Members to receive a verbal update.
Minutes:
Members received and considered a verbal update provided by Councillor Boden in respect of an urgent decision taken as Leader in respect of Freedom Leisure.
Councillor Boden first sought advice regarding his statement and Carol Pilson confirmed that only the information available in the Members’ briefing note of 1st May was in the public domain. Therefore, to provide any further details would mean the meeting may have to go into confidential session.
Councillor Boden advised that instructions were received on 22nd March that all leisure services had to cease, which had a profound and immediate impact on Freedom Leisure. It was clear that some sort of financial package would be requested but with no certainty of the amount. During the time, relentless efforts were made to arrive at a solution. Legal advice was sought internally and externally with regard needed for other council customers as Freedom Leisure has almost 100 centres across 25 councils. In mid-April the requested relief was found necessary and an entry placed on the Forward Plan on 23rd April. Freedom required payments by the beginning of May to meet their payroll obligation, having met April’s out of existing capital. There was a real and compelling concern that not to take action would impact on the continued employment of employees and the very existence of Freedom Leisure. Therefore we had to exercise discretion; the request not made lightly but there was a lack of alternatives at that time. In order to comply with constitutional requirements, it was necessary to take action and bearing in mind these are very unusual and unprecedented times. Councillor Boden explained this was just a summary of why the decision was made urgently.
Members asked questions, made comments and received responses as follows:
1. Councillor Booth queried the timeline as he was not convinced about this based on what he had read in the member briefing. Under 4.5 of the briefing paper, we could have decided not to give support or limited support and Freedom could have terminated their contract, so that suggests a time span, however he is not disputing the decision taken.
2. Councillor Boden said to remember that it was not just us but other local authorities as well and this was a matter where Freedom Leisure literally had days in which they had to have agreement in order to continue to operate. Yes, three months’ notice of termination of contract can be given under force majeure but would we want this or would it be of benefit to allow it, hence the conclusion that it was more helpful to continue working with Freedom. Due diligence was not made under what they claim they required, but the decision was not made flippantly; a lot of detailed work was undertaken by officers and there were significant changes in terms of support offered. Time was taken, hence the 1st May deadline to get agreement from all councils. Therefore the timeline is a stated but officers can give provide further information to Councillor Booth if he still has concerns.
3. Councillor Booth said it sounds like Freedom Leisure pressurised the Council to make that decision by 1st May as their statement said the majority of their clients said they would give significant support. Although he did not dispute the decision, Councillor Booth said it seemed a case of the tail wagging the dog.
4. Councillor Boden stated that although he can understand why it looks like that, we had contractual obligations in the leisure contract agreed with Freedom Leisure and we had to look at the best interests of the Council. All of the major customers had agreed to a package of support but that was not the case 7 days earlier; all councils were in that position.
5. Councillor Hay said we need to remember that we are in the early stages of a 15- year contract. If we had not helped we would have been in danger of having to take this contract back. She agreed it with Councillor Boden that these are unprecedented times and Freedom Leisure would have had to shut down their entire operations, not just one gym. This is on a loan basis and will be recouped over the following years; therefore it was the right decision to take considering it was urgent and the employees needed to be paid.
6. Councillor Boden thanked Councillor Hay for reflecting the position. He said that consideration was given to the implications if we did not provide financial support and it was not just about savings as it may have threatened the existence of one or more of the 4 sites. We weighed up all the risks involved and on balance in the interests of both the Council and residents it was important to provide support to Freedom Leisure.
7. Councillor Skoulding remarked that it was a good and brave decision. The Council had to strike quickly as staff did not know what was going to happen and he expressed his thanks for the decision.
8. Councillor Booth said he would be interested to know how many other councils were forced to take an urgent decision and not follow the constitution and allow call-in process. He realised it would be a task to get that information but would give an idea of how many other councils were in the same position. He then asked that as Freedom Leisure stated they had no income, had customer direct debits been suspended. Councillor Boden confirmed that this was the case and they will restart when appropriate to do so. So far as other councils are concerned, the information is available but it would take some doing getting hold of it and different councils have different schemes of delegation, so in many cases a council will have been able to fulfil this requirement without having to use urgency procedures and in other cases they will have had, so it will vary from council to council.
9. Councillor Hay said that as a member of Chatteris gym, she could confirm that when it first closed, she was informed her direct debit would not be taken; however customers were given the option to continue to pay if they wanted
10. Councillor Miscandlon said that he had previously had a long discussion with Amy Brown because of the urgency of the matter and considerable time was spent before the decision was signed off, so he is aware of the implications of what was dealt with at the time.
The Overview & Scrutiny Panel received and commented on the verbal update on the urgent decision taken by the Leader in respect of Freedom Leisure.
(Councillor Cornwell declared an interest as his son is an employee of Freedom Leisure and left the meeting for this item and for the rest of the meeting)