A joint meeting of the Environment and Sustainable Communities Overview and Scrutiny Committee and the Economy and Enterprise Overview and Scrutiny Committee was scheduled to discuss the progress and challenges of the Leisure Transformation Programme. The meeting's agenda included an update on the programme's delivery, key challenges encountered, and performance outcomes.

Leisure Transformation Programme

The meeting was scheduled to receive an update on the Leisure Transformation Programme, which was originally launched in January 2020 with the aim of modernising leisure facilities across County Durham. The programme's scope has evolved due to financial pressures and operational challenges.

Completed Projects:

• Abbey Leisure Centre: Refurbishment including a new Move Hub, fitness facilities, play area, and café.
• Peterlee Leisure Centre: Refurbishment including new fitness facilities, play area, tenpin bowling, and café, along with significant pool plant system replacements.
• Louisa Centre: Refurbishment including new fitness facilities, Move Hub, play area, café, Clip & Climb, and Tag Active.
• Spennymoor Leisure Centre: Refurbishment including a new centralised reception, co-location of the library, swimming pool improvements with new water play features, a play area, café, and gym refurbishment.
• Teesdale Leisure Centre: Refurbishment including a refreshed play area, new fitness facilities, Move Hub, new pool changing facilities, and general site improvements.

Ongoing Projects:

• Bishop Auckland Leisure Centre: A new build project to replace the existing facility, incorporating a leisure centre and library hub. This £28.9 million project is scheduled for phased completion in 2027 and has received £2.75 million in funding from Sport England.

Projects with Reduced Scope or Paused:

• Chester-Le-Street and Seaham Leisure Centres: The original plans for new builds or extensive refurbishments have been scaled back. A budget of £2 million has been ringfenced for asset preservation and essential maintenance to keep these centres operational.
• Riverside: A proposed sporting hub with an allocated budget of £2.34 million has been paused due to challenges in reaching consensus following community consultation and financial constraints. Discussions are ongoing regarding future options for the site.

Decommissioned Projects:

• Seaham / Chester-Le-Street: New build and extensive refurbishment plans were withdrawn due to reduced affordability, with a strategy of condition preservation approved.
• Shildon, Meadowfield, and Freemans Quay: No formal transformation plans were developed for these sites, and their initial estimated investment allocations were absorbed into the overall programme.

Key Challenges: The report highlighted several challenges encountered during the programme:

• Building Condition and Backlog Maintenance: Unforeseen issues due to the age and condition of facilities led to additional costs and delays. An estimated £10-£15 million liability for building condition and compliance factors remains.
• Programme Financial Challenges: High and volatile inflation, increased interest rates, and cost-of-living pressures have significantly impacted construction costs and the affordability of borrowing. Concerns were also raised regarding the council's VAT partial exemption position between March 2021 and March 2023, which could have led to a substantial VAT repayment.
• Contractor Liquidation: The liquidation of the main contractor appointed for several refurbishment projects and the Bishop Auckland new build caused delays and additional costs.
• Business Planning: Achieving projected levels of market penetration and repeat usage for new products has been challenging, with some products, such as bowling at Peterlee and Tag Active at the Louisa Centre, performing below forecast. Catering provision has also faced financial pressures.

Wider Transformation Work: Beyond facility investment, the council has consolidated leisure operations under a single management model, ending secondary contracts and introducing streamlined pricing and membership systems. Digital enhancements, including a new CRM, website, and mobile app, have been implemented to improve customer experience and engagement.

Performance Outcomes: The programme has reportedly led to significant increases in Thrive Active memberships, income levels, and participation in new activities such as Move Hubs and family-focused facilities. Visitor numbers are forecast to surpass pre-pandemic levels. However, the transformation has also introduced additional cost pressures, with some sites experiencing overspends due to cost and income pressures not aligning with initial projections. The external catering offer operates at a net cost, and underperformance in certain products has contributed to financial strain.

The meeting was invited to comment on the information presented in the report.