New Forest District Council to pay Freedom Leisure a further £270,000, taking total bailout to £1.5m

NEW Forest District Council is set to pay the organisation which runs its five leisure centres a further £270,000 to address an income deficit – taking the total bailout cost to £1.5m.

As reported in the A&T, Freedom Leisure, which took control of sites at Lymington, New Milton, Ringwood, Totton and Applemore in 2021, announced last year the centres could be at risk after a £750,000 offer of support was withdrawn by NFDC.

After taking advice, the council concluded the payment would have been outside the terms of the management contract.

At a meeting of NFDC’s ruling Conservative cabinet on Wednesday, members heard the centres had been affected by a slower than anticipated post-Covid recovery as well as spiralling energy costs and the cost-of-living crisis.

A report proposed a further payment of £270,000 be made to Freedom Leisure in addition to a management fee of £1.23m.

It confirmed the total deficit incurred by Freedom Leisure in the transition year was £1,866,650.

It added: “In discussions with Freedom Leisure, officers have proposed an increase in the management fee from £1.23m to £1.5m, which officers consider is a reasonable figure taking into account the bid parameters of the original tender process.”

Cllr Geoff Blunden, cabinet member for partnering and wellbeing, backed the additional payment and said it sought “a satisfactory conclusion” to the transitional year.

Cllr Edward Heron added that without the partnership with Freedom Leisure, NFDC would have been liable for the entire deficit.

But Cllr Malcolm Wade, leader of the opposition Liberal Democrat group, said: “Taking into account the service to the public is worse than when we ran it and it’s costing more money, is the administration considering bringing it back in house?”

Cllr Blunden said there had been “significant challenges” but he did not accept the service was worse.

Last November the operator was forced to close all the saunas and steam rooms at the centres to combat rising costs.

Tory Cllr Steve Clarke said Freedom Leisure was doing “a good job” considering the circumstances, adding: “I am confident the council made the right decision.”

The cabinet report explained: “The commencement of the contract so close to the pandemic left significant uncertainty as to how well the leisure sector – nationally, as well as locally – would recover.

“In recognition of this, year one of the contract, running from 1st July 2021 to 30th June 2022, was established as a transition year with the council and Freedom Leisure establishing an open book basis for financial performance oversight.

“The contract provides for the council to cover any transition period deficit, up to a cap of £1.23m.

“The contract further provides that any deficit incurred during the transition period above the cap will be dealt with in accordance with the dispute resolution mechanism set out on the contract.”

The cabinet’s backing of the payment will go to a full meeting of the council later.