Decision details

At the Cabinet meeting held in June, it was agreed that due to the COVID-19 pandemic and the impact on leisure facilities and Council finances, the project Steering Group review the current situation and options available for leisure provision. The ‘Development of Former Bexhill High School site’ was a long-standing Corporate Plan priority project consisting of a new leisure centre and housing.

The Steering Group met on 25 June 2020 and considered the following four options:

a.   Option 1: delivery of a new-build facility on the existing or an alternative site.

b.   Option 2: major refurbishment of the existing facilities.

c.   Option 3: continue with the existing facilities in their current condition (the ‘do nothing’ option).

d.   Option 4: do not retender the contract and close the Bexhill facilities.

Appendix A to the report provided detail on the analysis of each option, and a summary of the financial forecast supplied by the existing operator, as considered by the Steering Group.  It was noted that the current operational contract was ‘nil fee’, it was expected that this would no longer be viable beyond March 2021.

The Steering Group’s recommendation to Cabinet was that the Council should not rebuild or carry out a major refurbishment of the centres at this moment in time but undertake a modest programme of refurbishment with a view to seeking a new contract.  Given the unknown financial implications of COVID-19 on the economy generally and the leisure sector, the Council should be mindful not to undertake a significant investment with the funding source being unknown and not relied upon.  The Council would continue to review leisure requirements in the longer-term, including the possibility of a new facility as demand for leisure services and the financial climate became clearer. 

In April 2020, it was agreed to provide Freedom Leisure (FL) with financial support under delegated powers (Officer Executive Decision 003 (OED003).  The decision provided FL with up to £38,000 per month to meet the financial gap in their revenue brought about by closure due to the COVID-19 pandemic on an open book accounting arrangement; the support was time limited until the leisure centres became operational again.

Whilst FL had reopened on the 25 July 2020, many restrictions remained in place and the number of customers FL could accommodate would continue to affect their revenue income in the short to medium term and continued financial support was being requested.  Confidential Appendix B to the report gave details of the financial modelling FL had provided in order to operate the contract under the COVID-19 restrictions for the period August 2020 to March 2021.  The total value of financial support that could be provided by the Council to FL was detailed at Confidential Appendices B and C to the report.  

The Council was finalising the terms under which financial support payments were being reconciled as well as the terms under which future payments would be made between August 2020 and March 2021. The agreement would be in line with Public Procurement Notices (PPN) that had been produced by the Government to support such financial support packages between local authorities and their leisure services providers through the COVID-19 pandemic and the recovery phase. It was the intention of the Council to include within the agreement clawback clauses.

Without the Council's continued financial support, the contract between FL and the Council was unlikely to remain viable and the Council would need to explore alternative options to deliver leisure centre services.  An additional recommendation was tabled and agreed that the PPN and legal agreement currently being drafted include confirmation that the funding support was being extended as an interest free loan or repayable grant to be repaid when FL reported an annual surplus of income or against any future charges from FL to the Council.   In addition, FL be requested to supply forthwith the demographic data for the current membership for all FL members across the three sites. 

With the proposed suspension of the Bexhill Leisure Centre redevelopment, officers would need to procure a new contract to maintain existing leisure services up to 31 March 2024.  Legal advice confirmed that an operator could be appointed on the basis of a three year agreement whilst ensuring compliance with public procurement rules as the estimated value was under the threshold of the Concession Contracts Regulations 2016 and the Council’s own Procurement Procedure Rules.

Members were disappointed that this project was effectively now on hold but recognised the rationale for doing so; thanks were expressed to the officers for the work over many years to progress the project thus far. 

Members were reassured that the proposed housing strategy for the site would continue, therefore the necessary land acquisition and planning permissions for the residential development to the north of the existing leisure centre would progress.  It was noted that from this point forward, the redevelopment of the leisure centre and the housing delivery on the site would be progressed as two separate projects. 

RESOLVED: That:

1)   the Bexhill Leisure redevelopment project be suspended;

2)   a new leisure services contract be procured for the period March 2021 up to March 2024;

3)   the Council continues to support Freedom Leisure with financial support - detailed at Confidential Appendices B and C - and support the mobilisation of leisure services across the three sites from August 2020 until March 2021;

4)   a specification be developed for a modest refurbishment of the existing centres to be agreed at a later meeting;

5)    the housing development on the site be continued and progressed, including work required to develop and submit a reserved matters planning application for the rear of the site;

6)    the land acquisition and Compulsory Purchase Order be progressed where necessary; and

7)    the legal agreement being drafted in line with recent Government Policy Procurement Notes includes the condition that the current period of funding support being provided to Freedom Leisure is repaid at such time that Freedom Leisure reports a surplus of income.  In addition, Freedom Leisure be requested to supply forthwith the demographic data for the current membership for all Freedom Leisure members across the three sites.

(The Confidential Appendices in relation to this matter, as set out at Agenda Item 16 were considered exempt from publication by virtue of Paragraph 3 of Schedule 12A of the Local Government Act 1972, as amended.  In accordance with the Local Authorities (Executive Arrangements) (Meetings and Access to Information) (England) Regulations 2012 Cabinet did not consider it necessary to exclude the press and public whilst considering this matter).