Agenda item

(Leisure & Wellbeing Portfolio Holder) To consider the attached report (C-009-2010/11).

(1)        That, following negotiations with Sports and Leisure Management Ltd, the following proposals be agreed:

(a)        to provide capital investment of £798,300 for structural alterations at the Loughton Leisure Centre to generate a reduction in the Continuing Services Budget management fee of £100,000 per annum;

(b)        to provide capital investment of £192,000 for new fitness equipment at the Epping and Ongar Leisure Centres to generate a reduction in the Continuing Services Budget management fee of £53,000 per annum; and

(c)        the withdrawal of the additional management fee of £15,530 in relation to the management of the proposed new Sports Hall at Waltham Abbey Swimming Pool ;

(2)        That, in relation to recommendation 1 above, a supplementary capital estimate in the sum of £62,000 for new fitness equipment  at the Epping and Ongar Leisure Centres be recommended to the Council for approval;

(3)        That, with regard to the construction of a new Sports Hall at Waltham Abbey Swimming Pool, the scheme be suspended at the current time and reconsidered each year as part of the annual review of the Council’s capital programme; and

(4)        That, subject to the implementation of the works indicated in recommendations (1) & (2) above, the Council’s contract with Sports and Leisure Management Ltd be extended from January 2013 to January 2016.

The Portfolio Holder for Leisure & Wellbeing introduced a report on the contract extension negotiations with Sports and Leisure Management Ltd.

The Portfolio Holder reported that the present contract with Sports and Leisure Management Ltd (SLM) for the management of the Council’s four leisure facilities was due to expire in January 2013. The Cabinet in February 2010 agreed that proposals brought forward by SLM to reduce revenue cost should be pursued further, in line with the expectation of the Council investing capital monies and extending the present contract for three years to 2016. There were two elements to the proposals;

(i)         the capital provision for works to Loughton Leisure Centre and new fitness equipment for Ongar Leisure Centre and Epping Sports Centre; and

(ii)        the project for a new hall at Waltham Abbey Swimming Pool.

The Portfolio Holder stated that SLM had produced an outline proposal for Loughton Leisure Centre, which was within the allocated Capital budget of £800,000 and had offered a decrease in Management fee of £100,000 per year. Their expectation was that the project would be completed by January 2011 and thus the management fee reduction would commence as from that date. The capital for fitness equipment provision requested was £192,000 for a reduction in management fee of £53,376 per year. This would need £62,000 additional capital budget in 2011/12 as only £130,000 was in the present 2010/11 capital programme.

The Portfolio Holder advised that SLM had agreed to a nil increase in the management fee for managing the service at the new Waltham Abbey Pool Sports Hall, if the project went ahead. It was hoped that SLM would offer a further decrease in Management fee to cover the future increase in revenue costs. The offer therefore meant that an estimated additional revenue cost of £48,920 as outlined in the July 2009 report was needed. This could be covered by the management fee savings, on the fitness equipment capital investment agreement, of £53,376 as outlined above. Otherwise the project would need to cease as the Cabinet had previously decreed that the ongoing revenue costs should not increase the future Continuing Services Budget.

The Portfolio Holder added that the report had presented three options for the proposed construction of a new Sports Hall at Waltham Abbey Swimming Pool. The recommendation was for the Cabinet to agree to not proceed with the scheme at the current time, due to budgetary constraints, but that the scheme be reconsidered each year as part of the annual process for reviewing the Council’s Capital Programme. The Portfolio Holder expected that the scheme would recommence within the next two or three years. The £42,000 of project costs already incurred would be taken from the District Development Fund. The Cabinet was advised that the issue of the Sports Centres remaining open over bank holiday weekends had not yet been resolved with Sports and Leisure Management Ltd.

Members of the Cabinet, whilst disappointed with the proposal to postpone the construction of a new Sports Hall at Waltham Abbey Swimming Pool, accepted the current financial issues facing the Council and welcomed the viability of the project being reviewed annually. The Portfolio Holder for Finance & Economic Development added that the Council had developed a very good working relationship with Sports and Leisure Management Ltd, and was pleased at the proposed 12.5% return for the Council from its capital outlay.

Decision:

(1)        That, following negotiations with Sports and Leisure Management Ltd, the following proposals be agreed:

(a)        to provide capital investment of £798,300 for structural alterations at the Loughton Leisure Centre to generate a reduction in the Continuing Services Budget management fee of £100,000 per annum;

(b)        to provide capital investment of £192,000 for new fitness equipment at the Epping and Ongar Leisure Centres to generate a reduction in the Continuing Services Budget management fee of £53,000 per annum; and

(c)        the withdrawal of the additional management fee of £15,530 in relation to the management of the proposed new Sports Hall at Waltham Abbey Swimming Pool ;

(2)        That, in relation to recommendation 1 above, a supplementary capital estimate in the sum of £62,000 for new fitness equipment  at the Epping and Ongar Leisure Centres be recommended to the Council for approval;

(3)        That, with regard to the construction of a new Sports Hall at Waltham Abbey Swimming Pool, the scheme be suspended at the current time and reconsidered each year as part of the annual review of the Council’s capital programme; and

(4)        That, subject to the implementation of the works indicated in recommendations (1) & (2) above, the Council’s contract with Sports and Leisure Management Ltd be extended from January 2013 to January 2016.

Reasons for Decision:

The negotiations with Sports and Leisure Management Ltd had achieved a number of the objectives set by the Cabinet in February 2010. The expenditure at Loughton Leisure Centre was within the allocated budget and would result in  a reduction of the Management Fee by £100,000 per annum. The expenditure at both Epping and Ongar Leisure Centres, whilst requiring supplementary finance, would generate a reduction in the Management Fee of over £53,000 per annum. The construction of a new Sports Hall at Waltham Abbey Swimming Pool had been suspended due to the additional budgetary pressures facing the Council, but would be re-evaluated each year during the Capital Programme review. The Council had developed a very good working relationship with Sports and Leisure Management Ltd, which the Cabinet was keen to continue.

Other Options Considered and Rejected:

To not agree to the SLM proposals regarding capital investment. However, the proposed reductions in Management fee would be jeopardised and the contract would not be extended.

To continue with negotiations and seek new proposals from SLM. However, this would be unlikely to produce any proposals better than those currently on offer.

To not seek an extension to the current contract. However, this would lead to the contract being re-tendered in January 2013.

To continue with the construction of the new Sports Hall at Waltham Abbey Swimming Pool as planned. However, this would place considerable pressure on the Council’s capital budgets at time when the Council’s revenue was being reduced by the new Government.