Venue: Committee Room No.4
Contact: Katie Pepper Democratic and Electoral Services Officer
Chris Jones presented the finance review to the committee, He stated that the report provided a financial update on Barrow Forward as it neared the end of its first year of operation. The facility had been currently operating at a deficit. A request was made to the Council to provide funding to close this deficit.
Barrow Forward (BF) had been established in April 2021, as a Local Authority Trading Company wholly owned by Barrow Borough Council. The directors of the company were all employees of Barrow Borough Council. The company was governed according to its Articles of Association, and an agreed service specification which was monitored by the Council’s client officer, the Head of Operations.
Barrow Forward took over the operation of the Park Leisure Centre on 1 February 2022. The company was responsible for all of the day to day operations of the facility. It had procured external HR, Finance and marketing support, and received support from the Council’s Asset Management Team for the maintenance of the building, including the servicing of plant etc. The cost for this is ultimately recharged to Barrow Forward.
The Council paid Barrow Forward an agreed management fee for operating the facility on its behalf. Barrow Forward also received all of the income for charges to use the various activities provided at the Leisure Centre. Apart from the costs of professional support, maintenance, utilities etc., Barrow Forward paid the other operational costs, principally staffing costs. For the year 2021/22, Barrow Forward reported a small surplus. However, the projection for year end for 2022/23 was a substantial deficit. This was largely a consequence of the increase in energy costs over the last 12 months.
The most recent budget estimates (up to the end of December 2022) showed the following headline items:
Income £1.152m – budget £1.156m
Staffing costs £633,000 – budget £657,000
Gross profit £483,000 – budget 469,000
Operating expenses £733,000 – budget £469,000
Gross loss £250,000
The operating expenses included estimates for repairs and maintenance. These were not yet wholly accurate and it was recognised by the Council and Barrow Forward that a smoother system was required for recharging these items to BF on a regular basis. However, the figures available for budget monitoring purposes (up to September) do appear to show a large number of relatively expensive repair jobs, resulting in a considerable estimated budget deficit of £34,000 against repairs and maintenance. I do not anticipate that this level of overspend would continue to year end. The only other significant item that is over budget is for licence fees for the Legend Leisure Management System, which was not included in the initial budget at the beginning of the year. Fees to the end of December 2022 were £25,000.
By far the highest proportion of the deficit in operating expenses was utility costs.
These accosts, estimated to the end of December are £317,000, compared with a budget of £138,00, a shortfall of £179,000
On this basis, the estimate for the projected deficit for BF ... view the full minutes text for item 9.
Proposed Charges for 2023-24
Chris Jones reported the proposed increases in the charges for use of Barrow Leisure Centre for the financial year 2023-24.
Barrow Forward had been established as a company wholly owned by Barrow Borough Council. The function of Barrow Forward was to manage Barrow Leisure Centre. The directors of Barrow Forward were all officers of the Borough Council, and they oversee the day to day operation and management of the facility by the Operations Manager and his staff. Whilst most of the decisions relating to the operation of the facility were within the purview of the Barrow Forward board, some decisions were required to be ratified by the Member Committee formed as part of the setting up process of Barrow Forward. One such decision was the setting of charges for the use of the Leisure Centre.
The proposed charges were attached as an appendix to the report. This also provided comparisons with nearby public/community sector facilities.
The Committee agreed that the proposals be agreed but requested that the annual membership pricing be reviewed at the next meeting.
RESOLVED: - To agree the proposals from the Board of Barrow Forward to
implement the proposed charges.
The Meeting Closed At: 10.45 a.m.