Review of leisure provision at Boston Borough Council

The council needed to save approximately £200,000 across its leisure service in the 2019/20 financial year and also generate approximately £50,000 of income to offset reduction in funding from the government which would have provided support to maintain service levels. This case study forms as part of our productivity experts resources.

Efficiency and income generation

We requested specific support to help us reach conclusions about the best options for delivery going forward and also challenge the assumptions we had previously made to ensure the chosen options are robust and could deliver our aims.

This included reviewing whether an ‘invest to save’ model or working with a third party would deliver the most effective results.

Background

We are a small, semi-rural district council with a population of c. 69,000 where our own leisure services are currently provided in-house in the form of one main facility, with a leisure pool, training pool and gym facility.

As with most of the public sector, the council finds itself in challenging financial times and has to look at all options for reducing expenditure and increasing income.

Boston has a backdrop of poor health statistics particularly around activity and weight levels. We have limited facilities and resources available to tackle this problem. Maintaining our leisure provision is important to ensure that we work with other agencies to improve the overall health profile of the borough despite the need to make savings.

Description of assignment 

The Council was looking to save approximately £200,000 across its leisure service in the 2019/20 financial year and also generate approximately £50,000 of income.

We had previously looked at a number of options including a leisure trust and internal ‘invest to save options’. The council asked for specific support from the LGA to help us reach conclusions about the best option going forward and also challenge the assumptions we had made so far, to ensure the chosen options are robust and could deliver our aims.

We were looking for support to:

  • Work with the council to review all options previously considered and to put forward any other potential options.
  • Consider the best possible and robust options which are realistic and may deliver the agreed targets, whilst also providing a view on credibility of preferred options.
  • Provide a practical implementation plan to allow us to move forward without further support.
  • All the above must link together to allow us to achieve the required savings and additional income.

The scope of work was agreed as follows:

  • Review all options previously considered and to put forward any other potential options.
  • Consider the best possible and robust options which are realistic and may deliver the agreed targets, whilst also providing a view on credibility of preferred options.
  • Provide a practical implementation plan to allow us to move forward without further support after the project has ended.

Options considered must at least maintain current levels of provision to support our work on health outcomes.

The priority areas for health are:

  • Promoting healthier lifestyles in Boston
  • Improving the health and wellbeing of older people in Boston
  • Addressing the housing and financial capability issues that most affect the health and wellbeing of people living in Boston

The Strategic Health Group is a partnership between public health (Lincolnshire County Council), Lincolnshire East Clinical Commissioning Group, Linconlshire Housing Partnership (a registered social landlord) and Boston Borough Council. The focus is working together to improve the identified health outcomes.

The challenge

The council has a strong record of financial management and has had a good track record of managing within its budget despite significant savings being required over recent years. Boston as a small local authority has been facing these challenges for a number of years and has developed effective approaches to delivering required savings. We developed a Transformation Programme as far back as 2009 to prepare for future funding difficulties and budget challenges. We have:

  • Developed a co-located ‘one stop shop’ with DWP and third sector partners (CAB & Voluntary Service) which included £1 million investment in our buildings and increased income for the revenue budget.
  • Worked with parish councils to devolve local responsibility for functions that they are able to raise precept specifically for
  • Used expertise to develop a shared CCTV service for three other district councils including our own which has included investment in state of the art equipment for supporting community safety and crime
  • Working in partnership with Heritage Lincolnshire to develop schemes to improve buildings in the town centre with funding from Historic England and Heritage Lottery Fund.

The council is significantly affected by the reductions in government funding and is currently facing some difficult financial challenges which are being addressed through the councils transformation programme. However, leisure services remain a priority for the council but their overall cost needed to reduce to support the reductions across the entire council spend to deliver balanced budgets.

The council’s gross budget is approximately £33 million (a significant proportion of this spend is accounted for from benefit payments). This figure is forecast to remain static into the future despite increases in costs such as employee costs, utilities, fuel, price of goods and services etc. In real terms the council has already made cashable savings of over £2 million to balance its budgets.

Savings target 2019/20 

 

2019/20

2020/21

2021/22

2022/23

 

2023/24

Budget savings requirement (£’000) – cumulative

-

538

548

634

887

Budget savings requirement (£’000) – annual

-

538

10

86

253

 

NB this includes provision made for 2019/20 of increased income of £135,000 (per annum) and savings of £103,000 across the wider service. A further £35,000 of income, per annum, has been included from 2020/21 (already included in the budget).

To assist with this decision making, the council needed support from an expert who could evaluate work carried out in this area to date and review all options which might be available to the council to deliver the required outcomes.

The LGA Productivity Experts Programme has supported the council working with an expert who has significant experience in terms of commercial reviews, options appraisals, service reviews and commissioning in various local authority service areas including leisure.

The solution

The scope of work agreed was as follows:
a) Review the effectiveness of a recent light touch procurement exercise (the aim of this exercise was to see whether entering into an arrangement with a third party provider under an existing trust model may provide financial and wider benefits for the centre and the council).
b) Analyse the relative efficiency of the current operations and evaluate future plans that the service have to increase this efficiency.
c) Identify alternative management options available, relative advantages and disadvantages of these options.
d) An overview of the physical estate including its condition, suitability, and any investment requirements and/or invest to save opportunities that could impact on business opportunities.

As part of their work and report, the expert considered the council’s operations, together with its savings target, and concluded that the best option currently would be for the council to make a modest investment of just under £100,000 in facilities and enter into planned activities to generate further income rather than consider a different delivery model.

The improvement mainly focused on changing areas and modernisation of the ‘feel’ of the facilities for a better customer experience.

The rationale behind choosing this option was :

  • Sufficient certainty of increase in income following advice from the expert
  • Set up costs to join an existing trust model of approximately £60,000 in year one and for a three year arrangement these costs may be incurred again at the point of review

Income generation

There are a number of income streams recommended for consideration by the consultant, most of which however are commercially sensitive due to competition locally. This advice allowed us to consider which areas would attract the most income potential. The recommendations which are being taken forward span across a wide area of activities however by far the biggest income opportunities fall in changes to provision of gym memberships and change in pricing structure, customer relationship management and a change in staffing to support the customer experience with two reception areas currently operating at one centre – reducing to one reception at times.

We would be happy to share more details with individual local authorities if they would like to contact us.

This is supported by the following:

  1. The council could achieve the necessary savings and increased income without having to change the operating model.
  2. The set up costs for changing management arrangements are significant and would need careful consideration in the longer term as to whether a sound business case exists, particularly for a short term arrangement.
  3. The leisure centre appears to be performing well despite the facility requiring investment.

The impact 

Investment business cases were prepared and considered by elected members for each area of required expenditure.

A modest investment into the facilities at the leisure centre were agreed by elected members for each area of required expenditure. This included modernisation of the changing facilities and flooring to bring the facilities up to date and commensurate with what would be expected of users looking to invest more time and money in using the centre. It was considered by the expert that the proposed targets for income generation would be challenging without these cosmetic improvements.

The anticipated budget savings and associated income are likely to be achieved following review and advice from the expert as sound propositions. It is forecast to achieve a much higher proportion of the overall target from increased income rather than from savings as was originally anticipated. Initially a forecast of 20 per cent of the total required would come from additional income but this is now as much as 70 per cent of the total.

We have planned work on supporting staff at the leisure centre with training on sales and marketing. We are also considering ongoing support from a marketing specialist to ensure that we properly assess the potential market and target customers accordingly. We are currently looking at funding options for the marketing support to commence later in 2019.

The savings and income targets are set out above.

The medium-term financial ftrategy shows that the council will face a projected budget gap of just under £1 million by 2020/21. Additional income generation and a reduction in costs will contribute towards addressing this gap.

How is the new approach being sustained?

The council will continue to review progress quarterly, on income generation and savings. The recommendation from the expert was to retain the service in house with some investment and changes to operating to increase income for the next two years. Depending on the success of this, the council may consider comparing the leisure provision with those delivered by other providers via open market competition but the expert advised that a longer term arrangement would be more beneficial if considered at this point than one for a short term of approximately three years. The expert advised that bringing in a partner would be more difficult with a short term arrangement in terms of what they would bring to the partnership with investment as there was not the certainty and longevity of a contract for three years. They advised that a longer term contract should be considered for a more viable service in the future if the council decides to look externally i.e. 10 years.

Lessons learned

  • We need to ensure the flexibility of approach in the leisure service to ensure we can react quickly to market conditions and demands and that traditional local authority processes and decision making are not detrimental to us achieving our aims
  • To be realistic about potential income and savings in the medium term financial strategy. It is important, for the good of the whole organisation, to resist pressure to overestimate additional income.

The expert provided an overview of advantages and disadvantages of different types of service provision. The expert also provided an overview of realistic targets for income for the centre and assisted us to develop plans and targets for the increase in income.

Contact:         

Phil Perry – Head of Place & Space
01205 314200
phil.perry@boston.gov.uk