Agenda item

To provide an update regarding the performance, budget position of LeisureSK Ltd with its draft business plan for 2025/2026.

 

(Debbie Roberts, Paul Sutton and Councillor Philp Knowles were present in their capacity as LeisureSK Ltd Board Members).

 

The Chairman of LeisureSK Ltd presented the report, which was broken down into the performance of LeisureSK Ltd, the business plan for 2025/26 and a request in the budget for the following financial year.

 

At the previous meeting of the Committee, data on the Leisure Centres was provided. Information on attendance was included within the graphs alongside updates regarding Covid levels and how the Leisure Centres had returned back to pre-Covid levels for memberships in Bourne and Stamford. Grantham Meres had not returned to pre-Covid levels.

 

There was the potential for a refurbishment at Grantham Meres gym in the future.

 

The business plan provided was for one year only due to LeisureSK Ltd moving to an agency model from 1 April 2025. At present, LeisureSK Ltd had not received the new specification contract or set of new KPI’s going forward. Therefore, the business plan had been based on a one-year, like-for-like basis.

 

The request for the £150,000 was to assist with cashflow issues that the company would incur. Under the agency model, the company would receive the income on behalf of the Council and deduct expenditure incurred, a reconciliation process would take place on a monthly basis with either the Council receiving the surplus or this being topped up in the case of a deficit.  To assist with cashflow during the transition, the company would require an injection of cashflow from 1 April 2025. This would be repaid to the Council over the course of the financial year.

 

One Member queried what had been done to explore a simple overdraft facility for the £150,000.

 

A LeisureSK Ltd Board Member confirmed they were exploring costs of an overdraft facility. The cost of taking an overdraft facility from the bank would be more expensive than taking a facility from the Council.

 

It was noted the business plan had little specific reference to Grantham stadium. A query was raised on attendance numbers of Grantham stadium as figures were combined with Meres Leisure Centre.

 

One Member queried what plans LeisureSK Ltd had for the stadium to make it more attractive and attract more people to utilise it.

 

The Assistant Director of Leisure, Culture and Place clarified that Grantham stadium was included within the Leisure Management contract, therefore, LeisureSK Ltd managed the stadium on the Council’s behalf.

 

The attendance figures provided for Grantham Meres did not include the stadium.

 

The Council had been in negotiations with Grantham Town Football Club regarding their usage of the stadium. Once negotiations were concluded, ways in which LeisureSK Ltd could improve the stadium usage would be discussed.

 

The Contract Manager for LeisureSK Ltd highlighted that additional groups used the stadium and it was also used for school events in summer holidays, and for charity events. The negotiation with Grantham Town Football Club was key, as once their dates of use were confirmed, the stadium availability could then be offered out for hire.

 

The Assistant Director of Leisure, Culture and Place informed the Committee that the Council was leading on negotiations with Grantham Town Football Club. It was anticipated that a report be brought to the next Culture and Leisure Overview and Scrutiny Committee meeting in January 2025.

 

It was queried whether any facilities which were no longer utilised could be brought back to operation where infrastructure was available, for example, the climbing wall at the Meres.

 

The number of GP referral patients for the 12-week fitness programme, which had been advertised by the Meres was questioned.

 

ACTION: For the number of GP referral patients for the 12-week fitness programme be provided to the Committee.

 

The Contract Manager confirmed that the climbing wall at the Meres was decommissioned in 2021, post Covid. The costs of repairs and maintenance far exceeded the expected use and income. The climbing wall infrastructure was still in place, but not used.

 

The increase in National Insurance had been provided on exempt papers as part of the financial information with the business plan. It was noted the increase was an outside pressure of the Council and was a change to the terms of operation implemented by Central Government. As the change was not the fault of commercial activities of LeisureSK Ltd, it was felt the figure should be in the public domain.

 

The Chairman of LeisureSK Ltd confirmed the National Insurance costs had been addressed in the financial section of the report but the National Insurance figures were not strictly commercially sensitive, however, with other aspects presented with the figures made it commercially sensitive.

 

A projected added cost pressure of £63,688 had been included as part of the National Insurance increase for the 25/26 budget. The accuracy on how many people this figure related to was queried.

 

The Deputy Chief Executive confirmed the cost should not be described as irrecoverable as LeisureSK Ltd would have modified their cashflow accordingly to absorb the new cost into their projections.

 

The figure on the National Insurance cost pressure was an estimate, due to only a number of LeisureSK Ltd employees being on a salary. It was unknown how many people from April 2025 -March 2026 would be included within the £5,000-£9,000 banding, due to extra shifts becoming available.

 

Clarification was sought around the standard of gym equipment as the report stated the equipment was of a good standard, however, an analysis identified a weakness of outdated gym equipment at Stamford and Grantham. The potential of requesting a £200,000 loan from the Council to replace the gym equipment was discussed.

 

The Chairman of LeisureSK Ltd stated the gym equipment was in a good and working condition, however, the need to replace and keep up with newer types of modern fitness classes and equipment was necessary to keep existing members and encourage new members to join.

 

Grantham Meres received a refurbishment in 2016 which cost £600,000. It was queried what would be updated with the £250,000 loan.

 

The refurbishment in 2016 included change of use in rooms, a refurbishment of upstairs toilets, offices, cycle studio, dance studio and a remodel of the flume in the Grantham Meres.

 

The £250,000 loan would merely be required to update the gym only.

 

It was requested that an assessment be undertaken before any gym equipment was purchased to explore the market and alternative providers. It was noted that the competitive market was different to 2016 and other gyms within the town had lower costing memberships.

 

The Deputy Chief Executive clarified the relationship between the Council and the LeisureSK Ltd company. The proposal before the Committee was company driven which would require a full business case and visibility of the market procurement change that LeisureSK Ltd would be looking to utilise.

 

A commercial loan proposal would be backed by evidence to validate the request and ensure the Council’s money was being used efficiently.

 

One Member queried who would approve the grant of the commercial loan.

 

The Deputy Chief Executive highlighted the approval process would depend on the financial threshold as to what the request was. If the request was over £150,000, it would ultimately be a Council decision, which would mean going to Cabinet as a first proposal and recommending a modification to the budget framework to accommodate the loan.

 

An observation was made that the subject of LeisureSK Ltd would arise over the next few weeks in five different Scrutiny or governance meetings.

 

It was highlighted that taxpayers money was funding the company, therefore, the right governance and transparency was put upon the arrangement between the Council and LeisureSK Ltd.

 

It was queried whether S106 money, which was destined for leisure services could be utilised towards maintenance of the leisure centers.

 

It was clarified that S106 money was given to the Council rather than the company, therefore, it would be the Council’s decision on how the money was spent.

 

A suggestion was made on a sub-committee to be formed where LeisureSK Ltd be discussed separately.

 

As part of LeisureSK Ltd’s move to the agency model, governance routes and a better way of reporting to scrutiny were being explored.

 

The Assistant Director of Leisure, Culture and Place clarified that topics involving LeisureSK Ltd were mainly discussed at Culture and Leisure Overview and Scrutiny Committee. Other topics sat within the Articles of Association that the Council was responsible for the Directors of the company via Governance and Audit Committee.

 

It was proposed, seconded and AGREED to go into private session.

 

Under Section 100(a)(4) of the Local Government Act 1972, the press and public may be excluded from the meeting during any listed items of business, on the grounds that if they were to be present, exempt information could be disclosed to them as defined in the relevant paragraphs of Schedule 12A of the Act.

 

It was proposed, seconded and AGREED that the Committee:

 

1. Notes the update regarding the performance of LeisureSK Ltd.

2. Endorses the Business Plan for LeisureSK Ltd for one year 2025-2026

3. Recommends that a budget of £150,000 is proposed for 2025/26 in order to stabilise the cashflow of LeisureSK Ltd on a temporary basis.