Decision

Purpose of
Report
 
The report recommended extending Plymouth
Active Leisure's (PAL) existing contract beyond its current end
date of March 2032 and providing further financial investment to
support its ambitious new strategic plan, which envisions a
£160 million investment in sport and physical activity across
Plymouth over the medium term, generating greater social value,
improved health outcomes, and new income streams for Plymouth City
Council.
 
Decision
 
Cabinet:

Approved a cashflow loan of up to
£975,000 to Plymouth Active Leisure (PAL).
Approved the reprofiling of two
existing loans to PAL to increase the repayment term by three
years, including a utility costs loan of £565,983 and a
start-up loan of £365,000, totalling £930,983 plus
accrued interest.
Approved an extension of 10 years to
the existing contract with PAL to conclude in March 2042, including
the provision of a break clause in 2035/36.
Agreed to support feasibility
studies and the submission of capital funding business cases
through the Council's capital governance process for enhancements
to facilities.
Noted the following contract
amendments: (a) the drafting of new Key Performance Indicators as
set out in Appendix B; and (b) a requirement for an annual
performance update to the Housing Scrutiny Panel.
Noted the positive impact of the
Agency Model, as approved by Cabinet on 10 March 2025, and the
generation of VAT savings, which have been included in the PAL
financial model.

 
Reasons for
Decision
 

1.   
The support from PCC is to cover the working capital deficit built
up across the current contract period to date, which was largely a
result of start- up costs and the impact of COVID: restoring
working capital balances will provide PAL with a sustainable
platform to grow and thrive
 

2.   
Extending the contract will enable PAL to repay outstanding loan
debts over a longer period, provide operational stability, and
allow PAL to continue to align its services with PCC’s wider
corporate priorities and those priorities of the City
 

3.   
Extending the contract provides operational stability, whilst a
break clause, provides a mechanism for managing the financial risk
for the authority.
 

4.   
Noting the feedback from the Scrutiny Committee held on 10 December
2025 to enhance the oversight and risk management of the contract
and to ensure robust monitoring of KPIs, financial and contract
performance
 
Alternative Options
Considered and Rejected
 

1.   
Cease the Service (reject)- Leisure provision is discretionary, but
the service delivered by PAL is vital for sustaining physical
activity, generating significant social and economic value, and
supporting Council objectives. Ending the service would risk
reduced participation and jeopardize long-term Sport England
funding, making this option untenable.

2.   
Establish a Fully Independent Trust (reject)- Creating an
independent charitable trust was explored for tax benefits, but
HMRC VAT changes and post-COVID financial instability have made the
model unviable. Transferring operations would replicate existing
challenges, reduce Council control, increase risk, and incur high
set-up costs, so the option has been rejected.
 

3.   
Bring the Service Fully In-House –(reject)Returning the
service to full Council control would incur substantial additional
costs, including NNDR liabilities and enhanced staff terms and
pension obligations. This option is not likely to be viable and has
been rejected.
 

4.   
Outsource the Contract (reject)- Engaging a national leisure
management company could provide economies of scale, but it would
not resolve existing debt, risks misalignment with Plymouth’s
priorities, and leaves PCC with legacy asset issues. With high
procurement costs, lengthy timelines, and uncertain revenue
benefits, outsourcing is not recommended now, though it may be
reconsidered at a future break point