Turning Leisure Facilities into Income Streams for Local Government

Culture and leisure facilities contribute £10.8 billion to the UK economy every year, in 2019, they were one of the fastest-growing sectors. However, these services were some of the hardest hit by the Covid-19 lockdown restrictions.[1] Community Leisure UK reported that in September 2020, only 56% of leisure facilities had reopened following restrictions, due to their continued economic unviability.[2]

Local government is responsible for two-thirds of swimming pools and sports pitches in England. They provide communities with access to affordable physical activity. However, most facilities owned by authorities are ageing and pose issues for councils regarding the high maintenance and upkeep costs.

South Kesteven Council

Before the pandemic South Kesteven’s 4 leisure facilities were run by an external leisure provider on their behalf. With the contract ending during the pandemic, the council decided to transfer the running of leisure facilities to a local authority trading company.

By transferring to LeisureSK, the council were able to generate more income from the facilities than before the pandemic. LeisureSK predicts a positive income position for the council in their second year of trading. This is instead of requiring a subsidy, illustrating how investing in leisure facilities can provide an income stream for local government.[3]

The problem

The contract South Kesteven had with their leisure supplier was up for renewal in December 2020; the council wanted to generate income from any future leisure contracts they had.

Due to the pandemic, the council ended up taking on all the financial risks from the existing contract with the leisure provider. They were responsible for all deficit funding and had little operational control over how the leisure facilities were managed so had little opportunity to minimise any financial risks.

Increasing costs and dissatisfaction over how the facilities were run forced the council to recognise the existing leisure contract was no longer fit for purpose.

The solution

After revisiting the options, the council identified the possibility of establishing a Local Authority Trading Company to manage the leisure facilities. In August 2020, the cabinet agreed to establish LeisureSK ltd as a trading company.

It was recognised this would still leave the council with the financial risks of the previous agreement, but the benefits outweighed these risks.

The benefits of establishing LeisureSK:

• It placed the council in the driving seat for provisions of leisure services and decisions regarding how they are managed.
• It allowed for the exploration of how the leisure services could link more with other services the council provide.

What is LeisureSK?

LeisureSK is a not-for-profit ‘teckal’ company established by South Kesteven council. They are responsible for the management of leisure facilities the council owns, taking on the responsibilities previously held by the external contractor. As a ‘teckal’ company, 80% of what LeisureSK does must be for the direct benefit of the council. The other 20% is directed to finding new income streams that could benefit the council.

Challenges

Timescale

With the contract due to end in December 2020, the council only had 4 months to establish the company. To work within this timeframe, the council made a mobilisation plan to make LeisureSK a council-wide project. This helped determine which departments needed to come together to drive the project forward.

The ongoing impact of Covid-19

While establishing LeisureSK the long term impact of Covid-19 had to be considered. The council needed to prepare for the possibility of future lockdowns and the impact the pandemic had on customer behaviour. These fears were further confirmed by the announcement of the second nationwide lockdown in early 2021.

Successes

• Highly commended by the judges in the workforce transformation category at the MJ Awards.
• Finalist for the best efficiency and transformation category at the APSE Awards.
• Predicted to have a positive income in the second year of trading, contributing to the council’s income.

The Future of LeisureSK

The council intends for the surplus beginning from year two to go towards reinvestment in the leisure facilities. This will ensure the centres can be maintained. Alongside this the council are looking at long-term plans to improve the leisure facilities.

The leisure service can also be used to help deliver wider corporate strategies across the council, demonstrating how LeisureSK has been integrated into council programmes. This will act as a roadmap for the rest of the council and help provide insight into how collaboration can be improved across the whole organisation.

[1] Local Government Association, Leisure under lockdown: how culture and leisure services responded to COVID-19, (2020)

[2] Community Leisure UK, Covid-19 impact report, (2020)

[3] Karen Whitfield, Head of Leisure, South Kesteven District Council (2021)