Leisure Trusts Briefing 148 December 2006

Charitable trusts delivering public leisure and cultural services

Introduction

The Chancellor Gordon Brown announced £30million for community groups to support their take over the management or ownership of local assets in England. Various local authorities across the UK are developing proposals to set up charitable trusts to take over the running of public services such as museums theatres and sports and leisure centres. Fife Council, Glasgow City Council and East Renfrewshire are among those in Scotland considering such moves. The attraction for LAs is that the independent trusts can take advantage of the tax benefits offered to charities and so free up more money to deliver the service. The question is though should public services be delivered via a tax dodge?.

What are leisure trusts?

Leisure Trusts are organisations set up to independently run local authority leisure services. Various bodies have been set up across the UK taking over sports, museums, libraries and other leisure facilities. These Trusts are independent of the council run by a board of trustees. There is no legal definition currently, it is an umbrella term, for various structures. What is currently attracting the interest of LAs is that with charitable status they can make savings in rates and VAT. East Renfrewshire currently claim that a trust running its four sport centres, 20 halls, ten libraries and one theatre would save between £305,000 and £420,000. See P and I team briefing 36: Public Interest Companies for more information on the range of bodies possibly bidding to deliver public services.

Museums

Glasgow City Council, amongst others, is considering setting up a charitable trust to manage all its cultural and leisure services. This idea is based on a belief that there will be substantial savings in taxes and that a charitable trust is more likely to attract private donations than a council department. Museum and leisure trusts have been in place for some time but there is little evidence that the savings and improvements promised actually materialise.

Research into museum trusts in England and Wales has recently highlighted the pitfalls of this route. While the museums "industry" has been discussing the benefits and disadvantages of devolving museums for many years there has been a recent surge in the number of Trust being set up: more than half of the current trusts have been set up in the last ten years in England and Wales. These have all been LA museums. The reasons given are seldom to improve efficiency or services. Causes are mainly a response to funding difficulties, pressure from the Arts Council, a Best Value Review or rationalisation of services' branch museums. In terms of Gershon the process of moving the service to trusts does not generate substantial financial benefits: there tends to be "non cashable" efficiencies. Museums are not particularly well funded so there little scope to make savings. The economies of scale involved in being part of a large organisation particularly in terms of maintenance and procurement can also lead to higher operating costs. The report found no evidence that that devolution leads to better management of museums. There was also no evidence that museums are getting more private money as hoped. Most additional funding had come from public funding sources available to museums in general

Bargaining Issues

UNISON's experience in Scotland is that while initially many trusts have performed satisfactorily after the initial separation the promised savings and extra funding are slow to materialise. This means that trusts are increasingly running into serious financial crises. Although the Trusts are independent it is the council they turn to for cash to bail them out. The trusts also cut back on the wages and other conditons of staff in an attempt to make savings

Trusts appear to have come up against a similar set of problems:

The trust appear to have problems attracting and/or keeping good managers and trustees which mean they also have great difficulty in managing both the day to day running of their enterprises and dealing with crises when they occur.

In June Annandale and Eskdale trust had to ask Dumfries and Galloway Council for handout of £40 000 for its financial crisis. They were not prepared for the recent rise in fuel costs. They are also threatening staff with job cuts and reduced opening hours at its facilities. Aspire Trust, which had a contract to run East Hertfordshire's Leisure services, was £500,000 in the red in its first year. They had predicted savings of £980,000. The council only saved £50 000 in the first year while the trust has a projected shortfall of £278,475

Trusts have limited options to make cash savings and so are introducing lower wages and poorer terms and conditions. In particular, many are increasing the use of casual staff. This means money can be saved on actual wages, sick pay, holiday entitlements and pay, and pension contribution. Over-time is then used to keep centres open but with lower over-time and unsocial hours rates.

UNISON believes that some trusts', for example East Hertfordshire, plans to introduce pay cuts for transferred staff are illegal under TUPE regulations. Renfrewshire local government branch have 15 Employment Tribunals lodged under the wages act following changes in management at the leisure trust.

UNISON position

The experience of UNISON members is that Leisure Trusts are not an alternative means of community ownership of public assets but a tax dodge. There is no improvement in services or higher rate of private donations. Instead the staff delivering the services are experiencing a deterioration in their terms and conditions. Scottish Labour has made a policy commitment for next years elections. to ensure that the legitimate incentives that apply to charities are not used as vehicles for outsourcing by local authorities. Extra funding can be achieved without giving up on genuine community ownership and democratic control.

Further reading: Adrian Babbidge Moving to Museum Trusts Learning from Experience: www.mla.gov.uk/resources/assets
//T/Trusts_Status_Report___part_1_9294.doc

European Services Strategy Unit, Leisure Trust Failure:
www.european-services-strategy.org.uk/
news/leisure-trust-failure-alternative-option-for-e/

UNISON briefing no 36 Public Interest Companies:
www.unison-scotland.org.uk/briefings/pics.html

UNISON PPP staff protocol
www.unison-scotland.org.uk/briefings/pppprotocol.html