SUMMARY/PURPOSE

1. To consider the recommendations of the Policy Commission for Economy, Tourism, Regeneration and Transport arising from its Value for Money Review of Leisure.

BACKGROUND

2. The Policy Commission for Economy, Tourism, Regeneration and Transport reached a critical point in the completion of its Value For Money review of Leisure Services and decided to undertake a ‘gateway’ review of its findings to date. As a consequence it has prepared the attached Blue Paper for the consideration of the Cabinet. It considers that the views of the Cabinet are necessary before (or if) it continues with any further work on the study.

3. In completing its work to date the Commission has been provided with independent advice from specialist leisure consultants. In order to make the most effective use of time available the review has also begun the early stages of the procurement of private sector companies interested in running the Council’s leisure facilities. This involved the receipt of expressions of interest and completion of pre-qualification questionnaires (PQQs) from such companies. Fourteen companies expressed an interest and of these seven returned PQQs.

4. One of the key pieces of work undertaken by the consultants was the development of a target operating budget (shadow bid) for the leisure facilities if they were to be operated by the private sector. This budget was to serve as a benchmark to judge any potential tenders against. It showed an annual saving of £116,500 on the Council’s costs of running the facilities (based on 2005/06 figures).

5. In producing the shadow bid, the consultants made the assumption that there would be minimal financial risk to the contractor from the existing state of repair of the leisure facilities, especially in relation to the fabric of the building and condition of plant and equipment.

6. In order to make an assessment of the level of this risk, condition surveys of the leisure facilities were commissioned. These surveys identified a significant underinvestment in planned preventative maintenance over many years resulting in a repairs backlog of £1.7m. These repairs are those that would be necessary to put the buildings into the conditions assumed in the shadow bid. The average annual cost (over 10 years) of addressing this repairs backlog through prudential borrowing would be £212,000.

7. Therefore, on the basis of the assumptions made and financial calculations, the operation of these facilities by the private sector could potentially cost the Council an additional £95,500 per annum for the next 10 years and not realise an overall saving to the revenue budget for 18 years (all other things being equal).

8. In the light of this knowledge, the Commission has taken a view that before the Council considers committing to expenditure to overcome this repairs backlog, it needs to satisfy itself that it has the right portfolio of leisure facilities to meet the current and future needs of the Island’s community. Any such review should take into account not only the Council’s direct leisure provision, but also that of the private and voluntary sectors.

9. During the review, it became apparent through the number of consultation events held, that there is support for the creation of a single centre of excellence for leisure/indoor sports. Such a development would require significant levels of investment (public, private or a mixture) and would need to replace some of the existing leisure provision. The support for such a development was given further impetus by the Island Games Association’s successful bid for the 2011 International Island Games and the Council’s declared intention to bid for preparation camp status for the 2012 London Olympics.

10. The potential for such a centre of excellence would need to be at the heart of any overall review of the Island’s portfolio leisure facilities.

STRATEGIC CONTEXT

11. The investment required in Council-run sports and leisure facilities, if realised as a product of this review, would not just provide better buildings and facilities for Islanders and visitors alike. Improved facilities would enable the Council to offer a wider range of services, promoting physical fitness and well-being to more people, of all ages. This could be developed as a series of programmes engaging the public in the Island Games and using this as inspiration for more general activity programmes. This in turn could build increased levels of physical activity on-Island (supporting a LAA target) and could secure a lasting legacy of improved public health on the Island as a result.

CONSULTATION

12. The VFM Review carried out a series of focus groups with key stakeholders, as detailed in the attached report.

13. In addition, the review team liaised closely with the ETRTC Lead Member and Chairman throughout the process.

FINANCIAL/BUDGET IMPLICATIONS

14. The production of a shadow bid has identified that the operation of the facilities by the private sector could save the Council an estimated £116,500 pa. In order to achieve this level of saving, the Council may need to invest £1.7m to upgrade the facilities at an annual cost of £212,000 for 10 years.

15. The cost of completing the procurement of a private sector contractor is estimated to be in the order of £150,000 and is mainly associated with the completion of legal documentation. This may be recoverable from any savings over the lifetime of the contract.

16. A leisure needs analysis and completion of a leisure facilities plan will cost approximately £50,000 to produce if procured from external advisors. One-off resources are available to fund this amount.

LEGAL IMPLICATIONS

17. The Council has statutory powers to provide a wide range of leisure provision however the level of provision of leisure services is at the Council’s own discretion.

18. The Local Government Act 2000 provides the Council with the authority to do anything which it feels appropriate to improve the economic, social or environmental well-being of its area. A review of leisure facilities provision will enable the Council to plan for a portfolio of facilities that support the aspirations of the Local Government Act 2000.

19. Any subsequent decisions to amend the current portfolio of facilities and methods of management will need to be taken in the context of relevant HR legislation.

OPTIONS

20. The Policy Commission discussed a number of options for recommendation to the Council. Its final recommendation and the details of each option are given in the attached Blue Paper. In summary the options are:

(a) Continue the procurement of a private sector operator for the leisure facilities.

(b) Suspend the procurement of a private sector operator for the leisure facilities.

(d) Undertake a whole Island leisure needs analysis and produce an Island leisure facilities plan that meets the needs of the Island community.

(e) Agree to deliver the management and implementation of the leisure facilities plan by the most appropriate mechanism (private sector, not for profit organisation, in-house).

(f) Support the use of limited invest to save bids by the Council’s leisure management team to improve the current financial operating costs of the facilities.

EVALUATION/RISK MANAGEMENT

21. The attached Blue Paper contains a risk analysis for the options discussed by Policy Commission.

22. Continuation of the procurement of a private sector contractor may, on the face of the information presented by the Commission, not realise any savings to the Council in the operation of these facilities. Indeed it could add to the current operating costs without bringing about the improvements to the service that the Council would wish to see.

23. A fundamental review of the leisure needs of the Island’s community will enable the Council to target its resources where they are most needed in either directly providing facilities or enabling their provision. The review would be likely to identify the need to rationalise and/or replace facilities, but with the express intention of improving the quality of the services and facilities, the range of available leisure opportunities and the value for money they offer to the Council.

24. The production of an Island wide leisure review could be done in-house or with external consultancy advice. The independent role of an external advisor would greatly assist with the speed of production of such a review.

RECOMMENDATIONS

25. To approve options (c) to (f) of the report and to receive a further report on the completion of the leisure needs analysis in January 2007.

APPENDICES ATTACHED

Appendix 1 - ETRTC Blue Paper 9 August 2006

Contact Point : John Metcalfe, Assistant Chief Executive ' 5661 [email protected]

JOHN METCALFE

Assistant Chief Executive

COUNCILLOR TIM HUNTER-HENDERSON

Cabinet Member for the Economy, The Customer, Communications, Leisure and Tourism