Transcript

This meeting will be recorded for live and/or subsequent broadcasts on the Council's website in accordance with the Council's capacity in performing a task in the public interest and in line with openness of local government body regulations 2014. The whole of the meeting will be recorded except whether they are confidential or exempt items and the footage will be on the website for six months. If you have any queries regarding webcasting please contact Committee Services. Welcome to the first meeting of the Service Overview and Triguity Committee. If the fire alarm sounds and we're not expected to please leave an orderly manner down the stairs either side of the room and assemble outside on the front gates by the river. Please also turn your mobile phones to silence because I'll be after you if they go on. Right, may I invite committee members to indicate in turn that they are present. Thank you. I'd like to welcome the leader of the Council, Julia McShane, and also the lead Councillor for Commercial Services, Catherine Houston. James, are there any apologies for absence for me? Thank you, Chair. Four apologies, Councillors Jones, Steele, Young and Davies. I'd like to welcome Councillor Howard Smith. Any other Councillors in the chamber have missed? No. I can also ask any other Councillors present remotely to identify themselves in the chat function. Also to help tonight is Julian Higson, strategic director for Housing and Environment. Welcome, Julian. Kelvin Mills, assistant director of Commercial Services. Welcome. And Julian Russell, consultant from Blue Horizon. Thank you, welcome. And of course, James from Democratic Services is supporting the running of the meeting tonight and Andy is webcasting. Thank you. Item 1 we've had, apologies for absence. Item 2, Local Code of Conduct and Declaration of Disclosable Pecuniary Interests. Are there any or any non-pecuniary interests? I run a group at G Live and I just need to say in order to be transparent, that as far as I'm aware, I'm not biased or have predetermined the matter. Thank you, Jane. Is that fine, James? Thank you. Item 3, the G Live Contract Award. Catherine, would you like to open or should we have the presentation first? I'm easy either way. Go on. Thank you, Chair. G Live is one of the Council's most high profile and largest contracts. The report on the agenda summarises the outcome of the procurement process and recommends the type of contract for the next phase of G Live. The exempt annex gives a detailed technical breakdown and summary of the procurement process. Throughout this project, we've worked closely with the ONS working group and we presented to the group on the 31st of May a presentation on the procurement that we went through and the processes we took. They felt it helped explain and bring the process to life. It allowed a greater, more detailed understanding of the intricacies of tender process, the selection and evaluation criteria and the outcomes that have been delivered. So, it was felt that we should recommend and present to you here as a committee. I'm pleased to say that Julian Russell from Blue Horizon, who along with our internal procurement team led by Gavin Seaborn-Pugh, who have guided us through the process, is here just to take us through a presentation on the procurement process and the outcome we've come to and the recommendation we're making to Executive. We welcome any comments at the end. Thank you. Thank you very much. Nice to be here. Welcome the opportunity to be able to present to yourselves the journey that we've been on with G Live. By way of a bit of background of myself, before we get into the presentation, I represent an organization called Blue Horizon. We're a specialist consultancy organization supporting multiple local authorities on similar type projects. Prior to setting up Blue Horizon, I was the Chief Exec of HQ Theatres and Hospitality, which was the organization which ran G Live from the beginning. So, we were appointed in 2010. We supported the Council on the development of it and opening it and ran it all the way through until HQ was acquired by Trafalgar Theatres, the current incumbent, in 2021, at which point in time. We had an obligatory year supporting the organization and then left, so I was delighted to have the opportunity to work with the Council to secure the long-term future for G Live, having been involved in the venue for so many years. We'll go on to a bit of brief history, so we'll just move on to the next page if we may. Here we've just outlined a bit of history of the venue since it opened. As I said, the Council entered a 10-year contract with HQ Theatres, the incumbent, at the opening period in August 2011. This was extended by a further three years as a result of the pandemic, so that was due to terminate in 2021. Obviously, not a great time at that point in time to engage with the operator market, so a short-term extension was agreed. By way of an overview of the commercial arrangements, obviously there was a very detailed operator specification to support the running of the venue. In order to facilitate that, because it was a brand new venue, the Council subsidised the operator to the tune of £328,000 per annum. That was a fixed subsidy, so depreciating in real terms, because not increased by RPI, but still a considerable annual investment by the local authority. The three-year extension saw that subsidy reduced moderately down to £275,000, so a significant investment by the Council on the back of building and developing the venue. When we were appointed, we looked at various different options in terms of what could be available to the Council to secure the long-term future, the long-term strategic partnership. One of those was a development opportunity, i.e. an acquisition, so to actually look at selling the venue as an asset to an operator, or a long-term lease. I think it was right to consider both options, but it was quickly determined that actually the preferred route was a long-term lease, so retaining the asset within Council ownership. As a result of that, we developed a partnership with Kelvin and others, and Gavin, as Kelvin alluded to, in the procurement framework to best facilitate the best outcome for all parties. That was basically a procedure which facilitated an element of negotiation, so complying to PCR regulations, but a two-stage process enabled, once engagement with the operator market had taken place, for initial submissions to come forward, to those to be evaluated, to feedback, and then the second stage will enable the feedback to be reviewed by the participating bidders to therefore fine-tune and improve their bid to best suit. The commercial resilience and the operational excellence that we were seeking, as well as retaining some of the important economic impact and social value benefits as a thriving cultural asset. Once that was established, we moved to develop the minimum requirements, which we'll come on to shortly as part of that, and we developed a timetable, given the fact that there was a very significant cliff edge, and that is that the contract currently terminates at the end of September this year, and therefore we had to conclude the process in sufficient time to enable, if the outcome delivered, a new operator to be able to mobilise, as you would anticipate mobilising, and transitioning from one operator to another is a complex business in a venue of G-Life's nature. In determining the minimum requirements, it should be noted that as part of the first 10-year contract, or 13-year contract, there was a substantial operator specification, substantial KPIs, as well as minimum requirements in that, and they were delivered on the back of a subsidised relationship. So now the venue is mature, it's thriving, it's a very successful venue with national significance and recognition, we're able to look at things in a slightly different context, and in particular obviously the requirement to continue to fund it. So the first stage was looking at the length of the relationship, market forces determined now as the best outcome in these circumstances, the longer the relationship, the longer the partnership, typically 15-25 years but in many cases much longer than that, provides the most successful outcomes because parties can consider in long term future decisions and invest knowing that they can be returned and the benefit can be realised over the long term as opposed to shorter contracts. So it was agreed that we would look at two lease terms, 15 or 25, and the virtues and risks associated with those which we'll come on to. This would be a zero subsidy model so there would no longer be any subsidy required within there, and we were looking for an annual guaranteed rent, or charges our legal colleagues like to refer to it as, and the possibility of a gainshare, and the gainshare could be on top of rent subject to overperformance, so quite a significant shift from the subsidised model. We also looked at the number of performances, minimum requirements in the main auditorium, we specified 120 which on the face of it looks quite low, there's a very specific reason for that is that, in the context that on average 280-320 performances a year take place in G-Life at this point in time, the reason we looked to set that as a minimum auditorium show performance rate is because we were looking to engage with the arena market which is a distinctly different operator market than the theatrical operator market, and therefore that market would bring less shows per week, but they would be stellar shows of significant national touring context and would essentially operate at capacity every single show, so there's a lot more nuances to it, but we looked at the theatre operating model which is the one that's adopted at the moment, and the arena operating model I should say, just to be able to look and see how the competing operating models would work out. And then obviously there's just general compliance and governance, health and safety, security etc, they were minimum requirements set in there, so this was part of the initial evaluation process to see who qualified to be invited to bid forward. So it's important to recognise what is the kind of state, and one of our roles in this process is to be able to bring a level of expertise and knowledge of the commercial operator market. So it's important to understand the context in which G-Live is operating, and it is now a very successful, very vibrant, and a venue of national recognition that sits very firmly on the national touring circuit. It's worth noting, you will know that, but it's not a theatre, it is a music hall configuration, so therefore it doesn't benefit from a fly tower, so you aren't able to bring musical content etc, and that was a distinct strategy right at the very beginning obviously, and that's played out. It sits very nicely in the cultural ecology of the region, with Woking and Yvonne and others around here, so that narrows further down the operating model because of its technical capability and capacity. On that basis, it narrows down the operator market and therefore the pool of commercial operators of appropriate and suitable competence to be able to run a venue of this nature is very small, and you're talking about less than a handful of them in the market, and that is a bigger issue with the cultural sector which we won't go into at this point in time. But we would only be talking to a very small portion of the market that could competently demonstrate their ability to deliver this, so we set out that in the selection questionnaire, so the minimum standards required and obviously the governance, financial due diligence etc was incorporated in that. Having engaged, and we'll come onto the operator market in the context a little bit, shortly having engaged with the operator market, that two operators successfully passed the SQ stage, it was very very rigorous for all the reasons you'd expect to ensure that we would be engaging with operators that would be able to deliver it over a long period of time and demonstrate their capability of doing so. Trafalgar theatres, the incumbent and ambassador theatre group were selected to take part in the competitive bidding process, ambassador is the UK's and one of the global largest operators of venues such as this has 50 odd venues in the UK and a significant presence in Broadway and Europe as well. Trafalgar theatres now is the second largest commercial theatre operator in the UK with 15 venues, G Live being one of them. So essentially we would be bidding now with the two most significant players in the UK market, although ideally you'd like to be going to this process with three bidders to provide that real competitive tension, ensuring that we have suitably capable bidders was more important than being able to just have a competitive tension in there. And we did seek the feedback from the other operators and we have provided that information separately to them, but essentially the process was deemed too competitive for them to be able to take part in it. And also from the arena market, really they're looking at capacities of 2,500 to 3,000 to make their model work, which was at G Live optimum 1,700 with seating and standing is a little lower than that. So we move on to the next stage. So in terms of the operator market, just following that assessment, we put on the screen here an indication of the commercial operator market, which straddles over entertainment and leisure. Trafalgar theatres there, obviously being your incumbent, ATG, which we've talked about, ASM Global, one of the world's largest arena operators, so they run some of the biggest arenas in the UK and across Europe and the US as well. Not the co-op arena, I stressed around at this point in time. And then we have Tubidor theatres who have two venues currently but are merging with a very distinctly different business model than the other operators, but this was a bit too premature for them to enter into a market in a competitive process. Parkwood theatres, very small operation, predominantly born out of Parkwood Leisure, so a large leisure organisation which you may be familiar with, but they have five theatres across the UK, but they are all very small. The Wharf in Crawley, you might know of that venue, is one of theirs, that's the largest one, but this would be a real stretch for them to take on a venue of this status. And then you have three leisure operators who, to a very different degree, sort of dip their toe in the cultural sector, but reluctantly and usually if it's part of a joint bid with leisure and culture at the same time. So that is the state, really there's only sort of four or five on there that you could consider commercial theatre, sort of live entertainment operators that would meet a G Live's needs. So we move into the procurement stage now. So the two qualifying parties we said, ATG and Trafalgar, were invited to take part in the invitation to tender with negotiation, so that's the ITN process there. We pulled together as part of that three sort of distinct strands to the procurement process, and I say this is two stages, so first stage would be your initial submission, we would evaluate scrutinised feedback, and then there was a full and final offer later on which we'll come into. So the method statements is the first component part, and we'll come on to the detail of these three components shortly, but this is basically their techno evaluation, so asking them how they are going to run the venue in all aspects of it, and that's operational capability, commercial resilience, audience engagement, content strategy, space utilisation, this sort of stuff here. And most importantly obviously maintaining its very important social value and economic benefits, and enhancing those. So the commercial model is the next bit, so how is it going to be run, what are the commercial assumptions, predictions, the level of footfall, the spend per head, average ticket price. Occupation rates etcetera, and all the surrey income and costs that flow out of that, and most importantly that would then inform their commercial bid, and that commercial bid was a guaranteed rent to the local authority and any gains share. Worth noting that we intentionally did not specify a minimum rent, it can be common practice to say zero subsidy and a minimum rent of X and not anything on top of that. We were sufficiently confident that the competition would take care of that, and in fact market forces would determine the best outcome by leaving it to the operators to come to their own conclusion rather than actually setting a limit, because the likelihood is we'd set a limit, that's the limit you'd get. So some element of risk in that but relatively small risk, and then of course there's the kind of legal elements, there's the legal arrangement, the partnership and how that would be managed as a lease with a fully repairing and ensuring obligation over a 15 or 25 year lease. So there were the three component parts that were set up in terms of the procurement process which we'll come into some detail about each of those now. So there are the three components, there's the commercial we talked about, legal there, so there's the weighting, there's the split, the amount of scores that you get, and there's a lot more detail in each of these method statements, but this is the weighting and scoring criteria. It's not unusual in these processes to add a bit of context to see the commercial being up there at 60 plus percent, which essentially tends to shift it towards providing the best money and compromising on the technical delivery. So we were very keen to ensure that that wasn't the case, that there would be a strong commercial result for the council through this process, but it was very important that the technical element of it, so their competencies, their vision for the long term future of the venue was really well thought out and detailed and therefore the weighting was allocated accordingly. Okay so just the commercial, and forgive if there's any sort of commercial language adopted in here, I'm happy to answer any questions obviously later about any of these here. So the three component parts within the commercial, net present value elements, so that's essentially the rent, what is the highest rent that's discounted over a long term, that's just an accounting. So over the 15 or 25 year, the organisation that basically committed to the highest level of fixed guaranteed rent plus any gain share would score the maximum points and then others would be scored accordingly depending on the difference between theirs. And then we looked at managing the asset over the term, so this is the capital investment, obviously it's a complex asset, it needs careful monitoring management, it needs careful investment in maintenance, repair, renewal, etc. And obviously to ensure that there is no business interruption which would be a business critical element of this proposal, so we split that in two, so that's the asset management, so that's just making sure the venue continues to be compliant, it's safe most importantly and it functions at its optimum capability all the time. And then the next component part was the venue enhancement, so what are you going to do to invest in this venue, how are you going to improve the facilities, how are you going to improve customer experience, etc. And how are you going to adopt new technology and innovation to ensure that the venue is future proof to reflect the needs and desires of all participating audiences, whether that be creative learning or whether it be coming to watch a rock and pop show. So we wanted to make sure that we saw very clearly the detail behind their proposals for those three, so that's the 50% for commercial. And then the three elements of the legal, so it's the lease, so long term 15 or 25 year lease, fully repairing, so the risk transfer away from the council over to the operator, so that had to be clearly set out in the lease. The amendments to asset responsibility, so again this is the fully repairing, ensuring that ownership of the ongoing maintenance and investment of the council of the asset was very, very clear, who was responsible for what over that term. Again, this is quite a shift to take full repairing, ensuring responsibility off the council and into the operator. So the long term nature of the arrangement makes that feasible, and then the operator agreement and the asset responsibility, the operator agreement, which is how we're going to operate it, what are the component parts, what are the KPIs if you like, that are going to be put in there, what's the service specifications, so those three component parts were made up the legal element of it. And then the big weighty one was the technical, so this is really the method statements, and we pulled together very detailed method statements. I'm just going to touch really on the very headlines here, but there were about five, six sub questions in each of these, or most of these method statements, and then following that there was a very detailed breakdown of what we'd be looking for, specifically in how they would be able to achieve higher marks, so we went into substantial detail, I think the appendices can be provided for anyone to look at that. But I'll briefly go through each of the method statements now here, and just the headlines which are on the screen. The one which attracted the largest percentage of the overall 40% was operational success, and this essentially is how you're going to operate it, and demonstrate your credentials in operating venues of similar scale and capability. Now we were satisfied that they were able to do that because they were selected as part of this process, so we were very much looking for them to set out the future vision, not what they have done previously, but what they are going to do going forward. In these key areas here, as I say, GLIVE is a very successful and thriving principal, one of Guildford's principal cultural assets, and it was our prerogative to ensure that we maintain that going forward, but also responded to new audiences, new expectations in audiences, and to optimise all the spaces, and all the day parts, so it was a very busy asset, seven days a week, and just not three or four days in the evening, so we asked them to talk in great detail about how they were going to do that, and the interdependent disciplines, marketing, creative learning, technical, hospitality, front of house, administration, etc. So it was really substantial, and in order to make sure that we were able to evaluate this like for like, we were very clear about how many pages they could write, and how many word counts, and it was like for like, so a challenge for them to create or curate all that in there. Second one, creative learning, community and education, hugely important, obviously it's a very successful function for the venue at this point in time, it delivers very significant and very valuable social value and societal wellbeing initiatives in there for the broad spectrum of age groups, and socio-economic backgrounds and communities, so we were very keen to ensure that that was retained, and that was explicit, and it had to be retained, and couldn't be cut out as a result of the commercial landscape changing, but also enhanced and improved, so developed somewhat, so how they were going to do that to continue to work with other practitioners in the council, in the community I should say. Another point at the bottom there is for note is that everything they're committing to in the method statements doesn't put on the shelf and not looked at again, it's a legally binding element of the relationship. And then the three other areas here in terms of the technical, this is to do, so approach to event mix programming, so spatial utilization, what type of content, what type of shows, what's new, how you're going to really optimize all the spaces in G-Live, produce content that's going to be relevant to audiences, that's going to develop content, develop audiences, bring new audiences, etc. So ask them to detail that, and how that was going to grow and develop over the first three to five years of the new relationship. Sustainability and social value, obviously hugely important in aligning to the council's obligations and aspirations, so to describe how they're going to do that, and to evidence where they are doing that elsewhere. And then the last one there is added value innovation, so how are you going to ensure that the venue is future proofed, what new technology, new systems, new ways of working will be adopted within the venue to ensure that it remains relevant for many years, especially in the context that this agreement is going to be up to 25 years and therefore has to be continually evolving. So the five key method statements. So we move on to now the outcome of that, and that concluded, this was a year process, we started last June, it took through to this stage to go through the ITM process, it is a far more complex and labour intensive process, but it tends to deliver the best outcome if you've got the capacity to be able to do it. So of the two qualifying parties that came through, they both submitted their full and finals on the 15th of April, after feedback took place either side of this year and last year. As we mentioned earlier, obviously the expert evaluation was moderated by GBC's procurement. The submissions were both comprehensive, innovative with a lot of imagination, very compelling, well thought through, highly competitive, most importantly highly competitive, and the council would benefit, as would Guildford's community and wider community, benefit from adopting either of the proposals that came forward. So it was a very highly competitive process, despite just being two operators in the mix. As we said, the scores were very close, within one or two percentage points for each of those subsections, so they put everything they possibly can into the process. Unfortunately, the scoring applied after the evaluation delivered a winner, and the preferred supplier partner on this basis is your incumbent, the Trafalgar theatres, on a long term 25 year arrangement, subject obviously to all the various internal governments. So that's the result, what will come onto the next page is to give you an indication of what does that look like, what has been agreed, what was proposed, and what will G-Live, the council and the community benefit from. So a substantial commercial turnaround from the position of a quarter of a million pounds plus subsidy, annual subsidy, guaranteed rent to the council will now be a minimum of £240,000 per annum, increasing with RPI over time. So that's circa half a million pound per annum turnaround from a commercial point of view. There is an additional gain-share mechanism built into the arrangement, if there is a sort of super profit over and above agreed targets at the beginning of each year, the council will benefit from that 20% of that increase over and above the target. So the predictions that were built into Trafalgar's model suggested that some of that gain-share could be seen as early as the second year of this new agreement, if the targets are met, and it's worth noting that because of our involvement in G-Live and our appreciation, our intimate understanding of the venue's capabilities, the proposals were considered in great detail through that lens, so we weren't looking at expectations, predictions, assumptions that were unachievable, and therefore we're not looking at a relationship that could put either party at risk as a result of these tough commercial terms. Additionally, over £5 million of capital will be invested in the venue over the full term. Roughly 50% of that will be in enhancing the venue, so improvements, so investment in the facilities. You could see those being invested as early as next year, the year after, significant enhancements in there that will take some time to work through, in terms of a busy venue but also seeking permissions and sign-off, etc. Clients sign-off, the rest of it being allocated to asset management, so major plant repair, replacement, renewal, etc. as well as ongoing maintenance, ongoing technical surveys and testing, etc. that's required of a venue of this complexity. You've retained and enhanced your creative learning community education functions, so your social value initiatives aligns with the Council's ambitions will be continued. There has been some relinquishing of sovereignty, and by that I mean the original contract required the operator to meet a certain level of types of programme, number of audiences, they've been removed largely to enable there to be agility, they're no longer relevant, the venue does not need those KPIs anymore, it's established, it knows what it does, it knows what it does well, so by taking some of those shackles off, they provide more agility for all parties to be able to really optimise the venue's capability. And of course, risk transfer shouldn't be underestimated at capital contributions from the local authority over the years, and that risk would increase over term as the building ages, that's largely been removed, retained foundations and removed from something which is not unusual for a landlord, but the majority has been transferred over to Trafalgar. And not that this was necessarily a consideration right at the very beginning or priority because we could manage the transition, but a byproduct of retaining your incumbent is there will be no transition from one operator to another, so this will be a seamless transition from one arrangement to another, not going through the process of one operator leaving a new one coming in, and everything that you can imagine that would involve the GP and so on and so forth, so it's a smooth transition. So really all I've put here is just a very simple graphical representation of the outcomes, you've retained your operator so you have a smooth transition or no transition, no disruption on all fronts, you've got a guaranteed revenue over the term, over the 25 years, so that is guaranteed to the council, and not based on any gain share or profit share, capital funding, so the venue will benefit from substantial capital funding to ensure it's operationally sound and compliant and safe, but also will improve and enhance guest experience, making it a venue that will continue to evolve to meet the evolving needs of your audience. Audience development, new types of content, new types of shows, new innovation coming in to ensure that it reflects the kind of digitalisation and the innovation technology culture and ecology that exists in Guildford, so that will continue to evolve, new content as a result coming in so you'll start to see new types of shows throughout the day, day parts as well as the typical evening, and of course as a result of all of that economic impact, benefits and social value, that benefits are derived from a flourishing venue such as G Live will continue to be realised for the next 25 years to come. That concludes the presentation. Thank you Julian and the team from Blue Horizon for your work on this. Before we go to questions, Catherine, would you like to say a few words? Thank you, Chair. Firstly I'd like to thank Kelvin and Julian and also Gavin Pugh from Procurement, who's not here, for working, gosh it must have been just about a year on this contract tender and I'm sure you'll agree they have done a spot on job, because not only just considering the commercial side of an operation, they've waited a little bit more on the technical side, which was, as we saw the breakdown, was to look at the innovation, look at the social value, look at the sustainability, all of which are important to this council, so I know it's been really complicated and demanding and many stages, of course I was kept very much out of it because councils aren't allowed to influence this, it was very much down to procurement and what was the best thing for the council and for residents, but absolutely delighted with the outcome to see us in a plus half a million minimum state for the next 25 years from where, obviously started when the venue was first in operation 12-13 years ago, nobody knew what this venue was going to be and what it could achieve, those of us who were around in Guildford at the time, remembering it being quite a big discussion in local Surrey ad at the time, and here it is, it is very much a part of the community, it's a jewel in our crown, it's a landmark, it's a draw into our town, it contributes £4 million annually to the local economy, which is, you know, we want Guildford to be a thriving place and it certainly helps with that, so I'm really, really proud of what the team have achieved and I also would like to thank actually both of the tendering companies, it can't have been an easy time for the obviously incumbent, but also for ATG who took the time to put together a really careful bid as well, I'd like to thank them and I'd like to also thank, we had a small OS group which was Councillor Hives, Councillor Smith and Councillor Williams, who were involved in a couple of call, team call, team meetings to throw in ideas, come and look at the venue, and were with us a couple of weeks ago to hear from Julian and Gavin, so all in all it has been a really interesting project to be kind of sitting at watching you from the outside and being involved, obviously having to be removed from it because it had to be a very fair procurement process, so I'm really excited that for the next 25 years we have this venue safe and secure for the Council, I know that it's going, it already does some amazing things, you get to come along to some of the things it does, I went to a lunchtime concert recently which was really exciting, we've got lots of ideas, lots of things coming up, there's things going on in that venue and again Gavin touched on the fact that there's going to be some investment going on, that's going to make that front of house look a little bit more engaging I think to start with, is the first plan they've got, so I'd like to end there but say thank you very much, it's been an absolute pleasure being involved with this. Thank you Catherine, before I open it up to questions from the panel, does anyone have any questions on the part two, the pink sheets? I do, so to ask that question I need to exclude the press, is that now James or when we get to it, what's the best way to do that? Do you want to do it now and then come back? Yeah do it now. So to ask the question on the airplane you have to exclude the press and public and that's part, is it schedule 12A of the 1972 Local Government Act? I'll read the wording out. During debate on item three, if it becomes clear that there's a need for councillors to discuss exempt information within an exempt appendix, the committee should be invited to pass a resolution to exclude the public from the meeting for this purpose on the grounds of the likely disclosure of exempt information, as defined in paragraph three of part one of schedule 12A to the Local Government Act of 1972, namely information relating to the financial or business affairs of any particular person, including authority holding information. The public will be re-emitted to the meeting immediately following any discussion of exempt information. So does the committee agree to that? Agree. Thank you. Andy, can you talk to the webcast please? Thank you. Thanks very much. Councillor Ball, do you have a question? Yes, okay. First of all Julian, excellent presentation. I really wanted to put it in front of the public as well, so at least everybody knows. And I understand you are an external consultant aren't you? So whoever hired you, well done to them. Because your knowledge is absolutely amazing on the whole industry, which was really informative. My question, as we know, the GLAB is the most expensive asset for the Guilford Borough Council and 25 years is a long period of time as well. Is there any restricted comment in there where the Trafalgar Theatre can leave in the middle of the contract or if we can come out? I imagine, you know, nobody knew about the COVID in 2019 or 18, but imagine something disastrous happened again and theatres closed down for a year or two years, they can't afford to stay in the building. They say, oh good, we want to leave, we want to finish the contract. So we will, or in case, you know, Council decides, you know, it's one of our best tests that we want to dispose of to make sure, you know, our budgets are good and everything else is good. Now is there any restriction in there, into the contract, because I haven't seen in any of these documents mentioned, or will that be in a detailed lease? Okay, so yes, that will be covered in the lease, so that all the elements associated with the partnership and the obligations within each partner's obligations to discharge during the term of the lease is covered in detail. I think if you're referring to sort of either force majeure, where there is a situation where the venue is forced to close but it is out of the hands of either party and the pandemic is clearly a good example of that. Yes, that is covered and there is an obligation for both parties to determine the best way of dealing with that in both parties' interests, so it's not prescriptive, it does very clearly determine the classification of force majeure. And which circumstances would force both parties to deal with that. I mean, if it's force majeure, it's likely to be really obvious, but the pandemic being a good example of that. And actually, the alliance that was strengthened as a result of the pandemic in dealing with the situation collectively to ensure that the venue was protected, the workforce was protected, et cetera, was a great example of how these partnerships could work. And you can't always cover that in a legal document, but the essence of your concerns, yes, are addressed in there. Whether there is, there isn't, there aren't great clauses in the lease, but there are conditions in which the lease can be terminated. And predominantly if they are failing to discharge the obligations by either party, in which case either party can say, well, you're not discharging your obligations as set out in the lease. And it's fairly catastrophic to do that, obviously, but there are protection mechanisms in there to ensure that both parties are protected, and most importantly, the asset is protected. So there's a lot of detail covered in the lease, and appended to the lease is the operating agreement, the operating requirements, which set out very clearly the expectations of both parties to ensure that the venue delivers everything that's been agreed in the method statements. But I think it's important to note that there is not the ability in the lease for either party to arbitrarily terminate the lease without agreement of both parties, unless, as I say, there's a material breach in the agreement. Hopefully that answers your question. Any other questions? Just devil's advocate, in terms of the 15 years, 25 years, would the 15 years give the council more leeway? Because we don't know what's going to happen in 15 years, we don't know what the entertainment is going to look like, I mean, the venue might not be what we need then. What's the, I presume the pros and cons are that the 25 gives us guaranteed incomes, and that's the trade-off, but I just want your thoughts on that really, about the 15 years over the 25. Well, it's a very valid question. None of us are probably going to be sitting here having this conversation in 25 years' time, or 15 years' time, to determine what's the best. Again, there are mechanisms built in there to constantly evaluate what the venue does, and how it does it, and how the partnership looks. So there is a great deal of value and benefit in securing a long-term strategic partnership, and there are mechanisms built into that partnership to constantly evaluate the venue, how it's operated, how it's being invested in, what content goes in there, is it still fit for purpose. I mean, if the Council decided at some point in time in the future that it was looking at a development opportunity or asset disposal, it would have to engage with the incumbent to have that conversation, and it may well be that that would be of interest to that party at the time. But all the evidence points to, and we have the benefit of working on multiple of these similar sort of projects for local authorities and product developers across the UK, all the evidence clearly points to that the advantages of securing a long-term strategic partnership are far more valuable than a shorter-term one, as long as you've built in the mechanisms to constantly evaluate what the venue is and how it operates and what the partnership is, which this arrangement would do that. Yeah, and as you can imagine, this, if we go back a year, this was a challenging financial time for the Council, and at that point, finance did a very detailed review of the potential to sell the asset, to look at development opportunities, but when you looked at it in the round, the view from the strategic finance team was, actually, the economic benefit to the town of a G Live and Entertainment venue, and, if we can improve the financial performance of commercial return, was far more beneficial to the Council than a sell, so it was considered right at the outset, because, you know, at that period of time, we were looking at all assets, and this was almost the first, terribly the first on the list to be reviewed, and at that point, even at that time, it was still viewed by a finance team, actually, this is more value as a going concern and investment for the Council, and that was where we looked at it at that point. Sorry, I think that helps. Thank you. Jane. So, I've got just maybe a couple of comments, I think it's, G Live's spoken a lot now, you know, a lot of people I know are going there, it's, we've got people talking about Taylor Swift tributes, Pink Floyd tributes, my stepdad rang me last night, telling me all about the statute coming up, I've got, I work in a school, I had the G Live school choir event recently, so it's really, has, the story has really evolved of G Live, and you've seen over time, you know, it's just, there's so much going on, and there is a buzz around it, definitely. I guess my question is, you know, how do you define the venue, because I've just had a look, and someone's saying it's an art centre, and then other people are saying it's a live event venue, so with all these different stories going on within the building, and it's like a bit of a, it's a big building, but it is a bit of a tardis, there's so many lovely nooks and crannies, there's so much potential there, and probably a lot of people don't know about what's there either, you know, we've had the tours, and I've gone to events there, so yeah, how do you define what G Live is? With difficulty, and that has been, that is the case of any venue that is a multi-use entertainment conference venue, and G Live falls into that category, I remember distinctly having the heated debates with, internally and with council colleagues at the time, about the name, you know, G Live, you know, all the kind of debates, what does it mean, does it mean, does it know what it is, does it tell the audience what it is by calling it G Live? So it has had to work very hard to establish an identity for itself, not only in the local community, but most importantly, the kind of national touring ecology, you know, productions and artists that come there, what sort of venue is it? It's sought to some degree to the uninitiated, it predetermines its identity as not being a theatre, because it can't put on theatrical shows, you know, it has tried, it doesn't do a panto, for obvious reasons, so, you know, that, and so the type of content that goes in there means that it's an entertainment venue, really, an entertainment conference venue, but there isn't a snappy description for it. Just from the community point of view, over the years, I've gone to, they had some wellbeing festivals there in the past as well, and I think they sort of ceased, I think, before the pandemic as well, I think obviously the cost of hiring it for a community venue is quite high, and again, not everyone knowing what G Live was and translating it and getting people through the door. And the other thing I went to, there was a wonderful STEAM event a few years ago for girls, and it was put on to invite, and I think as a result, I hope my daughter's not watching this, but I think that's helped her to go into medicine, you know, having that event in the community and sort of seeing, and having inspirational speakers, women speakers in STEAM, is there scope to have those things in the future? Are people who aren't travelling theatre groups with more money perhaps going to be able to put on things like that at G Live, do you think? Yes is the answer to that, absolutely. Are you coming from an angle as, because of the commercial arrangement, will it be affordable now? Yes, it's very simple to answer, and I think the easiest way of answering that is, for it to be able to push through its glass ceiling, in all the different ways that we're looking for it to do that, and it's perfectly capable of doing that, it needs to do more for more people more often, not less. The route to a successful commercially resilient venue such as G Live is not by cutting back and doing less, it's by doing more and investing in the venue, and that is what we set out to achieve in this, is to actually create a partnership that is committed to doing more for more people more often. So I can't say with absolute confidence that there will be a show like that or an event like that on again, but the venue knows that in order to deliver its obligations and ambitions, it will have to do a lot of that stuff, and they're committed to doing it. Thank you, and hopefully just by saying that, it's also planted a seed that perhaps can go for that something we could do, if it's not actually allowed, it's something we can consider, and it's collaboration. Can I just add one small bit of that, I think you touched on it earlier Councillor, it's more than just one big auditorium as well, and it's maximising the Bellaby studio or the smaller studios upstairs, because sometimes the example you gave is a big community event, but to be a community event and have an auditorium of that size is quite extraordinary, but there's real opportunities at G Live, with its specialism of the smaller studios, but community spaces that can really, and they've done some fantastic stuff with training stand-up comedians with young people giving confidence, but they can do it in front of an audience of 80, you wouldn't fill 1700, but there is that flexibility that I thought was important to mention as well. I think one of the things that was most impressed me, since I've been a Councillor, was going to the Bugsy Malone production, which was a school holiday event they ran, was two weeks, and kids could apply to go on it with no background in anything, just an enthusiasm to have two weeks experience learning live theatre, and it was absolutely astonishing, and if we get the chance to go again this summer I'd urge you to go, because there'll be another event running, but children who were in wheelchairs were participating, and older children and younger children were working with them, everybody had a chance from the smallest six year old to the 18 year olds who were there, and it was put together from literally nothing, and two weeks later this amazing production turned up, and it was really entertaining, and I would have loved that to have been around when my kids were that age, just to be able to have a two week activity and holiday, that you could see the joy of all these kids who didn't know each other, had found a family, and it was wonderful, and so the fact that it's doing something adventurous like that, giving back into the community, getting children to come along and experience something that they probably couldn't do at school, or maybe they're not perhaps chosen to be those parts in the school performance, was wonderful, so I just really, I'm looking forward to their next summer production, and I'd urge you to go if you have the chance. Just on that, there's something about communicating that out to our communities isn't there, because I'm sure there's quite a few people that don't know about that, and the opportunities for kids in other parts of Guildford, that'd be really... Well I think they communicated to all schools, but obviously access for everybody is something that we want to encourage, as I don't know how that'll work, need to do a bit more investigation to it, but yes, I think the communication does go out to all schools, and there are ways that children who perhaps haven't got those same sort of advantages are able to be included, so I know that that is something that's very important to the management currently in place. Coming to you in a second Howard, any more committee members? I've got one more question, just on the gainshare model. That's target based, who sets the targets and is that an annual target, or is it set for say five years and looked at again, how does that work? Jafanga will be setting the targets initially and sharing it with the council to agree, and that's done every year. Does that negotiation process make us actually... Well no, the council doesn't have the rights to negotiate on Jafagas targets, but they... Or the share of the target that the council gets? Oh the share is, sorry the share is, there's an agreed mechanism that will be adopted every year to do so, it's not negotiation as in how much gainshare we get, it will be 20% of a certain amount that's agreed in terms of targets and set annually, but I think it's worth just stressing that Jafagas won't be coming to the council to get sign off on the targets, that is very much with them, but they obviously have got ambitious growth plans that will see the venue grow and grow and grow, and they want all parties to be able to benefit from that success. Just a quick one there chair, and that's not dissimilar to how the current model works, so that's on a profit share arrangement over a certain performance level, albeit that there's a subsidy, there's a 20, 80, 20% split that we monitor as a council at the moment, so we will continue with a slightly different monitoring machine. In previous meetings with this company over the year we always felt that 80/20 was too small for the council, this I presume provides a little bit more. Absolutely, the guarantee rent, so that 80/20 was split with us paying a subsidy of 275 in the latter years and 330 previously, so yet the real flip is actually we are guaranteed a return, and then we're talking about an 80/20 split on a smaller amount if that makes sense. In terms of communications, our comms team kind of sex it up a bit, and that's a real story for Guildford in terms of what we've gone through last year, it's a real achievement, so well done. Thank you. Howard? Yeah, thank you, a few questions inevitably. Yeah, congratulations to the team for such a sterling job, and thank you for Catherine for inviting other councillors to be on the working group, and it was very interesting and fascinating to be involved in it, so I appreciate that. First question is, can we please have a sign outside the venue that says what's on this evening? I walk past there all the time, and you see people going in and out in the evening and you never know what's going on tonight. Do you have to stop someone and say 'excuse me, what are you going to see?' It would be really beneficial I think for the venue. If you had a sign just saying 'tonight we've got Pink Floyd cover band' or something like that, it would be really handy. Sorry, that's a slightly trivial question. In the briefing that we had and the presentation that we had tonight, I was relieved that we didn't go down the route of going for the arena model, and I mentioned this before, because the venue itself is a contributor to the wider economy, and it's important that we have as many shows there as we possibly can to support the restaurants, the hotels, and whisper at the parking, in terms of widening the economy, improving the economy, certainly there's lots of restaurants in the vicinity there. So can you just be a little clearer about the obligation of the venue to not go for the two or three events? We had 120 or something a year on the modelling there, that it's going to be more like five or six days, evenings a week, rather than two or three, because I think it's really vital for the economy and the town centre. I can give you that insurance. We looked at the arena model to provide some comparable metrics to the benefits, of taking that route compared to the one that's currently adopted, and the one that was likely to be successful. I think it was important to do that for us to be able to transparently show the council what the options were available to them, as opposed to just focusing purely on one particular operating model, to look at the others. And doing so, we agreed that we would reduce the minimum show requirement as part of the tender process, to potentially open up to other markets, particularly in the fact that it's a very, very shallow pool of competent operators. But the outcome that's been delivered as a result of this process is a venue that will be exceptionally busy seven days a week, all day. And that is built into the service specification. There is no KPIs that say you must put on seven shows a week. It would be unworkable to do that. But the modelling that has been put in place, and the programming content strategies that have been adopted through the suite of method statements, will see the venue putting on somewhere between 290 to 350/360 shows a year. Most of those in that category will be in the May auditorium. There will be a lot of activity in the Bellaby studio, and there will be a lot of activity in some of the ancillary rooms and suites upstairs. But the operating model that Trafalgar discharge is one of being very animated and very busy all year round. And I would envisage that you will see a venue that will improve in that participation, that visibility, rather than shrink. The point I made to the Councillor earlier is that a commercially resilient successful venue has to be busy to more people more often, and doing more. And that is a very indelible characteristic of the commercial and the operator agreement that was put forward by Trafalgar. So what do we say if I'm running a restaurant in a town centre in Upper High Street, what do we say to them in terms of it will be a minimum of a certain number of shows? Is there a minimum? And secondly, do we monitor that? No, there isn't a minimum. And we can never commit to a minimum, and there's one very distinct reason for that. Operators such as Trafalgar in venues such as G Live are not in charge of the content. They don't produce the shows. They produce a small amount of shows, but they don't tour Jimmy Carr, they don't tour Biffy Cairo, they're not in charge of the content. And therefore, if shows don't tour, comedians don't tour, or certain music don't tour, or there's something that happens that is out of everybody's control, you may see a period of time where you're putting less shows on. But G Live has the ability, which is a very important part of the model, to weather that storm, those shoulder periods, because it has other capabilities, it has large conferencing, it has large hospitality. Historically, when you have seen a drought of shows, for whatever reason it may well be, and you're not in charge of those, G Live and Trafalgar have the capability of putting on their own shows, or putting on cabaret shows that fill the audience with five, six hundred people watching a show they put on themselves, or more community engagement activity, or more youth projects. So it's a very agile and fluid model, and G Live is an extremely busy venue that is unlike most theatres, and if you look at your theatre, for example, we'll be putting on large week-long shows. And so you'll put a show on and it'll sit there for five, six days, and then it'll go away for a few days and come along. G Live is putting on a different show every single day. And that's its model, and it's always been that model, it'll always continue to be that model, so if anything, as we've said, it will do more for more people more often. But could you ever turn around to anybody and say, I guarantee you that you're going to put two engine shows on this year? No. The likelihood is you will be doing that and more, but you couldn't ever guarantee it. I mean, I have no axe to grind on this, but obviously I'm thinking of the wider benefits to Guildford, but if we did slip back into a company that changed their business model and said, actually, we can survive on doing two or two and a half or three shows, something like that, on average, per week, there is a mechanism there for us to have a word and say, listen, this isn't what you signed up for, there is something in there. Yes. Absolutely. Great. Second question. Just to acknowledge I've got George on mine as well, so just let you know, George, who will be next? George has kept me waiting a few times. I'm still not clear about the profit share. Is this something that we have to do separately or something? When I used to go to Guildford Civic in the '70s, I used to pay 50 pence for a Thin Lizzy show or something. It was all small amounts of money. We're now in a situation where you pay 65, 75 pounds or something for a show, and who knows where it's going to end up? It's going to be an extremely profitable venue, and in five years' time we think, oh, good lord, we've really missed out on this, we could have had something. Is there something that we can see in terms of a rough order of magnitude of what we could expect from the venue if it runs in the manner that we hope and expect it to, in terms of income for the company? Yes. The modeling that they've done for 25 years predicts if those assumptions are achieved, predicts what the gain share will be for the council. That's built into the model. It's not guaranteed because, of course, it could do more, it could do less. But the council has got a guaranteed rent, which is an important component part, and that was the priority out of it. And on top of that guaranteed rent, it has got the ability to be able to share in anything over and above targets that are set on an annual basis. So if the venue, in collaboration with all stakeholders, including the council, over-exceeds on its annual performance, then you as a local authority will benefit and gain from that in increased revenue contribution. So there's a very distinctive mechanism that's built in to do that, and there is a prediction that has been built into the 25-year model based on their targets. If they over-exceed, you'll benefit from it. If they don't achieve it, you won't get as much. I think where you're coming from is that in 10 years' time, if it is absolutely going gangbusters and actually we could have got half a million quid a year rent, is there a mechanism in there? Well, if it's going gangbusters to that degree, you'll be getting substantial contributions in terms of additional gain share over and above the rent. It's built on performance, not on a kind of flat level. We wouldn't go into the exempt, but that sort of business projection is what's based in the exempt annex. It gives an idea of the profit share that would be expected if they achieve their expected outcome over the next 25 years. Can I have one last? It's a quick one, very quick one. So the venue's been open about 12 years or something, 12, 13 years now, and we're signing a contract for another 25, so does that effectively take us to the end of the life of the venue, or is it longer than that? Because Guildford Civic was there for like 40 years or something, this is going to be fairly close, isn't it? It's impossible to determine, but you predict a venue of this style, and G-LIVE was built to a very high standard. It's worth noting it's built to a very high standard, so all the components in there are high quality and therefore its longevity. If it's continued to be maintained under the current regime, it could have many, many, many years ahead of it. Typically you would work on 50 years life cycle for a venue such as this, and structure and so forth is kind of built into it. So I think 50 years, if you've got 13 now and another 25, you've still got some headroom after that. Nope. Thank you. George, online. Thank you. So first of all, just as a comment, I just want to echo that I think the team have done a fantastic job with this one. I think the jump in the financials is really welcome, and I'm really pleased to see that, and of course it's worth bearing in mind that we still have the Yvon Arno in particular as a venue very much aimed at the more community and amateur-led productions as well, as opposed to the purely commercial venue which diesel life has become. So yeah, I think it's to the credit of Guildford's hand that we have not one venue, but two venues and probably a third if you count the electric theatre catering to different sections of the market, which is very welcome. The question I had for the officers is a note in the report that I'll see that it mentions, and as I heard from the presentation, that sustainability was one of the key considerations of the new contract, and the report mentions, the cover report mentions that energy efficiency and carbon reduction are embedded targets within the new arrangement. I just wonder if the officers could go into a bit more detail about what exactly the targets are around sustainability, and what we're sort of expecting to see over a 25-year period of this contract in terms of sustainability, in terms of operation, energy efficiency, carbon emissions, all the rest of it, please. Thank you for the question. Trafalgar are committed to align their sustainability ambitions to the councils at zero, so that's built into their commitment and therefore will be an obligation by the council for them to do it. They have set themselves already as an organisation very robust corporate social responsibility and sustainability ambitions, reduction in carbon use through substantial investment in technology in the venue to reduce energy consumption quite substantially, which is a big part of it. So, same for water, same for wastage, substantial targets for reduction of waste, reduction of landfill. They also have strategic alliances dealing with recycling and waste, dealing with food waste, coffee compounds, etc. and traffic management staff, transport, etc. So they have committed to a plan and they provided that in terms of their submission, so that would be available to have a look. But as an organisation themselves, they are like many other organisations in our sector, they are committing to be able to make some fairly profound changes in the operating model to deliver the aligned aspirations with the council. Well, taking on board that comment, what we could probably do is look to bring some examples into the report or append it to the report going to executive What was quite impressive about Trafalgar is the realism and the targets they have set themselves in carbon neutrality and energy reduction were quite impressive actually. And plastic free, the way they were approaching it was extremely logical and made a lot of sense. So what I can do, Councillor Potter, is perhaps bring that in as an appendix to the report when we take it through to executive. That would be helpful. Thank you. Thank you. Any more, George? I can't see. Oh, no, I just said thank you. Yeah, that's great. Thank you very much. Thanks, George. Any more members? You're teasing me, George. I know, I lied. I'm terribly sorry. Just one quick follow up. You mentioned in fact they've agreed to align their carbon reduction target to match the council's. So is that aligning with the 2030 target for the council's own operations or 2050 for the borough as a whole? Yeah, it's to the 2030 commitment. Brilliant. Thank you. Thanks, George. Jane? I just wanted to say that as a venue, and I'm having my event there, it's really wonderful to be able to say that we've got parking outside the back. It's really accessible. There's bike racks. There's a bus stop outside. I get the bus usually and put it outside, park it outside, and the train station. And we did have someone coming along who needed that access. What I just wanted to ask a couple of things was, because I do have an electric bike and I do like to store it safely, whether they would consider as well a safe storage for things like an electric bike. I know I can often wheel it in, but there is space inside for maybe a bike area as well, just to encourage more people to travel there in a sustainable way. And also, I have to say this because I'm part of the project, could you consider Swift boxes on the building as part of that strategy? Thanks for the Guildford Swift project. I think the answer is I'll definitely bring that up with the operator and make that case. As you move forward, your comment around electric bikes shouldn't be sort of misquoted because they're expensive things now. So there is something that we would need to look at that, but I can definitely discuss that with the operator. Any more, any more? Julia. Thank you. It's been really interesting to listen to the presentation. And to that and to colleagues' comments and questions about this. And I just want to add my thanks to Kelvin and to the team for their work throughout this process. And also to Councillor Houston and to Julian at Blue Horizons. Also thank you to the G Live working group and the councillors who gave their time to be part of this process. It's really important. We've heard G Live is a fantastic, successful and popular venue in Guildford and attracts visitors from a wide area. And I think the creative learning and education function is really important to the community. And it's good news that this is not just going to be retained but strengthened. I think it's important that the contract is transferring the risk away from the council to the operator. And I think also that for taxpayers, for the residents of our borough, it's really important, it's good news that they will no longer be subsidising the venue. But in fact that the council will be receiving an income and with a profit share over and above that as well. And I think it's really important to acknowledge that despite all the perhaps speculation a few months ago with the financial situation that we found ourselves in, that this demonstrates the council's absolute commitment to G Live and to the community for the long term. So this is really, really good news for Guildford and I'm very excited about it and looking forward to the next 25 years of G Live. So thank you. Thank you Julia. So moving on to recommendations on page 8. Do you agree that we approve the appointment of FALGA Entertainment Group as the operator of G Live for a 25 year contract? That's for the Executive Chair, that's just for information. Oh sorry, we pass that to the Executive. Just a general comment perhaps on what you've heard. So the recommendation to the Executive is that the Executive approves the appointment of FALGA Entertainment Group as the operator of G Live for a 25 year contract and gives delegated authority to the strategic director of finance in consultation with the portfolio for commercial services to agree and enter into the agreed contract. I'd also like to add a prefix that the committee has scrutinised this and is happy with the tendering process and that a thorough and fair process was conducted. Just also to thank everyone for the hard work in this. It's been a good evening and a lot of work has gone into this. So thank you Julian, Kelvin and Catherine. Thank you. And thank you to any team members that we don't see tonight that helped us as well. Yeah, thank Gavin. Yeah, big thank you to everyone. Can I think with that, Andy, can you turn off the webcast please? I'll call the meeting to a close.