Agenda item

Report of the Interim Strategic Director of Place

Presented by the Community Services Portfolio Holder

Councillor A V Smith presented the report to members, emphasising the scope and scale of the project, the approval of which would require the highest level of oversight, as it would undoubtedly have an impact upon the Council’s budget and service delivery for years to come.  She added that it also triggered the Head of Paid Service’s duty under Section 4 of the Local Government and Housing Act 1989 to report to all members of the Council on changes to the exercise of Council functions. She made reference to report to Cabinet on 1 November and the decisions and recommendations made at that meeting.  She stated that it would not come as a surprise to members of council or the general public to hear that a project the scale and size of the leisure project represented a significant financial investment for the council and a considerable amount of time and resources had been expended on making sure the figures stacked up.  She added that due to the commercially sensitive nature of the financial implications associated with the outsourcing business case, it was necessary that the detailed financial information regarding the project’s affordability modelling, funding proposals and impact on the council were restricted and as such they were presented in the confidential Appendix A which accompanies the report.

Councillor A V Smith advised that in arriving at a decision to proceed with the A511 site, Cabinet had regard to information from detailed site investigations and surveys carried out by the specialist building consultancy group CBRE, which included intrusive ground investigations, ecological assessments, traffic surveys and highways and vehicular access.  Cabinet had commissioned this work to provide confidence to the Council in making the next key decisions in the project.

Councillor A V Smith stated that the reasons for building a new leisure centre were many and varied but in short the existing 40 year old leisure centre at the Hermitage site, whilst popular and well used, was increasingly unable to meet the expectations as well as the current and future demands of the 21^st century leisure user.  The sports hall, swimming pool and the fitness suite were all too small to meet current demand and an increasing number of customers were becoming frustrated at the difficulties they were experiencing when trying to book facilities which had resulted in some users moving to use facilities elsewhere.  The proposed new leisure centre with its enhanced facilities and services on offer would not only address the issue of current and future demand but would also play a critical role in achieving the Council’s vision, contributing to delivery of the Council's five priorities as set out in its Corporate Delivery Plan as well as being a major contributor to the outcomes of the Council's emerging Health and Wellbeing Strategy.

Councillor A V Smith commented however that the proposed outsourcing was not just about building a new facility and she drew members' attention to the fact that the Hood Park Leisure Centre in Ashby was also included in the outsourcing proposal.  As such the new operator would also be responsible for the operational management and business development of the building, staff, programmes and activities at Hood Park.  She acknowledged that the leisure offer at Hood Park was very different from that provided at the Hermitage Leisure Centre; the lido at Hood Park being a unique and iconic leisure facility and one of only a handful of such pools still operating in the country.  She added that the lido was a very well-used facility and provided a leisure experience to residents and visitors that few local authorities were able to offer and she expressed pride of that fact.  She added that the preservation and future of the lido would be a key consideration for any incoming operator, and the operator would need to satisfy the Council that there would be an ongoing programme of capital and revenue investment in all aspects of the Hood Park Leisure Centre.  This investment would ensure that Hood Park as well as the new leisure centre will continue to develop and improve its leisure offer to users over the 25 years of the contract.  She hoped members would agree that the future of the leisure services and the leisure provision in North West Leicestershire was both stimulating and exciting and she commended to Council the recommendations on page 80 of the report.

The motion was seconded by Councillor N J Rushton.

Councillor N J Rushton advised that in July, early financial modelling had estimated that the Council could be £334,000 better off within 40 years as a result of the sports and leisure project. This was based on the Council funding the cost of the new facility using internal funds and saving £200,000 per annum in corporate overheads.  Since then, financial consultants Ernst and Young had been engaged to assess the affordability of the project and the likely financial position that the Council could achieve through the sharing of risk and reward within a Design, Build, Operate and Maintain contract.

Councillor N J Rushton explained that in the detailed financial modelling, the main assumptions in respect of the new facility had been derived from the report produced by The Sports Consultancy in 2016. Other key assumptions included that the Council would achieve £200,000 per year savings in corporate overheads and following confirmation from the Council’s Actuary, there would be no additional pension costs arising on the transfer of leisure staff to the new operator.  The cost of the new facility had been estimated at £19.475 million which included an allowance for current and future inflation.  The building would be funded through a mix of internal borrowing from existing reserves, capital receipts from the sale of surplus council owned land, some Section 106 developer contributions and external borrowing; the details of which were covered in the confidential Appendix A and could be discussed in private session.

Councillor N J Rushton reminded Members that any further internal funding committed towards the project would reduce the level of external borrowing required.  He advised that two scenarios for the sharing or risk and reward under the DBOM contract had been considered, each of which presented different results in respect of the Council's financial position.  Cabinet agreed on 1 November that the preferred financial construct as a stance for negotiations with contractors under the competitive dialogue route was that the operator received all profits up to 8% of income, but suffered all losses and shared profit with the Council on a 50:50 basis above the 8% income level.   He summarised that the financial modelling undertaken had shown that the Council could expect to break even over the 25 year life of the contract and repay the external borrowing. Over the 40 year life of the new facility, the Council could expect to improve its financial position by £3 million.

Councillor S Sheahan thanked officers for their efforts to ensure the proper amount of challenge and scrutiny had been facilitated and particularly for allowing this debate to take part in open session.  He added that this meant a lot to the people attending the meeting.  He stated that the Labour Group had agreed to a free vote and this had not been an easy decision.  He commented that there was a lot to like, but a lot to be concerned about.  He assured members the Labour Group would continue to scrutinise this project closely to ensure the best outcome for the local community. 

Councillor M B Wyatt stated that he was not convinced by the business case or the Portfolio Holder that this was the best site to provide benefits to the town centre.  He stated that Coalville would not benefit from this location.  He stated that he could not support the recommendations and commented that the administration seemed to be more interested in privatisation than supporting the town which continued to decline. 

Councillor F Fenning stated that he was not persuaded he could support the recommendations.  He added that he had seen many attempts to re-galvanise Coalville.  He commented that the proposal would reduce the total number of staff by 30% and he expressed concerns about the impact this would have on service provision.  He referred to staff losses in other areas. 

Councillor D Harrison sought to raise a point of order that the comments made were too detailed and negative. 

The Chairman stated that he was happy to accept all comments that did not relate to the financial detail in the confidential section of the report.  He asked Councillor F Fenning to continue.

Councillor F Fenning stated that he had a leisure centre in his area and he expressed concerns that there would be insufficient staff to support it.  He also expressed concerns regarding the loss of income and the lack of control. 

Councillor M Specht commented that he did not recall Councillor M B Wyatt declaring an interest as a business owner.  He felt that the new Leisure Centre was not going to be a major factor in the economy, however it would provide a state of the art, fit for purpose facility to benefit residents across North West Leicestershire.  He added that any member who had visited the Leisure Centre at Hinckley could not fail to have been impressed by the facilities, location and staff.  He referred to the news report about Whitwick this morning regarding air pollution in Leicestershire.  He reminded members that when the Leisure Centre had been built some 40 years ago there were less cars on the street, and now it was a nightmare to get to and from it.  He commended everyone involved in putting the report together.

Councillor N Smith felt that this was an exciting opportunity for North West Leicestershire as the existing Leisure Centre was out of date and was of an insufficient size for events.  He added that leisure today was a business and this was best run by the professionals.  He commented that he was aware that colleagues in the Northern Parishes would like a leisure centre but in reality this would not be viable due to the number of health clubs in hotels.  He urged members to support the proposals.

Councillor D Harrison stated that this was a great moment for North West Leicestershire and members ought to be proud.  He made reference to the major financial commitment and the huge benefits the new Leisure Centre would bring to North West Leicestershire and to Coalville in particular.  He felt that the location was fantastic, particularly for Whitwick as this facility would still be provided in the community and would prevent residential development on the green wedge. 

He made reference to the concerns raised regarding the loss of staff and commented that they would have a lovely working environment and the Council would retain control.  He complimented the Leader and Deputy Leader on their resilience in progressing this project.  He also complimented the Chief Executive and her team. 

Councillor R Canny commented that committing such a large amount of money to one project was brave and courageous and she commended the proposals.  She made reference to the small swimming pool in Castle Donington which sadly had lost support once the school became an academy.  She stated that people in Castle Donington would not be able to catch a bus to visit the Leisure Centre and there were lots of ordinary people in Castle Donington who could not afford to use the health clubs in hotels.  She urged members to consider the future in Castle Donington as the area had taken a lot of development. 

Councillor G Jones commented that location was key and was why this project would be a success.

Councillor N Clarke felt that the proposals were a great benefit for the town.  He added that Hermitage Leisure Centre was tired, and as it was not possible to redevelop it, a new facility was the right option.  He stated that the investment in the project was huge and the Labour Group were cautious about the risks involved.  He thanked the Chief Executive for taking on board many of the comments made.  He made reference to the sale of land at Cropston Drive and he hoped that the eventual developer would provide 20% affordable housing and that the Council would pursue this.  He stated that this land was originally for Council housing and the developer should recognise that.   He thanked the Leader and Chief Executive for addressing the issue of 0 hour contracts.  He welcomed the removal of the sale of the land at Hermitage Leisure Centre from the scope of the project. 

Councillor J G Coxon commented on the uniqueness of Hood Park and was pleased the Council was showing an interest in it.  He welcomed the creation of the leisure quarter in Ashby as well as the new car park.  He felt that a rebranding of the Leisure Centre should be considered as many did not recognise the significance of the name Hood Park.

Councillor D Everitt felt the location was excellent and he hoped the town centre would benefit. 

Councillor R Blunt thanked members for an excellent debate.  He commented that the administration took the idea of outsourcing staff very seriously indeed and added that not a single post had been outsourced in the 10 years he had been Leader of the Council and he expressed pride at retaining services in-house.  He believed however that at this stage, the benefits outweighed the impacts.  He stated that scrutiny of this major investment from all parties was welcomed. 

In response to the comments made by members, Councillor R Blunt stated that 30% of staff in Ibstock were not being lost, but being transferred.  He reminded members that leisure was a discretionary service and this project provided a once in a lifetime opportunity to safeguard this service in the face of future funding worries.  He emphasised the importance of ensuring appropriate development of the land at Cropston Drive which was in the Council’s control.  He thanked members for their support of the project.

Councillor N J Rushton reminded members that the Council aimed to provide the best possible services with the funding that was available, and the new Leisure Centre would be managed in partnership.  He added that spending £20 million was a big decision which was why the location was of prime importance.  He said that this was not just a Leisure Centre for Coalville, but for the whole district. 

Councillor M B Wyatt expressed concerns regarding the funding sources for the project. 

Councillor A V Smith assured members that progress would be reported to Policy Development Group on a regular basis and she assured members that no funding was being diverted from the Coalville Project.  She advised that some of the leisure staff were being retained to work at the pools at Ibstock and Measham.  She stated that health and wellbeing was a priority, as 25% of the nation were obese and it was important to get people moving and active.  She advised that North West Leicestershire were performing well in terms of having a healthy population.  She stated that the new Leisure Centre would take 150 car movements out of Whitwick per day and discussions had been taking place around bus services.  She commented on the uniqueness of Ashby Lido and discussions around the name of the leisure centre

The Chairman then put the motion to the vote and it was declared CARRIED.

It was

RESOLVED THAT:

a)    The financial and affordability model in respect of the project be approved, including the requirement to borrow externally and consequential changes to the budget and policy framework.

b)    The outcome of the ground investigations of the A511 site be noted and Cabinet’s recommendation that the site be approved as the location for the new Leisure Centre be endorsed.