Fenland Council agrees to third bailout out to ensure leisure centres in March, Whittlesey, Chatteris and Wisbech remain solvent
PUBLISHED: 11:55 22 October 2020
Fenland District Council is to agree a third bailout of Freedom Leisure to ensure centres in March, Chatteris, Whittlesey and Wisbech remain open and solvent.
The total financial package – made up of deferred management fees, cash support, and an interest free loan – comes to £777,000 to the end of next March.
Those sums exclude £322,000 expected to be received by the council from government grants for lost management fees from Freedom Leisure.
“Without the council’s continued financial support, the contract between Freedom Leisure and Fenland District Council is unlikely to remain viable,” says a cabinet report.
The consequences of not propping up Freedom are set out in papers considered by portfolio holders who make up the council’s cabinet.
The report makes grim reading although council officers still believe Freedom Leisure, a charitable trust who work with 20 other councils across the country, will deliver savings for council tax payers over the 15 years of the contract they signed in 2018.
Had Covid-19 not happened the council had expected to achieve £5.6m in savings over the full term – and in the first 15 months of the contract things could not have looked better.
Freedom was running above expectations and customer service and income growth high, says the report.
But the pandemic changed all that and although leisure centres re-opened with reduced hours on July 24, Covid safety measures resulted in “a significant reduction in capacity of all facilities”.
Even with longer hours from October 5, they still do not match pre-Covid levels. Revenue is about 30 per cent to 40 per cent lower than 2019 levels.
“It appears that income has plateaued at this level,” says the report.
“Increased opening hours from October 5 are expected to increase revenue but have a negligible effect on the bottom line due to corresponding costs.
“However, this approach will help the business retain customers in the short term.”
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The council has been advised that social distancing measures will remain until at least next March and with the ending of the Job Retention Scheme and the new Job Support Scheme, Freedom still is unsure how it will affect them.
Officers said the council is lobbying the Government and MP Steve Barclay about the financial difficulties of the leisure sector.
But it still means dealing with a situation where Fenland Council needs to support Freedom Leisure or risk the consequences.
“The impact of Covid19 on the leisure sector was profound and immediate,” councillors were told. “Customers were unable to attend due to the change in law. Freedom furloughed most staff. Income during closure was negligible.”
“If Freedom fails, then FDC’s short term costs will increase by at least £500,000 per annum.
“And the council would be taking back the health and safety risk, staff management, accountancy and payroll functions, administrative functions and human resources of over 100 staff.”
The council is simply not equipped to take it back.
“Staff restructures took place in back office teams to reflect leisure being outsourced,” says the report.
“These additional costs would have to be added back into the FDC budget to support any in-house change. It will not be possible to find an alternative provider at short notice.
“Should Freedom fail, FDC will not realise the £500,000 per annum of savings over the outstanding period (14 years) of the contract”.
And there was a stark warning to councillors that if they did take back leisure, it may not be able to keep all four centres in their current form.
If the planned savings of Freedom contract are not possible, “the council may need to reconsider the strategic approach to leisure centre provision in Fenland.
“Such a review may mean that the current level of provision across the four towns would need to be re-visited, reflecting the financial challenges.”
And the report added: “Due to the unprecedented nature of the current situation and the overall fragility of the industry at this stage in recovery process, the council faces inevitable risks whatever decision it takes”.
“There remains a possibility that trends will not evolve as expected which could result in a requirement to remodel the proposed operational model.”
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