Following a change in organisational structure and political leadership, the council commissioned a corporate peer challenge from the LGA which was completed in November 2015. This case study forms part of our productivity expert programme.
It was reported that Pendle Borough Council is a fundamentally sound council that delivers services well and is held in high regard by partners. It has a high satisfaction rate with service users and it works hard to ensure that it understands the needs of its communities, residents and businesses.
Better value for money can always be explored and implemented. Therefore, using funding from the LGA Productivity Experts Programme, a piece of work with our leisure partner, Pendle Leisure Trust (PLT) was undertaken.
The challenge
The council has a strong record of financial management and historically has had a good track record of managing within its budget. However, the council is within the top ten authorities nationally most affected by the reductions in Government funding over recent years and is currently facing some strong financial challenges which need to be addressed.
To get the council on a sustainable footing, difficult strategic decisions need to be taken in order to avoid an on-going reliance on using reserves. There is now an opportunity for the council to take a more financially sustainable approach by examining how better value for money may be obtained in areas of larger expenditure, including the partnership with PLT.
To help with this decision making, the council needs to use benchmarking as a tool to explore performance and reduce cost. Currently there is a culture of providing universal services to all localities within the borough but to help make difficult decisions the council will need to look at tailoring services to local need to a much greater extent.
The LGA Productivity Experts Programme has supported the council working with a private sector 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) Benchmarking of key metrics related to Pendle Leisure Trust (PLT) including sales income, operating costs and subsidy per visit and per square metre; cost to generate each £1 of income; cost recovery; staff costs as a proportion of running costs and of income.
b) Whether cost, income and usage data suggest areas for improvement across all sites.
c) Approach to new sales and customer retention, including bookings, membership packages, management and targeting of customer data, planning of activities and use of management and performance information across all sites managed by PLT.
d) The pricing policy including concessions across all sites (with reference to any commercial competition within the area).
e) PLT’s approach to staffing including rota management within the sites.
f) The level of support costs within PLT including any service level agreements with the council.
g) A high-level view of the physical estate including its condition, suitability, and any investment requirements and/or invest to save opportunities that could impact on business opportunities.
h) Opportunities and/or restrictions within the service agreement between the council and PLT that may impact on income generation and/or operating costs.
i) Opportunities for PLT to expand services and activities into new areas such as parks, community centres, libraries and health centres.
j) The potential for further benefits from different delivery models, including concessions for some of the services (such as golf), and outsourcing to or partnering with a larger not for profit operator to ensure optimum delivery for the council.
As part of their work and report the Expert considered PLT’s day-to-day operations
together with its savings target and concluded that overall PLT appears to offer a cost-effective service and has been effective in maintaining customer income and minimising attrition, despite the entry of low-cost competitors into the local market.
This is supported by the following:
- Below average staff costs
- Income generation per FTE staff member is above average and good
- Income generated per visit is good
- Membership rates are comparatively high
- The centres appear to be performing well
The expert concluded that:
“PLT is offering a good service to the council and its residents within the scope of the number of facilities it is being asked to manage. However, what the benchmarking clearly shows is that the level of subsidy for a population of the size of Pendle is high.
The high level of subsidy highlights strongly that the number of Leisure outlets in the estate, all of which are subsidised to some extent, are too many for the level of subsidy the council would aim to have.
The only way to reduce subsidy by the amounts the council needs to is to rationalise the Leisure estate in a way to still provide a good Leisure offer but one that is affordable. The Trust would struggle to reduce operational costs significantly and still operate all the facilities because, as we have stated above, they are already offering good value for money in key areas with a relatively low cost base”.
The work undertaken provided an opportunity to examine and question aspects of the trust’s operations with their support and participation. The results provided affirmation that much of the trust’s performance and day to day operations is good and that the council receives value for money given the number of facilities it requires the trust to manage on its behalf. The council’s subsidy has reduced by £150,000 specifically for 2017/18.
For the council, the next steps would entail some form of market engagement to compare the trust’s operations with those delivered by other providers via open market competition. At this time the council has opted not to go down this route but rather continue its dialogue with the trust to explore other ways in which its subsidy can be reduced. However, this will be subject to further review during 2018/19.
How is the new approach being sustained?
The council has an ongoing dialogue with the Trust and meetings are held each year as part of the council’s budget development process. Whilst the work undertaken by the expert was a discrete piece of work, the outputs provided an informed picture of the arrangements in place with the Trust at the time of completion. This gave both parties a good understanding and provided a good platform from which to move forward in collaboration.
Lessons learned
The ‘Experts’ have a whole of market view combined with direct experience of supporting equivalent reviews in similar organisations; they possess good links to private sector providers and an understanding of what might work in relation to our circumstances.
The review provided a constructive and informed opportunity to engage with our leisure partner and provided the council with external validation of their operational arrangements and effectiveness. There were also a small number of areas highlighted for further consideration and these will be the subject of further consideration by the council and the Trust.
Contact
Council contact
LGA contact
Grace Abel, Advisor – Productivity, Local Government Association
[email protected]