undertaken with elected members, communities and key stakeholders through a range of methods, such as workshops, surveys, focus groups and reviews of previous consultations.

 

·         The consultation feedback has shown strong stakeholder support for a health and wellbeing approach, with the significance of community sports and volunteers also highlighted as important parts of any future approach.

 

·         Accessibility, in terms of transport and travel, is one of the main challenges, with a concern that rural residents will feel forgotten about.

 

·         Leisure facilities were highly valued in the feedback received, as a base for community clubs and for all abilities, but the condition of some was highlighted as requiring improvement. The cost and affordability of facilities were also raised as barriers to using them.

 

·         The new approach aims to move from a traditional leisure service to a sport and active wellbeing one, with a renewed focus on inclusive, wellbeing services that improve physical and mental health and reduce inequalities through a mix of universal and targeted services. There is a strong relationship in the new delivery model between facilities, local place based delivery and sports development. It is felt that this closely aligns with the latest national policy and strategies.

 

·         The aim is to focus on prevention and to take demand out of the health and mental health care system as a whole, improving population health and improving individual outcomes as well as aiming to reduce system costs.

 

·         It is proposed that assets will be turned into Sport and Active Wellbeing hubs, with a universal offer, supported by a network of locally based and digital services collaborating and co-producing activities with other organisations that are tailored to local areas.

 

·         There are challenges around integrating systems and processes as part of the new unitary council, but officers are keen to build on what works already, as well as to test, scale up and try new approaches in different areas where alternative delivery methods are needed.

 

 

On the Management Model:

 

·         North Yorkshire isn’t typical in its leisure set up, it has a little bit of everything when trying to find the right model. It is not easy to analyse and compare the different management models.

 

·         The size and scale of North Yorkshire is particularly significant, as it gives opportunities that a small district council wouldn’t have in terms of building up staff expertise and providing economies of scale.

 

·         A range of financial and non-financial criteria were used to evaluate the different management models. This was supplemented by national assumptions around model behaviour.

 

·         The models considered were: Outsourcing, Local Authority Trading Company (LATC) and In House.

 

·         The preferred management model is a single in-house approach, to provide clarity and consistency for customers, a clear link with democratic decision making and strategic control for the council. It will represent significant management change, but does bring real opportunities because of the size and scale as services are integrated. Contracts would be migrated in a phased way to an in-house model, as current contracts end between 2024 and 2027.

 

·         The Leisure Investment Strategy (phase 2) is needed as it is appreciated that there is a positive correlation between the quality of the facilities and the level of income generated, with targeted investment in facilities having the ability to drive increased revenue. This next phase will look at options for specific sites, issues around demand, supply, condition, and where potential investment could drive delivery of the new model.

 

Following the presentation, questions raised by the committee included:

 

·         How will the new model integrate with existing or proposed voluntary and private sector sports and leisure provision? In response, it was noted that community sports provision and a sports development approach has been built into the new model and the resulting staff structures will reflect this. Work is also underway with planning service colleagues to review the overarching strategy documents.

 

·         The community facilities across a large county like North Yorkshire was felt to be patchy at the moment. It was asked what can be done to improve this given the tight financial situation. It was made clear that having a clear strategic framework was essential, with opportunities around S106 and external funding will help to support this critical area.

 

·         The inclusion of culture within the SLR was queried. In response, Councillor Simon Myers, the Executive Member for Culture, Arts and Housing informed the meeting that separate work on developing a culture strategy for North Yorkshire was underway.

 

·         The TUPE arrangements for the current leisure centre staff were asked about and how the process may work.

 

·         The benefits of the council having strategic control as part of an in house model, to be able to influence areas, such as the carbon emissions savings at the various leisure centre sites was seen as a positive move forwards.

 

·         The increased emphasis on health and well being was highlighted as a positive and the greater opportunities to work with health and social care partners. Officers advised that future investment of public health resources for the revamped sport and active wellbeing service are currently under discussion. Meetings are also taking place with a number of parts of the NHS and the public sector about how they can be involved as part of this review process and on an ongoing basis.

 

 

Resolved –

 

i)        That Members support the new delivery model for the sport and active well being service as set out in the committee report.

 

ii)       That Members support the phased transition over the next 4 years to a single in house management model for the service. As part of this that the Selby services transfer to the in house service from September 2024 when the current contract with IHL ends.

 

iii)      That Members support the undertaking of a Leisure Investment Strategy as set out.

 

 

Note: Following the meeting, further VAT advice in relation to leisure was received. This updated advice will be reflected in the report that goes to the Executive in January 2024.

 

The key differences from the report presented to Members of the LGR Transition O&S Committee are reflected in the paragraphs below. Changes are shown in yellow highlight.

 

4.25        The in house model is the most VAT efficient model, following the recent Chelmsford ruling and offers financial benefits over both the LATC and the procured operator model. However, it should be noted that recent VAT advice suggests that the difference in VAT between other models and in house could be alleviated through the use of “agency agreements”, These will need to be explored further, however, currently the Council does not have these in place and so currently irrecoverable VAT is higher with both the Trust and the LATC models. 

 

9.2          In addition financial modelling has been undertaken to assess the financial impact on the Council of the preferred option of migrating the existing contracts into a single in house model over the next 4 years. This takes into account key variables relating to NDR costs, VAT treatment, staffing costs and external management fees. The modelling assumes that income and expenditure of sites remains broadly similar, although it would be expected that the service will drive additional efficiencies in the medium to longer term through economies of scale once the service is fully integrated.

 

	Fully In-house
	0% Support Cost Absorbed	50% Support Costs Absorbed	100% Support Costs Absorbed
	£	£	£
Irrecoverable VAT*	-348,889	-348,889	-348,889
Staffing	504,301	504,301	504,301
NNDR	525,682	525,682	525,682
Estimated Cashable Growth / (Efficiency)	681,093	681,093	681,093
External Central Support	0	-230,922	-461,843
Net position taking into account Central Support Costs	681,093	450,172	219,250

                * Irrecoverable VAT is shown as a net gain based on the current position, as VAT savings will be achieved once the service comes back in house. However, following recent VAT advice this benefit could potentially be achieved irrespective of the management model (i.e. with the exiting Trust/LATC models through the use of an “agency agreement”). It should be noted, therefore, that whilst this is a saving based on the current position potentially this saving is “model neutral” and not linked specifically to the transfer to an in house model.

 

In terms of the cost impact, the figures presented in the LGR Transition O&S Committee report are correct and remain unchanged. As it stands, the irrecoverable VAT is more advantageous with the in house model and would represent a saving for the Council (as shown in the above table) if all of the service moved in house. The recent advice however suggests we could potentially also make this saving through other management models with the use of an agency agreement. Overall, the analysis and conclusions remain the same as in the existing report and there is no change to the recommendations.