‘Managing the Recovery of Local Government Leisure Services’
23 July 2020
The Sport, Leisure and Culture Consultancy (SLC) facilitated an online Think Tank – ‘Managing the Recovery of Local Government Leisure Services’ for Local Authority Clients on 23 July 2020 from 3pm-5pm.
Facilitation was provided by Duncan-Wood Allum, Managing Director at SLC, supported by Judith Schrenk, SLC Research Consultant.
- Iain Greenshields – Womble Bond Dickinson
- Duncan Wood-Allum – SLC
- Utku Toprakseven – 4 Global
- Steven Ward – Ingesport
- Caroline Constantine and Jamie Wilson – Right Directions and Tillr.
- Paul Baker (Crawley Borough Council, Senior Leisure Officer)
- Graham Rowe (Crawley Borough Council, Partnership Services Manager)
- Alan New (Worcester City Council, Contracts & Performance Manager)
- Chris Fennell (Watford Borough Council, Head of Leisure & Environmental Services)
- Ann Hill (Warwick District Council, Sports and Leisure Contracts Officer)
- Julia Smith (Harborough District Council, Chief Officer – Communities and Wellbeing)
- Peter Ashworth (Stockport Metropolitan Borough Council, Head of Culture and Leisure)
- Dan Buck (Lee Valley Regional Park Authority, Corporate Director)
- Jamie Fenton (Peterborough City Council, Culture and Leisure Development Manager)
- Michael Shepherd (Slough Borough Council, Leisure Development and Client Manager)
- Peter Davis (Shropshire Council, Leisure Services Manager)
- Laura Jones (Test Valley Borough Council, Sport & Recreation Officer (Contracts))
- James Crowley (West Lancashire Borough Council, Leisure Projects Development Manager)
- Andrew Laslett (York City Council, Strategic Services Manager)
- Su Cumming (Newcastle City Council, Assistant Chief Executive – Public Health)
- Gemma Ryan (Sandwell Metropolitan Borough Council, Business Manager – Sport and Leisure)
- Emma Sharpe (South Kesteven District Council, Leisure and Events Officer)
- Pauline Lawrence (London Borough of Ealing, Leisure Operations Manager)
- Toby Kingsbury (SLC, Director).
- What additional legal considerations have arisen as a result of Covid-19 and any future change of law / force majeure?
- What additional contractual considerations can support recovery and risk transfer for both parties?
- In the event a leisure partnership fails, despite the best efforts of all parties – what are the options for a local authority?
- What insight tools are available to support tracking the recovery across the sector and benchmarking your leisure operator’s performance over the next critical months of recovery when services recommence?
- How can Councils be confident their facilities are ‘Covid Secure’ upon reopening and how can this be monitored effectively?
- Looking ahead, what are the longer-term implications for leisure services as regards strategic focus, investment and affordability?
Summary of legal considerations relating to the Covid-19 crisis – Iain Greenshields, Partner, Womble Bond Dickinson
One of the challenges the sector is facing are the legal considerations and any future change of law / force majeure arising out of the Covid-19 crisis. The situations local authorities find themselves in vary significantly due to the different nature of the contracts with their leisure partners. The current crisis can be covered in a multitude of different ways depending on the nature of a contract – as a qualifying change in law, an emergency, force majeure or authority step-in. Some contracts between leisure operating partners simply do not include provisions for dealing with such an event.
While Sport England have advised local authorities to go down the route of a Qualified Change in Law (QCiL), there are certain risks associated with this method. For example, the QCiL is assumed to remain in place for the length of the contract. What starts and stops the QCiL and is it specific to the leisure sector? Another risk is posed by claims based on a loss of revenue which may potentially reward the operator too significantly. Womble Bond Dickinson (WBD) advise local authorities to respond to Covid-19 as an “emergency” and thereby compensate the operator merely for the costs incurred as a result of Covid-19 (not a loss of revenue or profit). This gives the local authorities the ability to influence the handling of the sites by the operator more directly.
There is a question around the effect that government announcements on reopening have on QCiL. The government’s initial announcement was treated by Sport England as a Qualified Change in Law but there remains uncertainty around the re-opening of leisure facilities, in effect putting an end to the QCiL.
The recovery period will present new legal challenges to local authorities and their leisure operating partners. There is a question around the provisions in current contracts being able to adequately address the implications of lockdown and recovery. Local authorities will need to carefully evaluate the extent of financial support that is required by the operator and compensate for the actual costs incurred. This is where an open-book approach by the operator will be key in ensuring a fair amount of compensation is paid to the operator. A multitude of factors, such as projected reduced income, lower costs, central office costs and profit levels have to be considered when deciding on the extent of financial support. Local authorities and consultants will have to scrutinise the figures provided by leisure operators and demand information on underlying assumptions. Another key challenge will be to agree on the duration of the recovery period and the triggers to end it.
Perhaps the most challenging contractual considerations will arise in situations where, despite everyone’s best efforts, the leisure partnership has to be dissolved. In such cases, the local authority is left with a choice to either bring their leisure services in-house, with implications regarding NNDR, employment T&Cs, pension costs and VAT, retender the contract or set up a Local Authority Trading Company / Teckal company. Another option would be for the local authority in question to set up a trust albeit this would need to be tendered.
SLC has been supporting Sport England with the development of new draft Leisure Services Delivery Guidance (LSDG) and given SLC the permission to share with local authorities if needed. This document provides guidance on all management options available to local authorities and the key considerations for each.
There remains uncertainty regarding the legal implications of a potential local lockdown and how this may be viewed in terms of QCiL. Current contracts may not allow the Council to make local decisions on the closure of facilities and it is therefore recommended for local authorities and their leisure partners to have an open conversation about how any potential future local lockdown is to be managed.
Duncan Wood-Allum and Utku Toprakseven – SLC and 4Global
SLC has developed a local authority performance monitoring tool with leisure insight experts 4Global using information generated through the Datahub which captures and analyses live income data from 1,500 leisure facilities across the UK. This enables local authorities to track actual live financial performance of their sites linked to all the core income areas of a leisure operation and to maintain ‘real-time’ visibility on how the wider market is responding. SLC believe this will be hugely valuable to operators and their clients during such a period of uncertainty and will provide leverage to clients in managing performance and informing negotiations regarding financial reconciliation through the recovery period.
The Local Authority Performance Tool enables Councils to monitor the performance of their leisure operating contracts through income and participation KPIs. It shows an operator’s performance across different income streams, such as swimming and health and fitness and compares this with national data and other local authorities that have been identified as comparable. The tool generates a bespoke report with a visualisation of the data through a series of graphs. It shows where the contract is over-performing against national and comparable authorities and where the operator needs to focus attention to address any under-performance.
The tool provides local authorities with the insight needed to make informed decisions on risk transfer through the recovery period or changes in the level of financial support provided to the operator.
Steven Ward – GoFit
GoFit are the leading health and wellbeing operator across Spain and Portugal working with local authorities. Having reopened in June, Steve Ward was able to share some useful insight with the delegates.
GoFit have been working with virologists, biologists and Sheffield Hallam University to ensure their handling of reopening has been in line with the latest research. Based on experts’ knowledge, measures taken by GoFit include improvements to air ventilation systems with standards similar to hospital operating theatres, pre-booking systems across all facility types and thorough cleaning standards. Customers attending GoFit facilities have their shoes disinfected and their body temperature checked when entering buildings. Reservations are validated not only upon entrance but when checking into exercise classes, gyms or entering wetside facilities. During classes, a personal space of 6.25m2 per person is guaranteed and changing rooms are equipped with plastic screens to ensure customers are able to adhere to social distancing. When lockdown was announced, GoFit offered their members frozen memberships and continue to offer this for all members until they are happy to return.
Steve Ward advises operators and local authorities to be mindful of both the economic distress and the levels of fear when planning for reopening. Business modelling based on visitor numbers before the Covid-19 crisis has to be treated with caution. To respond to the levels of insecurity, constant engagement with the customers and staff are key. Sector colleagues working on-site are key in a safe reopening and creating an atmosphere of trust in facilities. Facemasks can add an additional level of safety to facilities – even though masks may not be mandatory in leisure facilities at this point in time, staff and customers are likely to feel safer if masks are worn in facilities. This can also help the sector in showing that it values public health and safety and ensures customer confidence.
Whilst the numbers of customers returning to GoFit facilities have been higher than projected, the average across other countries has been lower (approx. 38% of visits pre-Covid in the first week of reopening). It is believed that GoFit’s strong communication with customers during lockdown and leading up to reopening has been a key factor in delivering a positive initial period of recovery for the company.
GoFit have produced a report on the social value of reopening their facilities, which is available for interested local authorities.
A short video showing GoFit’s approach to reopening their facilities under social distancing restrictions is available to view by clicking this link.
Caroline Constantine and Jamie Wilson – Right Directions and Tillr
Health and safety and quality management consultants, Right Directions, have been running clinics for local authorities throughout lockdown, available to view on Right Direction’s YouTube channel. With significant discrepancies in the handling of Covid-19 by operators and local authorities, there are concerns about the lack of a consistent approach to remobilising services and that a single spike at a facility would set the whole sector back significantly.
Right Directions are working on a Quest tool, to be launched in September, to evaluate the performance of centres once they are up and running. In cooperation with Tillr, Right Directions have also launched a self-assessment and external audit tool on Covid-19 safety for local authorities. Leisure operators can fill in a questionnaire producing a score between 0-100. If a certain score (95 or higher) is reached, the operator can obtain a “Fit for Business” certificate to be displayed in facilities. The operator’s responses have to be validated by the Council or Right Directions through the provision of supporting evidence (e.g. policies and procedures, training manuals, risk assessments and videos of the site showing good practice in action).
Right Direction’s and Tillr’s tool can benefit local authorities that are occupied with the various challenges presented by Covid-19 and may have a number of centres they need to manage.
Other points raised
Councils across the country are struggling with the uncertainty presented by the virus and the challenges lying ahead in reopening. The first weeks will be critical in retaining member confidence – it is widely accepted that operators may not get everything right at first but continual learning will be key to a successful recovery.
With a multitude of challenges local authorities face, officers have been forced to focus on immediate actions to seek agreements with operators and remobilise services. Little consideration has therefore been given to the longer-term challenges and opportunities. There is a fear amongst sector colleagues that another lockdown will force local authorities into making even more difficult decisions. It is therefore key for Councils to continue to closely monitor and review the provision of services to ensure they are sustainable and affordable over the longer term.
The ongoing review process between local authorities and their operators will be critical and should be supported by robust financial information provided by operators. Local authority officers have to be clear on the information they require from operators – above and beyond standard profit and loss statements. It will also be important to ensure the right level of qualitative data is provided to ensure the services are delivering on the wider strategic priorities of the contract and it does not become solely about the ‘bottom line’ financial position.
SLC would like to thank all contributors and Think Tank participants for investing their time and providing insight and suggestions on how our sector can work through these difficult times.