Agenda item

In accordance with Regulation 10(1)(a) of the Local Authorities (Executive Arrangements) (Meetings and Access to Information) (England) Regulations 2012, the proper officer has informed Councillor Noordad Aziz, Chair of the Resources Overview and Scrutiny Committee, that it is intended that the following key decision will be made by Cabinet on 18^th March 2026, under the General Exception provisions, on the grounds that the decision is urgent and cannot reasonably be deferred.

Report attached.

In accordance with Regulation 10(1)(a) of the Local Authorities (Executive Arrangements) (Meetings and Access to Information) (England) Regulations 2012, the proper officer had informed Councillor Noordad Aziz, Chair of the Resources Overview and Scrutiny Committee, that it was intended that the following key decision would be made by Cabinet on 18^th March 2026, under the General Exception provisions, on the grounds that the decision was urgent and could not reasonably be deferred.

Members considered a report of Councillor Munsif Dad, Leader of the Council, presenting options to Cabinet for securing the long-term provision of leisure services within Hyndburn.

Councillor Dad provided a brief introduction to the report, highlighting the main issues addressed in the report which included the following:

• The award of new 30-year leases to Hyndburn Leisure (“HL”);
• The proposed write off from trading debt between HL and the Council;
• Compliance with subsidy control legislation;
• Payment of the annual financial support payment to Hyndburn Leisure in respect of the 2026/27 financial year; and
• The potential release of bad debt provisions from Council’s balance sheet.

Councillor Zak Khan commented that he supported, in principle, the writing off of the trading debt, but enquired about the following

• whether the figure of £1,624m was the entire debt owed;
• whether HL could adequately maintain the buildings in the longer term under a full repairing lease; and
•  what improvements to the financial management arrangement had been realised as a result of the negotiations with HL.

Martin Dyson Executive Director (Resources) confirmed that the total debt figure was as reported.  The Leader responded that a 30-year lease would enable HL to attract in additional funding and it had a track record of doing so previously.  Regarding improved outcome, the Council had set out some key requirements which were being monitored.  The Portfolio Holder, Executive Director (Resources) had regular meetings with HL.  Going forward:

• HL would manage their own Human Resources function in full;
• The Town Hall would come back into the Council’s responsibility in 2027; and
• The subsidy required over the last few years would be minimised.

Overall the Council wanted HL to continue, to prosper and to have a good working relationship with the authority.

Approval of the report was deemed a key decision.

Reasons for Decision

HL hade been the operating the Council’s leisure facilities since April 2002 and currently managed the following venues on behalf of the Council:

• Hyndburn Leisure Centre;
• Mercer Hall;
• Cath Thom Leisure Centre / Wilsons site including playing fields, athletics track and sports pitches;
• Accrington Town Hall;
• Oswaldtwistle West End Community Centre; and
• Bank Mill House Community Centre.

The Council had undertaken a review of its Leisure Management options in 2024 as it had been over twenty years since the current delivery arrangements had been set up, and both the Council and HL recognised that a lot had changed in that time.

The Council and HL had agreed that it was sensible to review the current operating model to ensure that it was still the best way to deliver community leisure services in the Borough and that it still represented best value for the Council and its residents, particularly in view of the following:

• The approaching expiry of the current leases of Hyndburn Sports Centre, Mercer Hall Leisure Centre and Accrington Town Hall.

• The closure to the public of Mercer Hall Leisure Centre and swimming pool and the ongoing work to identify ways to redevelop and repurpose the same as a community facility.
• The construction by the Council, (with the assistance of grant funding from Sport England) of a new sports and leisure facility at Wilson Playing Fields, (Cath Tom Lesiure Centre) and the need to determine how this would be managed.
• The hope that the new, energy efficient leisure centre at Wilson Playing Fields and the repurposed Mercer Hall facility would operate with reduced running costs; and
• A reduction in VAT benefits that had once been available to HL and the recent increased costs associated with leisure provision in the Borough.

The Government had recently announced plans to reorganise two tier local government within the next two to three years (LGR), which was not contemplated by the leisure management review or the leisure options report.  In the circumstances, it had been agreed that the Council would take a pragmatic approach and that the Council and HL would work together to agree a strategy for community leisure provision over the next few years.

Over the last year the Council and HL had agreed an approach that involved increasing health and wellbeing outcomes and reducing financial subsidy requirements, linked to the opening of the new Cath Thom Leisure Centre and the repurposing works recently undertaken at Mercer Hall.

The Council’s Medium Term Financial Strategy envisaged financial support to HL being required at the following levels subject to Cabinet approval and subsidy control compliance:

The report provided further detailed information in respect of the following matters:

• Lease arrangements;
• Current year financial position;
• Outstanding debt position; and
• Proposed grant subsidy and Subsidy Control Implications

Alternative Options considered and Reasons for Rejection

The Council could convert trading debt into a loan.  This was not considered to be feasible for the following reasons –

• The loan would need to be over a long period to enable HL to repay it;
• Repayments would be high based on a 15-year loan; and
• The loan would need to be at market value or be subsidised.

It has been confirmed that any increase in loan would not be affordable unless it was matched by increased subsidy.

The Council could charge rent at market value for Hyndburn Leisure Centre and / or the Cath Thom Leisure Centre.  This was not recommended as it would increase HL’s costs and therefore impact any financial subsidy reductions that had been agreed thus resulting in a request for increased subsidy.

The Council could decide not to pay the financial support of £500,000 proposed for 2026/27 or pay a lesser amount.  However, HL has budgeted on the assumption that the monies would be received.  Any reduction in the same would impact upon HL’s financial viability and could lead to increased charges to customers and / or a reduced level of service provision to the detriment of residents.

HL being responsible for their own payroll services would cease the need for the Council to be a registered payroll agent and comply with HMRC requirements for compliance, authorisation, data protection and anti-money laundering services.

Resolved                                 (1)   That, having considered the compliance assessment attached as Appendix 1 to the report and being satisfied that the following are consistent with the subsidy control principles:

i)       Cabinet agrees to accept the surrender of HL’s current lease of Hyndburn Sports Centre and to grant HL a new lease of the same for a 30-year term commencing on 1^st April 2026 at a peppercorn rent, with HL taking on full responsibility for repairs and insurance and with the mutual break clause detailed in section 4.6 of the report; and

ii)     Cabinet agrees to accept the surrender of HL’s current lease of Wilsons Paying Fields and the Cath Thom Leisure Centre and to grant HL a new lease of the same for a 30 year term commencing on 1^st April 2026 at a peppercorn rent, with HL taking on full responsibility for repairs and insurance and with the mutual break clause detailed in section 4.6 of the report below ; and

iii)    Cabinet agrees to write off HL’s trading debts of £1.624m currently owed to the Council subject to satisfaction of the conditions set out in paragraph 6.6 of the report.

iv)    Cabinet agree the £500,000 financial support payment to HL for the financial year 2026/27 as approved at Council at the budget meeting in February 2026 for payment in April 2026.

(2)   That Cabinet delegates authority to the Executive Director (Resources) to agree the detailed terms of the proposed new leases to HL and thereafter to instruct Legal Services to draft, negotiate and complete the same.

(3)   That Cabinet agrees that the Council will resume the running and management of Accrington Town Hall upon the expiry of the lease to HL on 1^st April 2027.