Agenda item

Note:  Councillor Philip Knowles left the Council Chamber for the duration of this item as he was a board member at LeisureSK Limited.

The Deputy Leader of the Council built on the report presented to the Committee on 18 June 2024. The report sought to explore the options for future management of SKDC’s leisure service. Whilst there were four possible options, the Deputy Leader identified that the preferred option would be to enter a ten-year contract with LeisureSK Ltd. incorporating agency principles, an option which SKDC had explored the validity of with expert tax advice from HMRC confirming the arrangement would be compliant.

One Member requested an amendment be made to refer the decision to Full Council with LeisureSK Ltd. acting as an agent for SKDC for leisure services only. The Member also asked if the agency model could be switched to sooner than the proposed timeframe of April 2025. The Deputy Chief Executive and Section 151 Officer confirmed that the current contract required a six-month notice period.  

A comparison was made with Hounslow Council who let such a contract in a two-month timeframe. A Member noted that if this could be done then there would be financial gain for SKDC. The Assistant Director for Culture and Leisure clarified that Hounslow Council had a significant period left on their contract whereas SKDC only had until December 2025. The tax advice received had confirmed that the Council could amend the current contract to incorporate agency principles but a new contract could be required from January 2026 in any event.

In this respect, the Member asked where the Committee stood regarding the tax motion previously heard at Full Council on 23 November 2023. The Deputy Chief Executive and Section 151 Officer confirmed that the tax motion did not impact this item. The proposal to adopt an agency agreement was not tax avoidance but an efficient tax arrangement.

The officer confirmed that in order to avoid disrupting the operating model of LeisureSK Ltd., and employee status, the recommendation suggested keeping the existing operating model but changing the arrangement to an agency model. Therefore, LeisureSK would collect gross income on behalf of SKDC.

The Monitoring Officer confirmed that, in line with the Constitution, the Committee needed to make a recommendation to Cabinet and could not delegate to Full Council. This was because for these matters Cabinet was the decision-making body.

Having been proposed and seconded, and following a vote, it was AGREED to:

1.    Recommend to Cabinet that the Council entered into a new leisure delivery contract with LeisureSK Ltd for a maximum of ten years from 1 April 2025.

2.    Recommend to Cabinet that the current contract with LeisureSK Ltd was to be terminated giving the required six months’ notice effective from 30 September 2024.

3.    Recommended to Cabinet that the new operating model for the delivery of the leisure services was to be based on an agency model with LeisureSK Ltd acting as an agent for the Council in respect of leisure services only.

4.    This committee recommended that if it was possible to shorten the notice period and expedite the process to save money then this option should be explored.

Note:  Councillor Knowles returned to the Chamber.