On 9 July central government announced that indoor leisure facilities would be permitted to open from 25 July. Neighbouring Stroud District Council and others opened their doors on the 25 July. Covid had forced the closure of the leisure centres and museum which caused a significantly reduced income to the service contractor SLM, who appealed to CDC to support their ongoing costs during shutdown and throughout their recovery programme.
At a special Cotswold District Council Meeting on 29 July, CDC voted to ‘grant’ £296,142 to SLM to support their service delivery from April to October 2020. SLM is a highly commercial and successful business which manages over 190 leisure and cultural centres across the UK in partnership with more than 60 different local authorities. In the Cotswolds they manage the Corinium Museum and the council’s leisure centres in Cirencester, Bourton-on-the-Water and Chipping Campden.
The Agenda Item was proposed by the Cabinet Member for Health and Wellbeing, Cllr Jenny Forde: To make a decision on the arrangements for the reopening of Leisure Centres across the district and the Corinium Museum in Cirencester, following the relaxation of the Covid-19 lockdown, and to agree to the financial support package to be provided to SLM (SLM), the Council’s leisure management contractor.
The council papers said there is ‘less reputational risk’ to the proposed opening of leisure centres and museum, and it would support the authority's priority to ‘help residents, businesses and communities to access the support they need to ensure a high level of health and well-being’. None of the Conservative Councillors disputes the importance of offering leisure facilities to residents, they recognise it as imperative to open up exercise facilities.
However Conservative opposition was astonished as the ease of this blasé council giveaway. Cllr Ray Theodoulou (Coln Valley) suggested an amendment to loan funds to SLM, rather than ‘grant’, ensuring the council would see its money back and the leisure centres and museum could reopen. Cllr Theodoulou's argument in Council can be heard here: https://youtu.be/0yffohKq5Yc
He went on to say that according to their latest published figures, SLM had a turnover of more than £270m with a ‘large, geographically spread portfolio’ and ‘it paid its directors £665,000 in salaries plus pension contributions and dividends to its shareholders of £10 million’. He added that grants are usually only made for smaller enterprises or charitable organisations, not to firms whose main objective is to provide returns for its shareholders and directors.
Council members were arguably misled by the text in the Council meeting papers which described the contractor as a ‘not for profit organisation’ - manifestly, this is not the case and it is unclear how the phrase crept into the papers.
Cllr Theodoulou said ‘Let's be in no doubt, we are looking at a thoroughly commercial organisation and a very successful one too. But there is no need for us to stuff money into their pocket which they can just take away.’
Councillor Mike Evemy deputy leader and cabinet member for Finance, said the proposal to amend the grant to a loan was ‘totally impractical’. He went on to say ‘Yes, absolutely we would love to be able to loan the money and not feel that we were effectively having to give the money to SLM to get our centres reopened and up and running for the next three months.’ He went on to say that SLM would not be able to repay the loan - a strange thing to say considering the size and financial strength of the company. SLM pays £10m dividends to its shareholders. SLM could have been asked to defer their dividends until the ‘support’ given by the Cotswold tax paying community had been returned.
Sadly the vote on the amendment was lost, largely on party lines.
The Leader, Cllr Joe Harris, clearly rattled, immediately requested a 20-minute interval to convene with his group. After 23 minutes they returned, still agitated and any further discussions about the item were shut down, even by speaking over the Chairman. They went straight to the original vote, allowing no further debate, bringing ethics and constitutional practice into question. Nothing was disclosed about their deliberations during the interval. The vote was passed, it was not unanimous, there was one abstention.
Shockingly, it was accidentally disclosed by one of the officers, that the LibDem cabinet had actually already made the financial commitment to SLM, before the special Council meeting. The LibDems were clearly confident that their majority would win the vote but this again brings into question the council’s constitution and ethics.
Cllr Jenny Forde, Cabinet Member for Health and Wellbeing, said that ‘we have been talking the SLM for weeks’ and had framed the proposal before Council as a result of these talks. What is not clear is whether Cllr Forde or Cllr Mike Evemy, Cabinet Member for Finance, had actually spoken the contractor direct. Council officers probably did have talks with SLM, but did meaningful negotiations take place? Undoubtedly, SLM had requested financial ‘support’, and the officers in turn referred the request to the cabinet members. Is that where the ‘talks’ concluded? To that end a Freedom of Information request will be considered so that these important questions can be answered.
Have the LibDems cabinet members failed in their duty to ask the right questions? such as: Who is the contractor? What resources does SLM have? What manner of support is requested and for how long? What about the provision of financial information such as balance sheets, cash flow forecasts and sensitivity analysis? Might there have been guarantees from the parent company?
Cllr Evemy's comments in the local press suggest that he depended solely on officer advice when making this decision. He had not researched the contractor, he did not investigate its financial standing. He did not consider loan facilities as opposed to a grant because he did not think of it. No consideration for the public interest has been shown beyond getting the facilities open - at any cost. As Cllr Forde repeated in Council several times: ‘Let’s just get on with it’.
The current LibDem cabinet does not appear to be financially awake, or curious, least of all Cllr Mike Evemy, Cabinet Member for Finance. Are they capable of scrutiny and due diligence? Ironically, Cllr Jenny Forde wrote in a public post in April 2019 ‘I know what it is to make scarce resources go a long way. I know what it is to treat public money as if it was my own.’
Cllr Theodoulou summed up, ‘This £296,141 grant supports the service up to October 2020. Unless corrective measures are taken, SLM will soon be coming back for more.’