Wrexham Council to award Freedom Leisure ‘up to £500k’ pandemic bailout facility to help with phased reopening of services
Wrexham Council are giving Freedom Leisure a substantial sum to help them restart providing the services the council pay the company to supply.
Following Government instructions leisure facilities in Wrexham, and across the County, closed in March due to the Covid19 pandemic, and are now in a period of restarting as things slowly unlock.
A report due to before councillors tomorrow explains that “phased reopening of centres” will see a “reduced service provision for an unknown period” and therefore Freedom Leisure need ‘support’.
Councillors have been informed of the decision taken by the Chief Executive of Wrexham Council, signed off by Council Leader Mark Pritchard and Deputy Leader David A Bithell, deemed urgent enough that it could not wait the next meeting of the Executive Board.
Wrexham Council signed an agreement in 2016 with ‘not for profit company’ Freedom Leisure to take over the management of four Leisure and Activity Centres and five Dual Use sports facilities across Wrexham, with ‘sustainability’ being one reason given for the move. The report before councillors states the annual contract is worth £430,081 and runs through until March 2026, with such specific contractual matters often used as a reason to keep reports private.
A related Welsh Local Government Association (WLGA) report paints a possible grim financial future for such trust setups, and suggests to councils that they should support operators: “When a leisure and/or culture operator running services on behalf of a council begin to be no longer financially viable, the council faces a difficult choice. It can either allow the operator to become insolvent, potentially bringing any facilities owned by the council back in-house as a means of keeping them open, or it can choose to support the operator.”
The wider impact on society is also noted: “If the leisure and culture sector is not sustained through this crisis, the remobilisation of public leisure and culture provision will be significantly affected, statutory library services will be at risk, facilities and venues will be unable to open and clubs and voluntary organisations unable to re-start activities for communities.
“This would lead to additional costs to the public purse through re-procurement, TUPEing staff, or establishing new delivery mechanisms whilst facilities remain closed for longer periods. There will be an impact on the social and health benefits to communities at a time when these will be most needed.”
The WLGA suggests a range of actions, including “offering their leisure and culture contractors an interest free loan or a grant to cover the months of closure and concession on future measures when allowed to re-open” and “paying forward on this year’s operating subsidy, as a quarterly advanced payment “.
In August Wrexham Council agreed to allocate a sum not exceeding £500,000 to support Freedom Leisure, along with two quarters of management fees paid in April covering up to this month, plus “an additional payment of £50,000 per month has been made in April, May and June” (and later referenced by the Lead Member as also including July).
The reason for the move is “to support the facilities, and our contracted provider during this difficult time”.
The information report before councillors states:”Whichever option is agreed, it must also be clear that there is no expectation made by Wrexham County Borough Council on Freedom Leisure to repay the additional fund which have been granted to support service sustainability and delivery.”
We asked Wrexham Council about the arrangement, if the figures involved were a loan facility or grant, and if the £500k sum was on top of £50k-a-month payments also referenced as being made since April. We also asked if the sum was expected to be reimbursed to the council from Welsh Government, as many extraordinary costs related to dealing with the pandemic have been.
A spokesperson for Wrexham Council explained: “All leisure facilities in the Country are under pressure due to the loss of income as a result of the Covid 19 Government restrictions.
“All councils are considering how they protect these key services and Welsh Government are making resources available to compensate for income loss in the first two quarters of the financial year. The payments to Freedom are in accordance with the Contract.
“The ‘up to £500k’ is on top of the payments of £50k for the period April to July which will be reimbursed. The level of the actual payment will depend on the level of reimbursement by Government during the rest of the year.”
Payments of £50,000 to leisure services is not new business for Wrexham Council to consider, with the sum familiar to those who have followed the fate of Plas Madoc over recent years. Some councillors decided to close the centre as in 2014 council Officers said it was making a £700k and £500k a year loss under their management.
However in a u-turn in October 2014, Wrexham’s Executive Board voted in favour of handing over a 20 year lease to Plas Madoc Leisure Centre over to the Splash Magic Community Trust, along with a £50,000 grant to help kick start the reopening of the leisure centre – but the Executive Board then decided to vote down a plan to extend a further £50k payment for a second year.
Back in 2016 the Executive Board were recommended to not support two £50,000 payments spread over two years to help the then fledgeling community trust facing the difficult rebooting phase, that has since successfully taken over and turned around the Plas Madoc leisure centre facility. However, £50k in support was agreed in a last minute u-turn after substantial pressure in-front of a packed public gallery.
We asked if Plas Madoc had been offered any support, and was effectively told no, as no ‘contractual relationship’ with the facility and Wrexham Council exists. Back in 2016 Wrexham Council were criticised for a ‘snub’ when they left Plas Madoc off a bid to Welsh Government for facility upgrade cash.
We asked Cllr John Pritchard, Lead Member for People – Youth Services and Anti-Poverty, about the decision, asking how Plas Madoc had a battle to get 10% of today’s £500k sum back in 2016, and why the circumstances are different for Freedom Leisure.
Cllr Pritchard said “It is essential that facilities are open for Wrexham residents to use the sporting and fitness facilities to benefit their health and wellbeing. The facilities also work closely with the Health Board in terms of fitness referrals.
“It is clear that remaining fit and health is a weapon against the virus for those that contract it and we are pleased to work closely with our contractor, Freedom Leisure to have them open and safe.”
Freedom Leisure is a trading name of Wealden Leisure Ltd , with that company reporting as of March 2019 they had £8.6m in reserves. The public accounts also contain the below table, showing no one in a group seven people included during year end 2018 was declared as earning £130-139k, however in year end 2019 that position had changed with seven people now in the £80k+ bracket, and one earning £130,000-£139,000.
The current situation of Freedom Leisure could be known to Wrexham Council, as they say: “An open-book accounting system has been implemented for the duration of the additional support to Freedom Leisure, and regular meetings are scheduled to review the support and plan for moving forwards.”
We asked Wrexham Council if there any longer term work underway (or planned) to decide if services need to be brought back in house, or if future support will be required.
The council spokesperson said: “The Council have a contract with Freedom Leisure until 2026 so there is no consideration of changing the delivery arrangements. In house leisure facilities are under exactly the same financial pressures.”
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