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Energy costs crisis force urgent changes to Fenland leisure centres

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Opening times for all four Fenland District Council leisure centres will be reduced from December 1 until March 31 next year in a bid to save £40,000.

Operator Freedom Leisure is facing a crisis over rising energy costs which they say will add £281,254 extra in energy costs in the final six months of the current financial year.

The sites affected are the George Campbell Leisure Centre in March, the Hudson Leisure in Wisbech, the Manor Leisure Centre in Whittlesey and Chatteris Leisure Centre.

“The predicted excess energy costs for 2023/24 are estimated to be in excess of £600,000,” says a report to Fenland Council Cabinet.

Freedom Leisure says jobs could go at the four centres to “mitigate costs due to the energy crisis”.

These include:

1: A full review targeting a significant reduction in staffing costs.

2: Reduction of the head office team of at least 15%.

3: A 10% pay cut for the executive team.

The report says: “As a large organisation, Freedom has the capacity to absorb typical market fluctuations and respond in a more agile manner than a council might.

“However, the current situation in terms of excess energy costs is untypical. These costs are not affordable for Freedom within the current contractual arrangement with the council.”

The report adds that the 2023/24 estimation assumes a continuation of the Government’s EBRS scheme.

“This continuation has not been confirmed by Government at this time. Nor do we know the trajectory of energy costs into the future,” councillors will be told.

Reducing opening hours is one way to save money and the council says customers will still have “many options to attend within the proposed opening hours”.

Proposed opening time changes to all four leisure centres owned by Fenland Council and run by Freedom Leisure

Freedom Leisure has asked the council to consider providing financial support and/or changes in service provision to fund the increase in energy costs to run the four leisure facilities.

This report sets out the possible approaches to “mitigating the excessive energy costs currently being placed on Freedom Leisure and to consider options to support Freedom with such costs”.

The report says Freedom “have advised” of prices rises from December 1 to “assist with the excess energy cost deficit”.

These will affect swimming lessons with a £1swim for under 5’s to be replaced with £2 for under 3’s and over 3’s to increase to the junior swimming price of £3.60.

£10 per year swim for over 75’s to be replaced with concessionary swim price for all over 65’s.

Learn to swim sessions to be increased.

As charges are rising by more than CPI for children and concessions, Cabinet will need to agree them.

In December 2018, Freedom Leisure, a charitable trust, took over the operation and management of the council’s four leisure centres with a 15-year agreement.

The council says the arrangement has saved them £351,000 p.a.

Additionally, a staff review of contract management staff as a result of the Freedom contract added an additional £49,000 p.a to the annual savings, equating to £5.6 million of savings over the life of the contract.

Councillors will be reminded of the support provided to Freedom through the impact of Covid 19.

But the report says that the energy crisis has added exceptional unavoidable costs into the leisure contract with Freedom.

It was anticipated that the Government’s support to businesses on increased energy costs would keep costs down, however that has not been sufficient.

Cabinet will hear that Freedom is not in a unique position.

Freedom Leisure want significant changes at Fenland leisure centres to tackle rocketing energy costs . PHOTO: Freedom Leisure

Excess energy costs are affecting the whole leisure sector regardless of whether services are delivered in house or through a contract partner.

Cabinet will be asked to consider whether to financially support Freedom Leisure with their excess energy costs and a list of options will be considered next Monday.

A brief summary of some of the options Cabinet will consider:

1: Underwrite all or part of the estimated excess energy cost for the remainder of 2022/23 of £281,254, repayable through a loan.

2: Agree reduced opening hours – initially until next March.

Cabinet will be told that whilst more severe closures, including pools, could increase the savings being made consideration of such an option is not recommended by council leaders.

Freedom Leisure want significant changes at Fenland leisure centres to tackle rocketing energy costs . PHOTO: Freedom Leisure

“In addition to the comparatively low increase in savings levels, a full pool closure would have profound impacts on the ability of Freedom to re-open the pools with staff finding roles elsewhere during any closure,” says the report.

“Additionally, this alteration to the contract with Freedom would mean a reduced management fee payable by Freedom to FDC impacting the FDC revenue position, offsetting the additional saving being made.

“This being the case, full closure of any of the pools would not be advised and is not a viable option for FDC and Freedom.”

Capital investment options that would make a positive revenue impact in 2023/24 financial year and future years are to be considered.

These could include additional energy efficiency projects through additional solar PV units and improved swimming pool lighting.

Capital expenditure could be borne by FDC with costs in the region of £350,000.

Freedom Leisure want significant changes at Fenland leisure centres to tackle rocketing energy costs . PHOTO: Freedom Leisure

“FDC is working with the Combined Authority for funding for the additional solar PV at the Manor Leisure Centre,” says the report.

Officers say the option of bringing the operation of leisure centres back ‘in-house’ at this time has also been considered “but discounted as the increase in costs faced by Freedom Leisure would also be faced by the council if it were the operator”.

If Freedom breaks the contract with FDC or the company fails as a result of unsupportive clients, then FDC’s short term costs by bringing the service back in house will increase by at least £400,000 p.a.

And should the contract with Freedom not continue as a result of the energy cost crisis, “FDC will not realise the £4.1m of savings over the outstanding period of the contract.

“Taking a long-term view, putting in place supportive operational changes in conjunction with Freedom, alongside potential financial support, is in FDC’s best financial interests”.

The report warns: “There is a risk that, despite FDC’s support, Freedom does not remain viable.

“This is a risk that FDC needs to recognise, whilst understanding the larger risk being that an unsupportive approach from FDC may lead to the contract being dissolved.”

Freedom Leisure want significant changes at Fenland leisure centres to tackle rocketing energy costs . PHOTO: Freedom Leisure

“Should the package of support devised by Freedom and FDC be insufficient to meet the challenge of the excess energy costs then the contract with FDC could become unviable.”

Fenland District Council Leader and Cabinet Member for Finance, Cllr Chris Boden, said: “The challenges facing Freedom Leisure in Fenland are replicated across the UK leisure industry, and we’ve already seen stories in other areas of prices increasing significantly, or services being cut and facilities closing – especially swimming pools which cost so much to heat.

Freedom Leisure want significant changes at Fenland leisure centres to tackle rocketing energy costs . PHOTO: Freedom Leisure

“Leisure facilities are vital to the health and wellbeing of our residents so we’re determined to do what we can to safeguard the services that Freedom Leisure provides.

“We will look at what action can be taken to relieve the impact of rocketing energy prices and what longer-term measures can be put in place to ensure their sustainability in future.”

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