Agenda item

This report is seeking approval to make in-year amendments to the Budget Framework for the financial year 2023/2024.

Note:  Debbie Roberts was a Director on the Board of LeisureSK Limited (as well as being an officer at South Kesteven District Council) and left the Council Chamber during this item.

Purpose of report

This report sought approval to make in-year amendments to the Budget Framework for the financial year 2023/2024.

Decision

That Cabinet:

1.    Recommends to Council the following budget amendments to the 2023/2024 Budget Framework:

a.    Subject to a successful outcome of the phase 3C Public Sector Decarbonisation Scheme to increase the Capital General Fund decarbonisation scheme contribution to £492,500.

b.    Delegate to the Deputy Chief Executive in consultation with the Portfolio Holder with responsibility for Finance to accept the Phase 3C Public Sector Decarbonisation Scheme funding if the grant application is successful.

c.     Provide an additional management fee of £123,000 to LeisureSK Limited for the current financial year only.

2.    Notes, with grateful thanks, the actions taken by Council members and officers in response to the impact of Storm Henk in the South Kesteven District.

3.    Approves the following actions in response to the request from LeisureSK Limited for additional funding for the current financial year:

a.    To request officers write to LeisureSK Limited to request a mitigation and recovery plan for the financial years 2023/2024 and 2024/2025 in response to the management fee request with a view to seeking the level of management fee being requested reducing further for 2024/2025.

b.    To request that the Cabinet Member for Finance and Cabinet Member for Leisure receive regular detailed budget forecast reports from LeisureSK Limited between now and the end of the financial year 2023/2024.

c.     To strongly request an invite for the Cabinet Member for Leisure to attend the LeisureSK Limited board meetings as an observer.

d.    To request an urgent independent assessment of the business plan and profit and loss account for the financial years 2023/2024 and 2024/2025 and propose any corrective action or mitigations that can be undertaken.

e.    To initiate an independent assessment of the existing governance model and operational financial management controls to ensure they are fit for purpose and effective.

f.      To note that an independent review of the VAT and taxation implications is underway.

g.    To ask the Section 151 Officer, on behalf of the Council, to undertake a review of the financial information, a review of the Board minutes and level of financial support being provided to LeisureSK Limited and to recommend to Cabinet any corrective actions that may be required.

h.    Accelerate the options appraisal for the future delivery model of SKDC’s Leisure Services including insourcing and full market testing by tender with leisure providers. This is to be undertaken within the shortest of timelines.

4.    Recommends to Council the formation of a Leisure Reserve of £850,000 in order to fund the contribution towards the refurbishment of the Deepings Leisure Centre

Alternative options considered and rejected

LeisureSK Ltd - Councils received no dedicated funding from Government to provide sports and leisure services and facilities. Without the requested additional funding, the Council could decide to close some or all of the leisure centres.

As the current contract with LeisureSK Limited was nearing the end of its period a thorough options appraisal would be undertaken to establish the most appropriate delivery model going forwards.

Reasons for decision

A Joint Meeting of the Culture and Leisure and Finance and Economic Overview & Scrutiny Committees met on 9 January 2024 to discuss and recommend the creation of a reserve to contribute towards the refurbishment of the Deepings Leisure Centre. Full Council subsequently met on 11 January to agree that the contribution of £850,000 would go forward, as and when the conditions of the Deepings Leisure Centre proposal were met.

The Council was required to provide match funding of £492,500 for the

Decarbonisation Fund application; creating this budget provision would ensure that the Council was able to accept the funding if the bid was successful.

The allocation of an additional management fee to LeisureSK Ltd would ensure that the Company could continue to operate.

LeisureSK Limited had been operating since 2020, and an additional £500,000 of funding had been provided in the previous financial year. Between Christmas 2023 and the New Year there had been an anticipated shortfall of £272,000. The £123,000 of funding within this report was required in order for the Leisure Centres to continue operating.

The following points were highlighted during debate:

·       The response of South Kesteven District Council officers to the flooding across the District was exemplary. The positive contributions of Members, Parish Councils and the Communications Team was highlighted. In particular, the contributions of the Ward Members for Casewick was highlighted.

·       A fuller update on the Social Housing Decarbonisation Fund would be held at Housing Overview and Scrutiny on 22 January 2024.

·       Cabinet Members remained wholly committed to the leisure provision across the District and were grateful for the work of those across the three leisure centres.

·       One member suggested that the existing governance model and financial management controls within LeisureSK Limited were not fit and effective, therefore an urgent governance review was necessary.

·       It was vital to ensure value for money, and fit and effective leisure facilities across the District.

·       Non-executive directors had a duty to uphold strong corporate governance.