Leisure Trust Partnerships:
Managing the Crisis and Planning for the Future
9 April 2020
The Sport, Leisure and Culture Consultancy (SLC) facilitated an online Think Tank – Leisure Trust Partnerships – Managing the Crisis and Planning for the Future for Local Authority Client Officers and their NDPO Trust Partners on 9 April 2020 from 10.30am-12 noon.
Facilitation was provided by Mark Tweedie, SLC Associate, supported by Judith Schrenk (SLC, Research Consultant) who took notes.
The delegates who attended were:
- David Ashbridge (Hambleton DC, Operational Delivery Manager)
- Stuart Lockwood (CLUK / Oldham Community Leisure, Chair / Chief Executive)
- Gemma Ryan (Sandwell MBC, Business Manager – Sport and Leisure)
- Jawar Ali (Thurrock Council, Recreation and Leisure Services Manager)
- Martin Burton (South Gloucestershire, Costumer Contact Manager)
- Andy King (Deputy Chair / Chief Executive, GM Active / Link4Life)
- Nathan Matley (Link4Life, Business Analyst and Performance Manager)
- Chris Rushton (Active Tameside, Chief Executive)
- Toby Kingsbury (SLC, Director)
- Duncan Wood-Allum (SLC, Managing Director)
Key themes explored in the session were as follows:
- What is happening with leisure management agreements whilst facilities are locked down?
- What approaches are being taken by councils and their leisure partners to address the immediate issues?
- How should we revisit future management agreements given the inevitable recession, changes in demand and future funding cuts for local government?
- What learning can be shared to support other councils and leisure partners with a contract and funding agreement in place now and in shaping the future arrangements?
- How can the sector support partners through the stages of recovery?
Where are we now? What is happening with leisure management agreements whilst facilities are locked down?
There is a sense of long-term insecurity for Councils (clients) and NDPO Trusts (operators) due to the crisis, but it is clear from Think Tank participants that most are successfully dealing with the immediate issues and the ‘now’. Several useful examples were shared with regard to how clients and operators were working collaboratively to manage the immediate issues.
Prior to the crisis operators were trying to reduce management fees through various means, this existing financial pressure has been significantly exacerbated due to the sudden loss of income for an undeterminable period. Future contract sustainability will be more dependent upon the capability to generate income as opposed to reducing costs.
Government rescue packages are available, including the furlough scheme (which all operators have taken advantage of) and loans / grants. The challenge is the time delays for the financial rescue packages to materialise and therefore the degree to which operators will need draw upon limited cash reserves. Going forward there are consequences that reduced or eliminated reserves bring with regard to the long-term financial resilience of operators. Government loans may be available, but this will bring repayment challenges, grants are therefore preferred but there is pessimism with regard to achieving grants of the quantum thought necessary.
Despite the Government rescue packages, the business impacts are still acute and clients are working with operators to mitigate the impacts. However, this is not without challenge as Councils are dealing with wider financial pressures which will have consequences for the longer-term financial arrangements within any leisure services contract/management agreement.
Delegates highlighted the work being done by national agencies, such as CLUK, in producing representative operator responses to government regarding the immediate and future pressures and suggested action is very helpful for the NDPO Trust operators. This can be accessed via CLUK and social media channels.
NDPO Trusts operators often deliver beyond the contract specification (i.e. via concessions and partnership / outreach work to deliver added health and social impacts). Concern was expressed about the capability to continue working in this way amongst the financial pressures and uncertainty, and that the consequences of this could exacerbate the impact of the crisis on vulnerable people and communities.
Emerging from the crisis, NDPO Trusts operators’ work to deliver added health and social impacts will be even more important than before. There is an opportunity to explore how NDPO Trusts can extend and formalise their potential to deliver across a wider range of public policy outcomes, including health, education and social services in partnership with their partner – but this needs to be sustainable.
What are the approaches taken to address the situation especially given the uncertainty regarding the duration of the crisis?
For planning purposes, it can be useful to divide the aspects of the immediate issues, and preparation for reopening and recovery, for example Project Phoenix (Link4Life – Rochdale).
In particular, activity to maintain engagement with existing customers as part of a retention strategy is important, as is being ready through a marketing and sales strategy to optimise the opportunity to engage with new customers post lockdown.
The duration of the crisis is unknown, as is the nature of lifting lockdown / social distancing. For example, a phased approach to reducing social distancing is likely. This will have operational implications for cleaning procedures and procedures for accessing pools, gyms and exercise environments.
Continuing to engage with existing members via online content is important for retention. In circumstances where most staff have been furloughed this is a challenge, but this challenge should be addressed in order to ensure potential consumer demand for an improved mix of on and off-line experiences is met post lockdown.
There could be a surge in demand to use facilities and to take part in group exercise owing to people being trapped for a long lonely period in isolation, although predicting consumer behaviours post lockdown is difficult. It is, however, important to plan ahead to ensure the capability and capacity is available to meet new demands and that promotional activity is ongoing in the lead in to lockdown being lifted.
Most NDPO Trust operators have frozen memberships. Some have offered long-term discounts to retain members and maintain a level of income during this crisis. However, where memberships have not been frozen, membership cancellation numbers appear to be relatively high.
The crisis provides an opportunity to re-shape communication channels between NDPO Trust operators and the public to further develop the public perception of NDPO Trusts’ role. This can be achieved by raising awareness of NDPO Trusts’ charitable ethos and work, and work to address inequalities (i.e. this is the essence of the NDPO Trust model described by Community Leisure UK).
There is an opportunity to advocate the NDPO Trust model with policy makers and commissioners as a vehicle to provide a wider scope of services to impact upon a broader range of public policy outcomes i.e. as stated previously.
It was highlighted that there is also an opportunity to fund-raise for charitable work undertaken by Trusts through campaigns and also to involve staff in volunteering whilst being furloughed.
The circumstances of this crisis are so profound that it is extremely important for clients and NDPO Trust operators to maintain effective and purposeful dialogue.
How do Councils and operators deal with the financial risks associated with the current crisis and re-opening the facilities?
There is no clarity regarding the length of the lockdown, therefore the sector cannot accurately assess the financial impact. Decisions have to be made on a week to week basis. Nevertheless, this crisis presents the opportunity for clients and NDPO Trust providers to plan collaboratively for re-opening to reflect future needs.
It was felt that there was an inevitability around limited resources becoming significantly more scarce post lock down, and as such expectations might involve further reducing the costs of operation where a management fee is paid by the client.
Councils and NDPO trust operators are under financial pressure which makes financial transparency on both sides fundamental and essential to jointly responding to this crisis.
There was a mixed perception of how much NDPO Trust operators share financial information (i.e. adopt an open book policy) with their council client. An open book policy would constitute a significant change of culture for some NDPO Trust operator and client relationships. The general consensus was that it was necessary to engender a real partnership approach to resolving the immediate and residual issues going forward.
Some NDPO Trust delegates highlighted their concerns over adopting and maintaining open book policies. This was primarily a risk to the NDPO Trust of local authority clients undertaking an options appraisal and potentially market testing or bringing the service back in house or establishing a local authority trading company.
It was acknowledged that models where NDPO Trusts have elected Members on the Board (notwithstanding their fiduciary duty to the Trust.) can be helpful in supporting a partnership-based approach. This is so they can be made aware, at first hand, of the acute financial pressures faced by NDPO Trust operators, the work being done to proactively manage the financial pressures and the added value provided.
There might need to be a focus on financial support during the period of re-opening to allow the build-up of services to pre-crisis levels. However, this will be dependent upon how quickly demand returns. A slow recovery will mean NDPO Trust operators need to focus heavily on income growth and cost management, this could jeopardise customer concessions and added value / outreach services that require cross subsidy (i.e. community-based exercise and events).
NDPO Trust operators would benefit from specific financial support to retain these services if they are threatened during the re-opening / build-up phase.
What clients want from a leisure service and what they can afford is a key question moving forwards. This will lead to discussions on the purpose and affordability of the leisure and cultural portfolio, capital investment plans and the services provided. The latter presents an opportunity to recommission wider public services to achieve more and better outcomes for less, for example the Active Tameside health and social care integrated service model.
There is the opportunity to re-define the strategic local outcomes required by clients from leisure partnerships, including the delivery of services in the community. Impact measurement is important and this can be achieved through more sophisticated outcomes frameworks. Link4ife (Rochdale) has recently developed such a framework but it has been put into abeyance as a result of the crisis for the time being.
How do people want to re-visit long term partnership arrangements?
There was a consensus that the crisis is an opportune momentum for collaboration between clients and their leisure operating partners to co-design solutions to enable leisure services to play a key role in re-building communities post Covid-19.
This crisis also presented the opportunity for the client and NPDO Trust operator relationships to be strengthened during this crisis. NPDO Trust operators have an opportunity to establish themselves as a flexible and ‘go to’ partner.
Specifically, this creates an opportunity to redesign services and implement new commissioning and performance management arrangements that enable NDPO Trust operators to better reach out to communities and provide an improved wider scope of services to improve health and address inequalities prioritised by the local authority.
SLC highlighted that Sport England’s Strategic Outcomes Planning Guidance (SOPG) is a good place for Councils to revisit and re-establish the long-term wider local strategic outcomes to be prioritised through leisure services given Covid-19. This can form the basis of developing more focused priorities for the NDPO Trust operator to deliver sustainably.
As financial reserves will be used to fund the short-term cost impact of this crisis NDPO Trust operators highlighted there will be insufficient reserves available to secure long -term business resilience. They feared this could also impact adversely on their appetite and ability to maintain concessionary and targeted services that require cross subsidy, or to develop new services that require pump prime revenue investment in the short-term. In situations where business resilience is severely threatened and revenue growth cannot be achieved, decisions about closures of centres might have to be made and factored into future contractual / partnering arrangements.
Moving towards a more outcomes-focused contractual relationships that maintains strong accountability could deliver an increased opportunity for the NDPO Trust operator to be flexible and more successful in their approach to service delivery. This could also bring flexibility to allow the client / NDPO Trust operator relationship to be more developmental and progressive. However, the return on investment for services (supported by the right evidence) that deliver better and wider public policy outcomes must be communicated clearly to the client so funding is secured.
There is a risk if clear priorities are not set and resourced that there will be no incentive for NDPO Trust operators to focus on the delivery of wider public policy outcomes and targeted interventions.
If savings need to be achieved in light of a recession as a result of this crisis, it must be clearly communicated by the local authority client side what services can be reduced, and it is important for NDPO Trust operators to evidence the impact of such disinvestment decisions to core services and added value activity. (SLC believe open book accounting and transparency is essential to facilitate this and build trust.)
Close inter-departmental collaboration involving Council services is happening during this crisis. This can be capitalised upon as we emerge for the crisis to drive forward a whole systems approach to redesigning and delivering public services to deliver wider public policy outcomes.
It is important for NDPO Trust operators to position themselves as part of this potential opportunity and to bring enthusiasm and innovation.
Key discussion points
- The need to provide a unified request for support to government on behalf of the sector to support local government to continue to fund essential services. (See open letters by Community Leisure UK)
- The need to better communicate the value of the sector to partners outside of the sector and to the wider public
- The value of having an open book approach that can help optimise the developmental relationship between clients and NDPO Trust operators
- The opportunity for leisure to deliver across a wider range of public policy areas i.e. health, education and social service local strategic outcomes
- The opportunity to develop a clear vision and national strategy for leisure post Covid-19
- The future situation (post Covid-19) for the procurement of leisure services
- The likelihood and willingness of the sector to collaborate to do the right thing during and after the crisis.
We would like to thank all the delegates who invested their time to support each other and share their thinking.
The next Local Authority Client / NDPO Trust Virtual Think Tank exploring Leisure Partnerships – Managing the Crisis and Planning for a Sustainable Future is on 23 April.
For further information on upcoming themes for exploration in our weekly virtual Think Tanks, please visit SLC’s website www.slc.uk.com
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