Leisure centre contract could be brought in house after COVID blows hole in Southwark Council’s budget

Katherine Johnston (22 July, 2020)

Financial support package worth £1.2 million was agreed for March to June during lockdown closures

10176The Castle leisure centre

Leisure centres could be brought back in-house after the COVID-19 pandemic left Southwark Council giving its contractor a £1.2 million bailout because of  four months of closure.

In council papers published before Tooley Street’s cabinet meeting on Tuesday (July 14), councillor Rebecca Lury, the deputy leader who also holds the leisure portfolio, explained that “much had changed” since the council had entered its contract with Sports and Leisure Management Ltd (SLM), in 2016.

“We are now coming to the time when leisure centres are once again allowed to open, and it seemed like the best time to reconsider the whole of our leisure services provision.

“This is not a discussion that we have entered lightly, and is one that has been achieved thanks to the ongoing conversations between officers and SLM that are always aiming to achieve the best outcome for our residents.”

Her recommendations include operating as normal until at least March 2021 when the council should consider all options from a full review into the service.

The council is now preparing a more detailed report for September’s cabinet meeting on options to move leisure centres in house, establishing a charitable trust to run the service, or continuing with SLM until the contract ends in 2023

Under the contract terms SLM, which operates under the name Everyone Active, was offered a peppercorn rent for seven years with the option to renew.

After gyms were locked down during the pandemic, the council agreed a support package for covering the period March to June 30 to the total of £1.2 million.

The funds include making up the shortfall of pay from the furlough scheme so staff received 100 per cent of their salary; salaries for a ‘skeleton staff’ to maintain sites, other utilities and maintenance costs and a waived management free.

In early July, council leader Peter John told the News: “Our contractors are saying they need money immediately to keep going, but that is five million not in our budget for things like our leisure facilities.

“There are many other organisations that are going to be challenged but our pockets are not bottomless.”

At the cabinet meeting, he told his colleagues how although the company was struggling financially its two key shareholders received pay outs of more than fifteen million in the last two years.

In a statement published by the SE1 website, Everyone Active’s spokesperson said COVID-19 had “undoubtedly had a significant impact’ on its business.

“Consequently, we are negotiating with all our local authority partners to find the best way to move forward and the support we have requested as part of our discussions – including those with Southwark Council – does not go beyond the terms that are detailed within our partnership agreement.”

 

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