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Leisure Trust Bail Out - Budget Update
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TOPIC: Leisure Trust Bail Out - Budget Update

Leisure Trust Bail Out - Budget Update 5 years ago #1

  • RM64
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Background -

It was made public that 'East Renfrewshire Council had to bail out its struggling Culture and Leisure Trust.'

There were specific financial implications during the year.

A projected overspend of £277,000 for the year 2017/18 was forecast in the Trust’s financial monitoring report and the council agreed to plug the funding gap.

The Cabinet were informed a ‘letter of comfort’ had to be written to allow the Trust to continue providing services in its sports facilities, libraries and community spaces, including the Barrhead Foundry.

An increase in funding from the council was also confirmed in a letter to the Trust.

ERC and members of the Trust had talks over a new management agreement as the current deal comes to an end this year.

In a report to the cabinet, the council’s head of accountancy, Margaret McCrossan, claimed it was “necessary to issue a letter of comfort to the Trust” to allow provision and development of services.

Ms McCrossan also confirmed that an additional £239,000 has been set aside to support the Trust.

A planned savings target of £110,000 has also been deferred.

The level of additional resource received from the Council was £225,000.

The Council commissioned an independent finance and business review of the Trust

This independent report detailing how much funding the Trust needs was published in a bid to secure the future of cultural and leisure facilities and activities in East Renfrewshire.

A joint Trust / Council action plan is now being implemented and overseen by the Director of Education, the Trust’s Board and its Chief Executive.

Re: Leisure Trust Bail Out - Budget Update 5 years ago #2

  • RM64
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These are Figures Extracted from ERC Budget papers that refer to East Renfrewshire Culture & Leisure Trust (ERCLT)

East Renfrewshire Council(ERC) REVENUE ESTIMATES 2019/20

ERC will spend the following sums on East Renfrewshire Culture & Leisure Trust (ERCLT) - Budget2018/19, Budget 2019/20

Property Costs
2018/19 - £960,000
2019/20 - £1,002,000

Supplies & Services
2018/19 - £265,000
2019/20 - £269,000

Third Party Payments(Service Fee)
2018/19 - £4,597,000
2019/20 - £5,177,000

Support Services
2018/19 - £907,000
2019/20 - £843,000

Total Expenditure
2018/19 - £6,729,000
2019/20 - £7,291,000

Net Expenditure
2018/19 - £6,729,000
2019/20 - £7,291,000

SAVINGS PROPOSALS
31.…………….
Available savings have been further reduced by £0.220m to align the Council’s and East Renfrewshire Culture and Leisure Trust’s budgets for 2019/20 and to extend an additional £0.200m of support to the Trust for a further year.

The revised savings applicable to each year are set out in Annex A.

SAVINGS PROPOSALS 2019/20 AND 2020/21


ERCLT savings target
2019/20 - £0,000
2020/21 - £110,000

Additional ERCLT support funding ends
2019/20 - £39,000
2020/21 - £190,000

You can read the full papers here -

www.eastrenfrewshire.gov.uk/CHttpHandler.ashx?id=23885&p=0

Re: Leisure Trust Bail Out - Budget Update 5 years ago #3

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This information is extracted from East Renfrewshire Culture & Leisure Trust (ERCLT) - Business Plan 2019/20 -

4.5 SWOT Analysis

Weaknesses

Resourcing is very lean, with limited ability to support development – commercial, improvement or community

• Condition of the estate

• Staffing model, contracts and terms and conditions and operating hours do not align with customer demands

• Limited online digital customer journey experience, with ‘clunky’ operational supporting systems.

• Limited Sales and Marketing resources

• Inability to respond quickly to evolving markets.

• Car Parking at key sites

Threats

48% of income is Earned Income and at risk.

• Continued pressure on public finances

• Balancing Charitable and Commercial objectives.

• Tutor / casual roles / employment status

• Difficulties recruiting staff across a number of services

• Growing competition in key commercial areas

• Impact of political decisions, legislation or policy changes

• Unplanned closures

4.7 Horizon Scanning
4.7.1
Capital Investment Despite significant pressure on public finances, a number of capital investments are being made in our facilities, including a final phase upgrade to the Foundry sports hall, studio and foyer.

In addition we will continue to work with our Council colleagues around plans for the future of Eastwood Park Leisure Centre, and the longer-term vision for Neilston as well as around the maintenance of our existing facilities to reduce disruption caused by upgrades, maintenance or unplanned closures which continue to pose significant challenges to ourselves and our customers.

4.7.3
Increased Competition
Increased competition in the local sports and leisure market will continue to exert pressure on our income.

Half of our budget is earned and over 75% of that is through sports.

Recent developments in gyms, fitness and swimming will continue to pose a risk.

We will seek to address this through addressing some of the maintenance and quality issues with venues; through continued improvements in customer care and quality assurance; and through ongoing business development work.

4.7.4
Service Fee
Continued financial pressure on our Council partner, together with economic uncertainty make it highly likely our Management Fee will be under further pressure from 2020.

A reduction of between 5% and 7% (c. £300,000) from the expected 2019 level is being planned for.

This will be very difficult to meet from either reserves or non-pay efficiencies, and therefore plans including the withdrawal of services from some sites; organisational restructure; and a review of the operating model will need to be explored.

These will all be highly sensitive.

10.Financials
The Trust reported an operating deficit of £0.065m for the year ended 31 March 2018 (2017: £0.108m deficit), which was in line with expectation due to the level of change underway to transform the operations.

This is before allowing for the pension net service costs of £737k and net actuarial loss of (£1.101m) in respect of the multi-employer defined benefit pension scheme.

In summary, the financial position for the period ended 31 March is noted below:

£k
Income
Year Ended 31 March 2018 - £8,293
Year Ended 31 March 2017 - £8,161
Movement - 132

Net Operating Expenditure (excludes Pension net service cost)
Year Ended 31 March 2018 - (65)
Year Ended 31 March 2017 - (108)
Movement - 43

Actuarial Gains / (Losses)
Year Ended 31 March 2018 - (1,101)
Year Ended 31 March 2017 - (1,825)
Movement - (2,926)

Total funds (after retirement benefit scheme gains / losses)
Year Ended 31 March 2018 - (556)
Year Ended 31 March 2017 - 1,347
Movement - (1,903)


The principle funding sources are a combination of income generated through a level of sales, fees and charges for our charitable activities (£4.0m) (2017: £4.0m),

as well as a Management Fee received from ERC of £4.3m (2017 of £4.1) for our work in managing the Sports and Leisure, Library, Arts and Community facilities within the local area.

The primary areas of spend are
people £5.7m (2017 £6.3m),
Property £0.5m (2017: £0.4m) and
Supplies and Services £0.8m (2017 £0.8m).

10.3 Fixed assets The Trust has a maintenance lease agreement with ERC for the use of the buildings and equipment linked with the charitable activities and as such these assets do not belong to the Trust.

11.3. Financial Services ERC currently provides a range of accountancy, creditor and debtor services to ERCL.

As part of the annual SLA review, a gap analysis was completed which identified a number of significant gaps in the financial control services provided to the Trust by ERC.

The gap analysis was supported by the output of the Solace in Business (SiB) review, with the resultant Joint Action Plan which detailed a number of critical ERC service developments, including inter-company accounting and provision of regular balance sheet reporting.

The Joint Action Plan Steering Committee closely monitors the progress of the actions.

As part of the ERC core systems platform, incorporating a new general ledger, HR and Payroll system, the Trust have been engaged in the initial procurement process and are represented on the associated Change Board.

The implementation of this platform, together with re-engineering the supporting finance processes should help to provide the Trust with a platform which will deliver the required financial control framework and reporting tools.

As part of the initial procurement process, ERCL provided its key requirements for the system.

The project has funded a resource to ensure that the Trust is represented throughout the project, including providing the ability to challenge and influence the current systems, controls and processes, with the aim of ensuring they will be robust, simplified and fit for purpose for the Trust.

On the basis of delivery of the SiB Action plan and the successful implementation of the new core systems platform, the current recommendation is to retain ERC as the service provider of financial services.


You can read the full East Renfrewshire Culture & Leisure Trust (ERCLT) - Business Plan 2019/20 here -

www.ercultureandleisure.org/CHttpHandler.ashx?id=23899&p=0
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