Latest Sector Landscape Reports

Published on: May 9th 2022
Last updated on August 16th 2022

We frequently consult, and survey, our members to understand key challenges and pressures they face collectively as a sector. This information is then made available to members, and communicated to partner organisations, councils and governments. These are called our Landscape Reports.

On this page you will find:

Landscape Reports August 2022 for England, Scotland and Wales.

Landscape Report: Spotlight on Culture Published June 2022 for England and Wales & Scotland

Landscape Reports May 2022 for England, Scotland and Wales

Public Leisure and Culture in Crisis – England Landscape Report August 2022

Public leisure and culture are in crisis. The sectors are in the throes of recovery from the Covid-19 pandemic, and are now facing unprecedented increases in operating costs and soaring utilities bills, paired with stagnated return rates and reduced levels of income. 

With inflation not expected to reduce to normal levels until 2024-25, the risks of public leisure and culture services ceasing to exist or being forced to increase prices are very real. This would have a significant impact on communities, disproportionately impacting lower income households and those living in poverty, with reductions to services having already started.

The Government must act now to ensure the sustainability and viability of public leisure and culture sector by:

  • Providing emergency funding for operators in crisis;
  • Funding local authorities to enable them to support leisure and culture services.

Local authorities must recognise the impact of losing these vital services and work in partnership with operators to maximise flexibility within contracts to support in these extraordinary circumstances. 

The impact of no support for public leisure and culture

If there is no support, particularly into autumn with the anticipated rise in the energy price cap, it is inevitable that public leisure and culture services will be significantly cut or, as is increasingly more likely, that facilities will be closed, either temporarily as a mitigation measure or permanently. 

Any reduction in services will result in an increase in social isolation, reduced opportunities to be physically and mentally active, thus increasing health inequalities. Key services and opportunities at risk include:

  • Access to swimming, which offers opportunities for gentle exercise, family time, competitive swimming and the development of an important life skill. 
    • Children’s Learn to Swim programmes and statutory school swimming programmes. This would increase the risk that over a million children could leave primary school in the next five years unable to swim the minimum standards required under the national curriculum in England.
  • Access to libraries
    • Although libraries are a statutory service, additional programmes such as adult education, rhyme time for children or adult reading groups may cease. 
    • Library branches may be closed or opening hours reduced,  further increasing inequalities and access to safe, warm community spaces, and internet access.
  • Dedicated health and wellbeing programmes including prehabilitation, rehabilitation and preventative services such as cancer rehabilitation, falls prevention, weight and ill health management, exercise referral schemes and social prescribing.
  • Programmes enabling unpaid carers to access classes, benefitting their wellbeing.
  • Holiday clubs and activities for children and young adults, including holiday hunger programmes to support children living in poverty
  • Activities and clubs for people with disabilities and children with additional learning needs including self-help groups and dementia support groups.
  • Access to regular exercise and lifestyle routines. 
    • Public leisure and culture facilities offer a base for community clubs, groups, national governing bodies, and elite athletes i.e. local sports clubs, youth clubs, drama clubs, reading groups, dance centres.
  • Physical activity, performing arts and library development programmes working with wider voluntary and community sector organisations to support social interaction and encourage a sense of belonging.
  • Cultural events to engage specific groups within the community
  • Volunteering opportunities, helping people into education and employment, and supporting their wellbeing.

The risk of closing a leisure or culture facility

Once a facility is mothballed, there is no guarantee that it will reopen. In addition to the community impact, this would significantly impact the local economy. Leisure and culture trusts are important local employers, and significant employers of 18-30 year olds. Any closure of a facility would impact on the workforce, with difficult decisions necessary without any furlough support for employers. 

Moreover, as we saw during the Covid-19 pandemic, there are health and safety as well as technical considerations when facilities are closed that will delay a reopening, particularly for older buildings or where equipment is older. 

Mitigations to date

Operators have already maximised all possible measures to manage the increased costs, focusing on maximising energy efficiency, and reducing costs. These include: 

Price increases (examples from operators, in addition to price increases in line with inflation)

  • Additional £1 for adults and £0.60 for children for casual swimming. 
  • £1 surcharge for juniors and £4 for adults on every casual swim. Introduced as a temporary measure. This is on top of a general, permanent 6% price increase.
  • £1 surcharge for adults and £0.85 for children have been introduced on casual swimming.
  • Charging schools to use pool space, which was previously offered free of charge.

Reducing energy consumption

  • Energy audits to identify plant and equipment that are still drawing resources overnight.
  • Building Management System installation to control pool and ambient air temperatures.
  • Swimming pools: reductions in temperatures of up to 2 degrees; using pool covers, reducing backwashes, reducing pool depth, and overnight pool shut down trials.
  • Reducing the usage of air conditioning units and increasing temperatures in gyms, studios and office spaces.
  • Installing LED lighting and automatic switches to ensure areas are only lit when in use.
  • Fitting time-switches to equipment to switch off in non-operational hours.
  • Redistributing refrigerated goods storage to one main “bulk” refrigerated store to allow localised fridge and freezer shut down.
  • Shutting down all electrical equipment when not in use for long periods or out of hours including office equipment and vending machines (containing non-perishable goods).
  • Charging equipment during non-peak hours of the UK’s electricity distribution network.

Installing and repairing equipment 

  • Inspecting and repairing lagging insulation to pipework and plant equipment.
  • Fitting Thermostatic Valves (TV’s) to all radiators.
  • Installing Variable Speed Drives to all large consumption load motors.
  • Installing ground source heat pumps and solar panels.
  • Replacing inefficient boilers.
  • Installing more efficient showers (less water/ energy needed).
  • Draft proofing windows at old buildings.

Further economic context

The cost-of-living and energy crises come at a time where public leisure and culture have not yet fully recovered from the Covid-19 pandemic. At present, customer numbers, and therefore income, remain reduced having stagnated since October 2021 – with most in the sector reporting a return of 80% of pre covid levels. 

The situation is likely to get worse as summer is traditionally a quiet period for the leisure sector, coupled with the reality of people having less disposable income and ability to afford public leisure or culture services. Families and individuals will be forced to review their outgoings with the risk of leisure and culture activities becoming a ‘luxury’.

Data from the Community Leisure UK membership shows that energy costs could be as high as a 600% increase when compared to 2019, without the safety net of pre-Covid reserve levels to support in the short to medium term.

Case study from an operator in the North East and Yorkshire Region

“We are now being quoted 592% increase for gas, it was 481% a couple of weeks ago and Electricity has moved from 238% to 292%, this means based on current costs for our 3 sites of £106K annually for Gas & Electric, it’s now coming out at £529K an increase of £423K- we are seeking urgent discussions with our partners as this level of cost will bankrupt us.”

Public Leisure in Scotland: Landscape Report – August 2022

Summary:

  • Public leisure and culture charities are facing significant financial pressures, threatening the delivering and sustainability of services.
  • Local Authorities are seeking ways to manage their own financial pressures. This forces trusts to be more reliant on income from trading.
  • Leisure and culture charities have to consider changes in operations, including reviewing opening hours and increasing activity costs.
  • They have already made investments in energy efficient systems where they can. However, they are unable to further invest in decarbonisation and refurbishment. 
  • The local government landscape is changing, which poses a threat if the long-term focus is on cost management rather than the delivery of public services.

Acute financial pressure and risks to delivery

Public leisure and culture are in crisis. The sectors are in the throes of recovery from the impact of the Covid-19 pandemic, and are now facing unprecedented increases in operating costs and soaring utilities bills, paired with stagnated return rates and reduced levels of income.

With inflation not expected to reduce to normal levels until 2024-2025, the risks of public leisure and culture services ceasing to exist or being forced to increase prices are very real. The immediate impact of the position includes the potential to lose:: 

  • Access to swimming, which offers opportunities for gentle exercise, family time, competitive swimming and the development of an important life skill.
  • Access to libraries
    • Although libraries are a statutory service, additional programmes such as adult education, bookbug sessions for children or adult reading groups may cease. 
    • Library branches may be closed or opening hours reduced,  further increasing inequalities and access to safe, warm community spaces, and internet access.
  • Dedicated health and wellbeing programmes including prehabilitation, rehabilitation and preventative services such as pulmonary rehabilitation, cancer rehabilitation, falls prevention, weight and ill health management and physical activity referral schemes.
  • Carers programmes to enable unpaid carers to access classes
  • Holiday clubs and activities for children and young adults, including holiday hunger programmes to support children living in poverty
  • Physical activity, performing arts and library development programmes working with wider voluntary and community sector organisations to support social interaction and encourage a sense of belonging.
  • Cultural events to engage specific groups within the community
  • Activities and clubs for people with disabilities additional learning needs including self-help groups and dementia support groups.
  • Access to regular exercise and lifestyle routines.
  • Volunteering opportunities, helping people into education and employment, and supporting their wellbeing.

Decreasing management fees from local authorities

Prior to the pandemic, the landscape for public leisure was challenging with reducing management fees from local authorities, combined with increasing demands and expectations for services. This has been further exacerbated by the pandemic, with a return to decreasing management fees from local authorities for 2022/23, with some indicating the intention to move to zero management fee within the next 5 years. 

The risk of moving to an approach of no investment into leisure and culture from local authorities is that services will be forced to operate commercially in order to remain viable, which may involve increasing membership and access charges, reducing concessionary and free access and stopping the delivery of non profitable activities. 

Unprecedented rises in operating costs

Leisure and culture charities are facing an unprecedented increase in their expenditure which is putting an unsustainable pressure on their operations. Specifically, there are a range of cost increases that are coming together to create an unsustainable pressure: 

  • Energy costs
  • Pool chemicals low in supply and increased cost
  • Water charges increase
  • National Living Wage increase
  • National Insurance increase
  • Building supplies cost increase
  • Price increase to raw materials including paper, cleaning products

Operators have already maximised all possible measures to  manage the increased costs, focusing on maximising energy efficiency, and reducing costs. These include:

  • Price increases
  • Changes to opening hours
  • Reduce energy consumption
  • Install and repair equipment

Future-looking

If there is no support, particularly into autumn with the projected price increases for energy, it is inevitable that public leisure and culture services will be significantly cut or, as is increasingly more likely, that facilities will be closed.

While public leisure and culture are not statutory services, they are essential for the health and wellbeing of Scotland, and for the local economic development of places. So while budgets will continue to be under pressure, it is paramount that leisure and culture continue to be included in councils’ investment plans for their localities, and that councils are adequately resourced to do so. 

The leisure and culture sectors are unable to overcome these numerous challenges in isolation, but form a key part of the wider system in Scotland, both locally and nationally. Cross-policy working and integration across health, education and transport is essential to enable a joined up approach to find solutions to the current challenges.

ENDS

Public Leisure in Wales at Risk – Landscape Report August 2022

Public leisure is still feeling the impact of the Covid-19 pandemic. While all facilities and services have reopened, months of closure have led to changes in lifestyles and habits, and the public has not returned to using leisure facilities to be physically active to the same level as pre-Covid.

In addition, the cost-of-living crisis is putting unprecedented pressure on businesses and the public. This has led to a crisis point in public leisure where operators are reporting unsustainable increases in costs, paired with stagnated return rates and reduced levels of income.

The public leisure sector is requesting an urgent response from Welsh Government with:

  1. Direct financial support for the energy crisis for local authorities and their partners. 
  2. Encouragement to local government to fulfil their responsibilities under the Well-being of Future Generations Act by investing in public leisure and culture as essential services.
  3. Long-term revenue funding to local authorities to enable them to invest in public leisure and culture, delivering preventative health interventions in partnership with public health.

With the energy and cost of living crises continuing to worsen and inflation not expected to reduce to normal levels until 2024-2025, we outline the risks to public leisure.

What are leisure trusts?

Leisure facilities in Wales act as central hubs for community activity. This includes a wide range of sessions and opportunities for the full demographic within villages, towns, and cities across Wales.

Half of all public leisure in Wales is managed by leisure trusts. These are charitable, non-profit distributing organisations that operate on small margins. Any profit that is generated is reinvested into providing accessible services for local communities.

These organisations do not have shareholders and are not private businesses. They are governed by Trustees from the local community, are transparent and share a fundamental belief in working with others for the benefit of all. Charitable trusts manage public leisure in partnership with Councils. 

What would be the risk of not supporting public leisure?

If public leisure is unable to remain viable, not only do we risk losing charitable organisations that are rooted in their communities, but it will have a significantly adverse impact on population health and wellbeing, increasing social isolation and worsening health inequalities through the loss of:

  • Access to swimming, which is a life skill. 
    • Local pools offer Learn to Swim programmes and run primary school swimming programmes for children across the country with a KPI that all children can swim 25m by the end of key stage 2 (primary education for pupils aged 7 to 11). 
    • There is an average of 575 children on learn to swim programmes per public leisure facility with a pool.
  • Access to regular exercise and lifestyle routines. There are an estimated 625 regular users per facility.
    • In addition, public leisure facilities are also the home of many community clubs, groups, national governing bodies, and elite athletes. This includes local swimming or football clubs, youth clubs, dance centres, dementia support groups, and self-help groups for disabled children and their immediate families.
  • Sports development programmes working with wider voluntary and community sector organisations to bring sport and physical activity to the local area.
  • Holiday clubs and activities for children and young adults.
  • Activities and clubs for people with disabilities and children with additional learning needs.
  • Free-swimming initiatives Lower Super Output Areas (LSOA). The free-swimming initiative, funded by Welsh Government through Sport Wales, is delivered for under 16’s and over 60s, within targeted areas of deprivation.
  • Concession schemes to reduce cost as a barrier to be physically active.
  • Delivery partner for the National Exercise Referral Scheme.
  • Dedicated health and wellbeing programmes.
    • These include prehabilitation, rehabilitation and preventatives services such as pulmonary rehabilitation, falls prevention, weight and ill health management, and social prescribing.

Economic context

The cost-of-living crisis comes at a time where public leisure has not yet fully recovered from the Covid-19 pandemic.

At present, customer numbers, and therefore income for public leisure, remain reduced having stagnated since October 2021 – with most in the sector reporting a return of 80% of pre covid levels. This means that at present there are already fewer people being physically active in leisure centres than there were prior to the Covid-19 pandemic. 

The situation is likely to get worse as summer is traditionally a quiet period for the sector and the reality of people having less disposable income and ability to afford public leisure services. While the Welsh Government fuel support scheme will aid people, this is not enough to put the spend back into leisure. Families and individuals will continue to feel pressure to review their outgoings and it is often leisure activities that are cut as a ‘luxury’.

Public leisure services are impacted by the cost-of-living crisis. Data from the Community Leisure UK membership shows that for operators in Wales, energy costs could be as high as a 200% increase when compared to 2019. 

Councils are also facing financial pressures with rising energy costs and are unable to support their charitable trust partners with the scale of the increase. Where they do support, or where the Local Authority manages the services themselves, costs are currently mitigated through a larger corporate budget covering all Council-run services, but with the caveat of inevitable service reduction in the next financial year as budgets reduce.

Most leisure trusts are in an energy basket through their Local Authority partner, accessing more favourable rates, but many face contract renewals after the summer. 

Some leisure trusts have been given a three-fold projected price increase for when contracts are renewed, which they are unable to afford. In other cases, Councils may pay for some of the utility bills of their trust partner as per contract arrangements, but to compensate for the unprecedented increase, they have reduced their management fees, paid to the leisure trust partners. This impacts the finance for public leisure programming, reducing the funding available to continue to deliver wider wellbeing services.

What has been lost already?

Mitigations have already been put in place to manage the increased costs, focusing on maximising energy efficiency, and reducing costs. However, there are no further areas to look at for cost reduction. Current mitigations include: 

  • Activity price increases in line with inflation
  • One operator increased prices by 4% in January 2022 and a further 6% from 1 July, in agreement with the Local Authority.
  • Closing facilities when there are no activity bookings.
  • Later opening of facilities during weekends, reducing general access.
  • Reducing social activities/programming such as access to skate parks.
  • Reductions in pool temperatures.

What are the implications of mothballing a leisure facility?

Once a facility is mothballed, there is no guarantee that it will reopen. In addition to the community impact, it will also significantly impact on the local economy. Leisure trusts in Wales are important local employers, collectively employing over 3000 staff. Individual sites require up to 200 staff members, dependent on size and facilities, and these individuals’ livelihoods would be at risk in the event of mothballing, as there is no longer any furlough support.

Two thirds of the public leisure building stock is past its replacement date. In many cases, relying on older equipment which is at risk of breaking when shut off for prolonged periods of time. 

Moreover, as we saw during the Covid-19 pandemic, there are health and safety as well as technical considerations when facilities are closed, that will delay a reopening. This includes redoing risk assessments, staff training, reinstating water and air circulation, testing systems, readjusting pool chemicals, and testing for legionella infections.

Public leisure’s ambition to move to green energy

The public leisure sector has already made investments to reduce its energy usage and decarbonise its facilities. This includes switching to LED lighting, switching off equipment when not in use, improving insulation, using pool covers, and investing in solar panels and other decarbonisation projects through the Welsh Government Energy Service and Salix Finance.

However, delivery of these projects is a medium to long term ambition.

While leisure facilities are consistently in the top 5 most carbon intensive buildings in a local authority area, leisure trusts are unable to make further investments without sustainable financial support into their services.  There is currently no possibility of investing significant amounts into retrofitting or upgrading facilities due to the fragile financial landscape. The supply chain and labour shortages are also pushing prices up rapidly for these projects, and there have been significant delays and cost increases, with some projects reporting a 100% increase in cost compared to original estimates.

Further background information

Direct support for public leisure was withdrawn at the end of March 2022 – the Local Government Hardship Fund had specifically supported public leisure provision during the Covid-19 pandemic. This support is now wrapped into the revenue support grant received by Local Authorities, however, we are hearing reports that this is not reaching leisure services. Specifically, the feedback is that Councils do not recognise having received any uplift in revenue funding to support leisure trusts with ongoing Covid related pressures.

Energy forecasts amongst our membership suggest a further rise in 2023. It paints a bleak picture for the sector; especially for operators of large facilities, including swimming pools, theatres, events spaces and heritage buildings. This is despite various energy saving mitigations already put in place.

Spotlight on Culture June 2022 (England and Wales)

Community Leisure UK published comprehensive landscape reports in May 2022 outlining the current challenges faced by leisure and culture trusts. This is a complementary spotlight briefing focusing on the impact for culture trusts, and what this means for public arts and culture programming.

Change in audience habits and cultural offers

The Covid-19 pandemic has had a profound impact on the willingness of audiences to attend arts and culture events. According to a recent study by the Centre for Cultural Value, more than a third of pre-Covid audiences were still not comfortable attending arts and culture events in November 2021, despite the wide availability of vaccines and cultural venues having tried and tested risk assessments in place.

Visit Britain’s Covid 19 Consumer Tracker results highlighted several concerns and challenges for the cultural tourism sector. In order of risk, the barriers are viewed as: the current state of the economy; the cost of travel for tourism (fuel); industry inflation to recover Covid costs; and Covid.

Although audiences may be interested in the shift to a digital offering, especially younger audiences interested in participatory content, this is not suited to all forms of arts and culture and cannot replace a physical offering. Digital access has helped people in remote or rural communities to access the arts, as well as those who are isolated or face psychological or physical barriers to engaging in-person. Digital platforms are also providing workers new creative opportunities. 

However, there are major barriers that need to be addressed, including: ensuring all audiences have access (especially those living in digital poverty), determining whether online engagement has the same benefits as in-person engagement, and employing it appropriately to support health and wellbeing.

While libraries’ digital offerings significantly increased in popularity at the start of the pandemic, other cultural forms, notably arts, drama and museums, were not as easy to ‘pivot’ towards digital. Undoubtedly, digital platforms are offering the arts sector opportunities that should be explored further but this requires investment in research and development, and upskilling of staff.

Our members have reported the following challenges with providing a digital offering:

  • Copyright of recorded performances and music hindering the ability to make them available online;
  • Expense of the technology to provide a quality digital experience, with platforms such as Zoom not always adequate to meet the technical and artistic needs;
  • Lack of staff capacity with reduced workforces;
  • Digital offerings expected to be free of charge and therefore not a viable long-term activity;
  • Not all audiences have access (particularly  those living in digital poverty).

The arts and culture sector could benefit from infrastructure investment to support digital delivery. Business models also need to adequately remunerate creative workers, not duplicate or detract from in-person offerings, and not adversely affect the funding of in-person arts activities. It is therefore important to consider a hybrid approach for the arts and culture sector, but with consideration of which activities most benefit from being digitised.  

Culture trusts are acutely aware that there is a fine balance to be struck to remain accessible and inclusive as a public arts and culture offering. People living in digital poverty, both those without internet access and the skills to get online, were at risk of being left behind during the pandemic, widening the inequality gap. Our members actively engaged with their communities in different ways throughout the pandemic, such as check-in calls, and many kept Covid-19 measures in place after reopening for longer to provide reassurance for customers. 

The pandemic has increased public support for arts and culture, where over half of audiences “agreed” that “the pandemic has made me feel that arts and cultural organisations are more worthy of support than I did before”. However, the cost of living crisis poses a new risk as, with inflation at a 40-year high, the public’s spending power has decreased significantly. Any gains made with an uplift in pre-booking and online donations may be lost if they are not able to secure a percentage of the public’s dwindling disposable spending. With attendance at arts and cultural events having stagnated, there is significant concern for the viability of public culture services.  

Impact of the energy crisis

Our previous reports highlighted the unprecedented increases in our members’ utility bills with the most recent data from England showing an average increase of 89% as compared to 2019, with increases as high as 180%. For our members with culture, there are many energy hungry venues, including libraries, theatres and heritage venues.

The recent ESOS audit included 2018/19 consumption data, being the last full year of use across our sites, Grimsby Auditorium (theatre capacity of 1300 seated/2000 standing) had a total electricity and gas consumption of 1,057,309 kwh, compared to […] our smallest leisure centre (25 m x 5 lane pool, gym, studio) that generated 1,083,326 kwh, almost the same as the Auditorium.

There is a lot of lighting in theatres, plus large cavernous areas to heat, as well as bars and catering areas that run fridges 24 hrs, so it is not surprising that utilities costs are high and will impact on the running of venues

Local Authorities are also facing financial pressures with rising energy costs, and unable to support their trust partners with the scale of the energy increase. Where they do support, or where the Local Authority manages the services themselves, for the current financial year costs may be covered through a larger budget, but with the caveat of inevitable service reduction in the next financial year as budgets reduce. 

The majority of our members pay utility bills themselves, whether that is fuel for mobile library services, the heating and cooling of libraries, museums and archives or lighting in theatres, and will struggle to cover those costs in the future without additional support. 

Culture trusts have already implemented energy saving mechanisms, including more energy efficient lighting and air handling units, and improving insulation but are unable to make further investments without sustainable financial support into their services. Due to the vast and often technical spaces that they manage, being located in a heritage and/or ageing building, incorporating energy saving measurements are costly and cannot always be covered through grant funding:

Consumption areas noted where improvements can be made include changing tungsten halogen stage lighting for LED, this would be expensive (at least £100k) and not eligible for energy grant funds as stage lighting is not classed as fixed lighting.

The Climate Emergency and the drive to net zero is a key priority for public culture venues, with an opportunity to further explore what this means in relation to the development and delivery of cultural activity. However, without further investment, they are limited in their ability to reduce their carbon footprint, Most national funding is also only available to local authorities, with culture trusts dependent on their local authority partner to include their venues in schemes such as the Public Sector Decarbonisation Fund or the Welsh Government’s Energy Service. 

Loss of skills and expertise

Culture trusts are facing a loss of skills and expertise on two fronts. First, they have lost skilled and technical staff as a result of the pandemic, with people finding alternative work while furloughed or changing their preferences for working patterns. Second, the seasonality and anti-social hours associated with working in the cultural and creative sector, particularly in live performance, are unattractive for many people. Staff are often employed on a seasonal and casual basis, yet are seeking opportunities for more secure employment with regular earnings.

Furthermore, many roles within the cultural and creative sector are paid at or below the market rate for the equivalent roles in other sectors, which further complicates recruitment and is exacerbated by the fact that many roles are part time. Staff will now also be feeling the squeeze of the cost of living, and some staff have said they don’t want to take on extra shifts, as they might usually, because the cost of travel to work doesn’t make it worthwhile.

In addition, volunteering has changed, with the uncertainty of restrictions in the past two years making it difficult to bring back volunteers on a consistent basis. Many individuals have stopped volunteering and some older volunteers felt too vulnerable to return. Filling volunteer roles was identified in a national survey as one of the main challenges for charities. There is a challenge to reinvigorate volunteer support within organisations and to have capacity to meet the additional support needs of volunteers, specifically around wellbeing. 

Understanding the cross-subsidy of public culture

Culture trusts are charitable, non-profit distributing organisations with a cross-subsidy model where: 

  1. cross-subsidy of services i.e. more profitable activities (e.g. secondary income from trading), will subsidise some health, community, library activities, etc., and;
  2. cross-subsidy of individuals i.e. where those that can afford to pay support those who cannot afford to pay.

With the majority of culture trusts having a diverse portfolio of not only arts and cultural venues and programming, but also physical activity and leisure, they are reliant on the income from more profitable activities to subsidise a significant proportion of their arts and cultural work. Equally important, arts and culture receive a significant proportion of their income from secondary spend in catering and shops, a model which was fragile prior to the pandemic and is now completely broken.

There is a perfect storm of: reduced attendance, and therefore reduced income,  across all services; significantly increased operating costs, and continually decreasing local authority investment into facilities and services. This is creating an increasingly fragile operating landscape, with questions over the future viability of some services. 

Call for sustainable funding

The current challenging operating climate creates significant, unsustainable pressure on the budgets of culture trusts. It limits their capacity to deliver their current programming, and risks future development. This means that programming may become less innovative, staying on the ‘safe’ side of what culture services providers expect will bring people back, and, ultimately, risks the ability for venues to remain open with less income. 

The positive contribution of arts and culture activity on people’s health and wellbeing is well-documented, but the lack of long-term commitment of funding is currently putting the sustainability of these valuable services at risk. This will inevitably lead to difficult decisions being made around which service to run and which services are no longer viable or need to operate with reduced hours. 

In addition, while there is societal support for culture, charitable donations that are a vital income stream for public culture services are at risk if people’s spending power decreases. Increasing ticket prices is also not an option for many culture trusts as it would further increase inequalities and alienate audiences. 

Risks to public culture services

For theatres, many operators are reliant on touring products which have also taken a significant hit and may now have to consider every tour very carefully with venues that don’t achieve a certain level of sales continuing to see shows cancelled. In addition, Covid has not gone away, with an ongoing impact around staff absences and capacity. The current economic climate and the UK’s exit from the European Union also mean that European productions are further challenged by cost and restrictions, adding to the downward spiral.   

For other cultural spaces, notably libraries, which are free to use, there is an even greater risk of increasing inequalities if they are unable to remain open, with a recent report by Libraries Connected showing that 44% of library services have already seen increased demand due to the cost of living crisis, and over 80% expect an increase in people using libraries to keep warm next winter. 

The future of public culture

Cultural services have a key role to play in the improvement and regeneration of high streets and town centres. To illustrate, libraries classically have a central library often on a high street, they have potential to become a new and different ‘anchor tenant’ as we see the face of retail changing and a desire for town centres to be leisure destinations.

Culture trusts are custodians of cultural services across the UK, their community venues and accessible cultural services combat social isolation, reduce loneliness, improve mental health, instil a pride in place, and encourage tourism. These include high profile venues, but also community hubs and the organisation of arts and culture festivals across the country, which are an important source of income for local economies. They also contribute to the cultural tourism offer and, in some areas, are fundamental to the visitor economy, extending the stay and the spend of visitors to the area. 

Yet there is a major lack of investment in existing infrastructure with many venues and buildings suffering from historic neglect and lack of capital investment. Although the Government’s Levelling Up strategy and investment gives a huge opportunity to invest in cultural infrastructure, this needs to be actively considered by local authorities applying to the fund. There is no spare capacity across services to look at funding pots or applications, with funding needs to cover core service provision not being met. Equally, there are other funds such as the Welsh Government’s Winter of Wellbeing and Summer of Fun programmes that give an opportunity for the impact of arts and culture to be recognised and to be aligned with local priorities.

Finally, culture trusts have welcomed the significant government support during the past two years through the Culture Recovery Fund, and we now need to ensure that this public investment is protected for the future and ensure the sustainability of cultural services. For this to happen, local authorities need to be enabled and financially supported to prioritise investment in public culture, with budgets ring fenced beyond the support of statutory library services, and in line with their own health and wellbeing and local development plans.

Ends

Spotlight on Culture Scotland June 2022

Community Leisure Scotland published a comprehensive landscape report in May 2022 outlining the current challenges faced by leisure and culture charities. This is a complementary briefing focusing on the impact on cultural services and programming.

Change in audience habits and cultural offers

The Covid-19 pandemic has had a profound impact on the willingness of audiences to attend arts and culture events. According to a recent study by the Centre for Cultural Value, more than a third of pre-Covid audiences were still not comfortable attending as late as November 2021, despite the wide availability of vaccines and cultural venues having tried and tested risk assessments in place.

A significant part of the audience profile for arts/culture is the day and overnight visitor market. According to Visit Scotland, this market is not expected to recover until 2024. Visit Britain’s Covid 19 Consumer Tracker results highlighted several concerns and challenges for the cultural tourism sector. In order of risk, the barriers are viewed as: the current state of the economy; the cost of travel for tourism (fuel); industry inflation to recover Covid costs; and Covid.

Until March the number of visitors to Scottish attractions was down 39% compared to pre-pandemic 2019, from a survey of over 330 attractions. According to a recent meeting convened by Museums and Galleries Scotland, no service has regained 100% of pre-Covid footfall, and some venues across Scotland remain closed. These figures resonate with reports from our members of noticeably lower footfall across their services and facilities. 

Although audiences may be interested in the shift to a digital offering, especially younger audiences interested in participatory content, this is not suited to all forms of arts and culture and cannot replace a physical offering. Digital access has helped people in remote or rural communities to access the arts, as well as those who are isolated or face psychological or physical barriers to engaging in-person. Digital platforms are also providing workers new creative opportunities. 

However, there are also major barriers that need to be addressed including ensuring all audiences have access (especially those living in digital poverty) and determining whether online engagement has the same benefits as in-person engagement, employing it appropriately to support health and wellbeing.

While libraries’ digital offerings significantly increased in popularity at the start of the pandemic, other cultural forms, notably arts, drama and museums, were not as easy to ‘pivot’ towards digital. Undoubtedly, digital platforms are offering the arts sector opportunities that should be explored further but this requires investment in research and development, and upskilling of staff.

Our members reported the following challenges with providing a digital offering:

  • Copyright of recorded performances and music hindering the ability to make them available online;
  • Expense of the technology to provide a quality digital experience, with platforms such as Zoom not always adequate to meet the technical and artistic needs;
  • Lack of staff capacity with reduced workforces;
  • Digital offerings expected to be free of charge and therefore not a viable long-term activity;
  • Not all audiences have access (particularly those living in digital poverty).

The arts and culture sector could benefit from infrastructure investment to support digital delivery. Business models also need to adequately remunerate creative workers, not duplicate or detract from in-person offerings, and not adversely affect the funding of in-person arts activities. It is therefore important to consider a hybrid approach for the arts and culture sector, but with consideration of which activities most benefit from being digitised.  

Culture charities are acutely aware that there is a fine balance to be struck to remain accessible and inclusive as a public arts and culture offering. People living in digital poverty, both those without internet access and the skills to get online, were at risk of being left behind during the pandemic. However, many of our members engaged with the Connecting Scotland programme, applying for devices on behalf of individuals who were digitally excluded, and supporting them to use their devices to engage and connect with a range of content. Furthermore, our members actively engage with their communities in different ways, such as check-in calls and many kept Covid-19 measures in place after reopening to provide reassurance for customers. 

The pandemic has increased public support for arts and culture, where over half of audiences “agreed” that “the pandemic has made me feel that arts and cultural organisations are more worthy of support than I did before”. However, the cost of living crisis poses a new risk as, with inflation at a 40-year high, the public’s spending power has decreased significantly. Any gains made with an uplift in pre-booking and online donations for museums may be lost if they are not able to secure a percentage of the public’s dwindling disposable spending. With attendance at arts and cultural events having stagnated, there is significant concern for the viability of public culture services. 

Impact of the energy crisis

Our previous reports highlighted the unprecedented increases in our members’ utility bills with the most recent data from members in Scotland showing an average increase of 140% for 2023 as compared to 2019, with increases as high as 170%. For our members with culture, there are many energy hungry venues, including libraries, theatres, which have lots of lighting and large areas to heat, and heritage venues. To illustrate, there is a lot of lighting in theatres, plus large cavernous areas to heat, as well as bars and catering areas that run fridges 24 hrs, so it is not surprising that utilities costs are high and will impact on the running of venues.

Local Authorities are also facing financial pressures with rising energy costs, and unable to support their culture partners with the scale of the energy increase. The majority of our members pay utility bills themselves, whether that is fuel for mobile library services, the heating and cooling of libraries, museums and archives or  lighting in theatres, and will struggle to cover those costs in the future without additional support. 

Culture charities have already implemented energy saving mechanisms, including more energy efficient lighting and air handling units, and improving insulation but are unable to make further investments without sustainable financial support into their services. Due to the vast and often technical spaces that they manage, being located in a heritage and/or ageing building, incorporating energy saving measurements are costly and cannot always be covered through grant funding.

The Climate Emergency and the drive to net zero is a key priority for public culture venues, with an opportunity to further explore what this means in relation to the development and delivery of cultural activity. However, without further investment, they are limited in their ability to reduce their carbon footprint. Most national funding is also only available to local authorities, with culture charities dependent on their local authority partner to include their venues in their local plans and funding bids. 

Loss of skills and expertise

Culture charities are facing a loss of skills and expertise on two fronts. First, they have lost skilled and technical staff as a result of the pandemic, with people finding alternative work while furloughed or changing their preferences for working patterns. Second, the seasonality and anti-social hours associated with working in the cultural and creative sector, particularly in live performance, are unattractive for many people. Staff are often employed on a seasonal and casual basis, yet are seeking opportunities for more secure employment with regular earnings.

Furthermore, many roles within the cultural and creative sector are paid at or below the market rate for the equivalent roles in other sectors, which further complicates recruitment and is exacerbated by the fact that many roles are part time. This is despite the commitment to Fair Work and wages above the National Living Wage across our members. Staff will now also be feeling the squeeze of the cost of living, and some staff have said they don’t want to take on extra shifts, as they might usually, because the cost of travel to work doesn’t make it worthwhile.

In addition, volunteering has changed, with the uncertainty of restrictions in the past two years making it difficult to bring back volunteers on a consistent basis. Many individuals have stopped volunteering and some older volunteers felt too vulnerable to return. Filling volunteer roles and reinvigorating volunteer support is a key challenge with many organisations finding that some of their pre-existing volunteers were not able or willing to return for reasons such as continued apprehension in relation to volunteer safety/COVID; loss of confidence after having stopped for so long; and for some volunteers, a reassessment of priorities leading to stopping volunteering. Furthermore, those who had volunteered whilst on furlough were no longer able to continue once they returned to work. 

Understanding the cross-subsidy of public culture

Culture charities are non-profit distributing organisations with a cross-subsidy model where: 

  1. cross-subsidy of services i.e. more profitable activities (e.g. secondary income from trading, fitness memberships), will subsidise some health, community, library activities, etc., and;
  2. cross-subsidy of individuals i.e. where those that can afford to pay support those who cannot afford to pay.

With the majority of culture charities in our membership having a diverse portfolio of not only arts and cultural venues and programming, but also physical activity and leisure, they are reliant on the income from more profitable activities to contribute to arts and cultural work. Equally important, arts and culture receive a significant proportion of their income from secondary spend in catering and shops, a model which was fragile prior to the pandemic and is now completely broken.

There is a perfect storm of: reduced attendance, and therefore reduced income,  across all services; significantly increased operating costs, and continually decreasing local authority investment into facilities and services. This is creating an increasingly fragile operating landscape, with questions over the future viability of some services. 

Call for sustainable funding

The current challenging operating climate leads to significant, unsustainable pressure on the budgets of culture charities. It limits their capacity to deliver their current programming, and risks future development. This means that programming may become less innovative, staying on the ‘safe’ side of what culture services providers expect will bring people back, and, ultimately, risks the ability for venues to remain open with less income. 

The positive contribution of arts and culture activity on people’s health and wellbeing is well-documented, but the lack of long-term commitment of funding is currently putting the sustainability of these valuable services at risk. This will inevitably lead to difficult decisions being made around which service to run and which services are no longer viable or need to operate with reduced hours. 

In addition, while there is societal support for culture, charitable donations that are a vital income stream for public culture services are at risk if people’s spending power decreases. Increasing ticket prices is also not an option for many culture charities as it would further increase inequalities and alienate audiences. 

Risks to public culture services

For theatres, many operators are reliant on touring products which have also taken a significant hit and may now have to consider every tour very carefully with venues that don’t achieve a certain level of sales continuing to see shows cancelled. In addition, Covid has not gone away, with an ongoing impact around staff absences and capacity.  The current economic climate and the UK’s exit from the European Union also means that European productions are further challenged by cost and restrictions, adding to the downward spiral.   

For other cultural spaces, notably libraries, which are free to use at any time, there is an even greater risk of increasing inequalities if they are unable to remain open. Public libraries provide a national infrastructure across Scotland with over 490 local venues, 49 mobile libraries and a 24/7 digital offer. According to the Association of Public Libraries, there are over 23 million visits annually to library services in Scotland. 

There is a major lack of investment in existing infrastructure with many venues and buildings suffering from historic neglect and lack of capital investment. There is no spare capacity across services to look at funding pots or applications, with funding needs to cover core service provision not being met. 

The future of public culture

Cultural services are crucial in the improvement and regeneration of high streets and town centres. Libraries classically have a central library often on a high street, they have potential to become a new and different ‘anchor tenant’ as we see the face of retail changing and a desire for town centres to be leisure destinations.

Culture charities are custodians of cultural services across Scotland, their community venues and accessible cultural services combat social isolation, reduce loneliness, improve mental health, instil a pride in place, and encourage tourism. These include high profile venues, but also community hubs and the organisation of arts and culture festivals across the country, which are an important source of income for local economies. 

They also contribute to the cultural tourism offer and, in some areas, are fundamental to the visitor economy, extending the stay and the spend of visitors to the area. Furthermore, the cultural offer is a key component of Scotland’s cultural diplomacy, with a key role to play in delivering international growth and increasing Scotland’s cultural profile on the world’s stage.  Inadequate funding will undoubtedly constrain the creation of this and the realisation of Scotland’s ambitions on this front. 

Finally, culture charities have welcomed the financial support through the Performing Arts Venues Relief Fund and from Local Authority partners, and we now need to ensure that this public investment is protected for the future and ensure the sustainability of cultural services. For this to happen, local authorities need to be enabled and financially supported to prioritise investment in public culture, with budgets ring fenced beyond the support of statutory library services, and in line with their own health and wellbeing and local development plans.

Ends

Here are our Landscape Reports for May 2022.

Click here to view England

Click here to view Wales

Click here to view Scotland

Leisure and Culture Trusts in England: Landscape Report

May 2022

Summary:

  • The delivery of public leisure and culture is changing, and we are at risk of losing organisations that have been rooted in their communities for more than a decade.
  • Local Authorities are seeking ways to manage their own financial pressures. This forces trusts to be more reliant on income from trading.
  • Covid-19 financial support has been removed while operations have not returned to pre-Covid levels.
  • Leisure and culture trusts are facing an unprecedented increase in their expenditure which is putting an unsustainable pressure on their operations, especially around utilities, payroll and the supply chain.
    • Energy bills for 2022 have increased by 86% as compared to 2019, with a projected 114% increase for 2023 as compared to 2019.
  • With the trust model focused on cross-subsidising access and people, this level of change in income and expenditure will cause changes to the way they can operate and risks increasing inequalities.
    • Leisure and culture trusts have to consider changes in operations, including reviewing opening hours and increasing activity costs.
    • They have already made investments in energy efficient systems where they can. However, they are unable to further invest in decarbonisation and refurbishment. 
  • The local government landscape is changing, which poses a threat if focus is on cost management rather than the delivery of public services.
  • If we do not reconsider how we invest in public leisure and culture, the Government will struggle to achieve its priorities on Levelling Up, decarbonisation, supporting the NHS, and addressing inequalities.

Contents

Introduction 1

In focus: Income reduction 1

Changes in financial support 1

Customer and audience income 3

In focus: Expenditure Increase 4

Utilities 4

Payroll 5

Supply chain 6

Impact to communities and operations 7

Facility management 7

Member examples 8

Future-looking 9

Operational changes 10

Changes in the local government landscape 11

Conclusion 12

Introduction

The current landscape for leisure and culture trusts is volatile. Trends of significant income reduction combined with unsustainable increases in expenditure are changing the delivery of public leisure and culture.

While the current global economic climate poses yet another unprecedented challenge coming out of a pandemic, our evaluation of members’ position illustrates an under-appreciation of the value of public leisure and culture as vital public services. Public leisure and culture must be prioritised and invested in for the benefit of communities across England.

We are at risk of losing organisations that have been rooted in their communities for more than a decade, and that are trusted and well-known by partners and their communities. Charitable Trusts’ sole purpose is to listen to their communities’ needs and provide inclusive and accessible leisure and cultural activities that improve wellbeing. 

Our report spotlights the current trends and highlights the significant risks to leisure and culture trusts’ ability to deliver public services. It also looks at the future and warns that if we do not reconsider how we invest in public leisure and culture, not only will we lose cherished charitable organisations and community assets, but the Government will struggle to achieve its priorities on Levelling Up, decarbonisation, supporting the NHS, and addressing inequalities.

In focus: Income reduction

There has been a shift in the value placed on public leisure and cultural activities. Local Authorities have been making decisions based on cost management rather than public services for years, and while the Government’s plan for Living With Covid is fully in place, leisure and culture trusts’ recovery has been stagnating due to a change in customer and audience habits and priorities. These trends together form a significant challenge for leisure and culture trusts and lead to an unsustainable reduction in their core income.

Changes in financial support

In the past two years, various forms of government-backed financial support have kept leisure and culture trusts stable, most notably through the Coronavirus Job Retention Scheme and the Culture Recovery Fund. The National Leisure Recovery Fund, while welcomed, provided short term relief for operators. 

It is vital that we build on the financial support from the Government in keeping public leisure and culture viable, and capitalise on the opportunity afforded by the raised profile of the positive health and wellbeing impact of physical activity.

However, the majority of funding to support public leisure organisations during the pandemic came from operator reserves, and early insight from Sport England’s Future Of Public Leisure research also identifies a £474 million funding gap resulting from Covid-19.

Source: Insight from Sport England’s Future Of Public Leisure research

While Covid has not gone away and customers and audiences have changed their habits and expectations, as evidenced below, there is no longer any financial support to manage the long-term impact of Covid-19 on the public services that our members provide.

In addition, approximately 60% of our members receive a management fee from their Local Authorities to deliver public leisure and culture services to communities. Yet, due to their own financial constraints, local authorities have been progressively reducing these payments. While payment decreases were frozen during the pandemic in recognition of the financial challenges faced by operators, members report that management fees have started to decrease again. This trend forces leisure and culture operators to be more reliant on income from trading which, as outlined below, is also reduced. 

Councils’ financial pressures are projected to continue into the next few years, with the Local Government Association (LGA) concluding:

“Inflationary pressures, our own wage bill and energy price rises, as well as the ongoing cost of dealing with and recovering from the COVID-19 pandemic, look increasingly likely to make 2022/23 significantly more challenging for councils than initially estimated.“

With the LGA further estimating that the average increase in annual costs facing Councils will be £2.6 billion per year to maintain services at their current level of access and quality, councils are seeking other ways to reduce their funding gap.

Consequently, we are seeing local governments amending contracts with leisure and culture trusts, with decisions being made based on cost and asset management rather than the delivery of public services.

Some Local Authorities are viewing leisure and culture services as income generation opportunities, rather than public services. They are therefore adopting an approach of charging rent for leisure and culture assets or adopting a profit-sharing approach, rather than seeking to financially support their leisure and culture services and partners. This changes the relationship between leisure and culture trusts and their local authority partners with a reduced value placed on public leisure and culture services.

Customer and audience income

Insight from both Moving Communities and our membership show that customer returns in public leisure, since October 2021, have been stagnating at the 70-80% mark when compared to pre-Covid levels. The exception is the increased demand for swimming lessons, but recruitment challenges limit operators’ ability to meet the demand. The latest report from Sport England’s Moving Communities data shows that even with the customer recovery peak in October 2021, throughput was still lower than the monthly average in 2019.

Source: Moving Communities In Focus – April 2022

For the arts and culture sector, there is a similar picture, with the Insight Alliance’ research showing that only 78% of audiences had returned in the first quarter of 2022. Research from the Centre for Cultural Value, which has monitored the impact of Covid-19 on the culture sector throughout the pandemic, also reveals that willingness to attend and levels of anxiety or impatience have remained stable in each wave (i.e. time period) of their research. Their latest data from November 2021 also shows that a majority of respondents expected the pandemic to “still have an impact on our lives and activities” well into the future.

With the cost of living in the UK increasing since early 2021 and inflation reaching a high of 7% in March 2022, this will undoubtedly impact people’s choices to return to leisure and cultural activities. The World Bank has further warned that global prices will stay at “historically high levels through the end of 2024” signalling that there will be no end to this financial crisis any time soon.

In focus: Expenditure Increase

Leisure and culture trusts are facing an extraordinary increase in expenditure which is putting an unsustainable pressure on their operations across three principal categories: utilities, payroll, and supply chain.

Utilities

Our most recent insight survey shows that for leisure and culture trusts in England, energy bills for 2022 have increased by 86% as compared to 2019. Our data shows that costs are projected to increase even further, with a 114% increase for 2023 as compared to 2019. 

The data as shown in the graph below is based on facilities that cover 519 pools across England, with various mitigation measures already in place, including:

  • Decarbonisation schemes including BMS upgrades, installing new boilers, air handling units, and Variable Speed Drives;
  • LED lighting and automatic sensors;
  • Pool covers, reducing pool temperatures and less frequent backwashes;
  • Installing solar panels and new windows;
  • Reduced hours of health suites and saunas;
  • Outdoor pools not implementing a longer season to avoid colder months;
  • Reviewing housekeeping and daily monitoring of half-hourly energy profiles to identify unexpected or uncontrolled energy consumption.
Chart

Source: Community Leisure UK Insight Survey

This paints a bleak picture for the sector; especially for operators of large facilities, including swimming pools, ice rinks, theatres, events spaces and heritage buildings. In addition to the significant increases to global energy prices, water bills have soared too, adding to the pressures.

In some areas leisure and culture trusts can tap into Local Authority contracts, and can access more favourable rates, particularly as these are not subject to VAT if the local authority is the payee. However, rates are increasing globally and therefore this access offers minimal reduction to the astronomical increases. There are also a vast number of trusts, particularly our single sites, that have no Local Authority contract or whose contracts have no such clause included.

Payroll

The increase to the National Living Wage puts pressure on the payroll expenditure of trusts, as the rate of pay for lower paid roles is increasing at a faster rate than the pay increases across organisations as a whole. This has been a challenge for a number of years, but is now impacting more acutely in terms of recruitment and retention, specifically for roles with senior responsibilities where there is little reflection of the level of accountability within the pay. 

This is resulting in the gradual and continual erosion of the differential between different job roles. The most challenging roles identified by trusts in terms of managing the roles are: Duty Managers/Officers, senior leisure assistants, recreation officers/assistants, swimming instructors, and child care assistance.

The 6.6% increase in April 2022, with a further prediction of a rise of 10.7% in 2023 is far above the level of pay awards possible, with 19% of members paying on the National Living Wage/National Minimum Wage increases as pay awards in 2021, and of those who gave pay awards, most gave 1-3% increases. 

An increase is rarely in isolation. Most members operate a grading scheme for posts with gaps between each grade. However, as the baseline is lifted the gap is reduced or even removed, organisations end up having to increase two, or often more, paygrades to retain a differential.

Many pay rates for leisure and culture trusts are based on local authority pay rates and grading models, thus it is not sustainable to pay staff who score lower at the same rate as others, particularly where qualifications are an essential requirement. This, therefore, has the effect of creating artificial wage inflation for roles currently being paid above the National Living Wage rate, further adding to the financial pressures.

Further, the increase to National Insurance contributions this year adds another point of significant pressure to a system that is already close to breaking point.

Supply chain

Due to the current global economic climate, there are significant challenges across the supply chain. In particular, there is a shortage of pool chemicals due to global labour and container shortages and the closure of some suppliers’ chemical plants, which have caused significant delivery delays. Pools across the nation are therefore running out of the chemicals needed to keep sites open. One way to mitigate this is to switch chemical usage, however this will take time and poses a risk as it requires additional staff training and new contracts.

In addition, there are global shortages of raw materials including packaging and building supplies that drive up prices and make it increasingly difficult for operators to invest in (refurbishing) their facilities and (adapting) services.

Impact to communities and operations

The trust model operates on small margins, and any profits generated are reinvested back into the organisation. They work with a cross-subsidy model:

  1. cross-subsidy of services i.e. more profitable leisure activities (e.g. fitness memberships), will subsidise some health, community, library activities, swimming activities etc., and;
  2. cross-subsidy of individuals i.e. where those that can afford to pay support those who cannot afford to pay.

If there are no profits to reinvest,  there is a real risk that the core focus will shift towards survival and business viability. This would result in the reduction or stopping of other activities that are currently subsidised, including health and wellbeing programmes, outreach and neighbourhood programming, family support and other charitable activities.

If prices continue to rise, there is a real risk that leisure and cultural activities will be seen as a luxury, available for those who are able to afford to participate. This will inevitably exacerbate existing health inequalities, with the latest Active Lives Survey from Sport England stating that activity fell 4.4% for those living in the most deprived areas (IMD 1-3) compared to pre-pandemic, compared to 1.2% for those in the least deprived areas (IMD 8-10).

Inevitably, those who would be most impacted by the loss of these programmes and services are those who are arguably most in need – people on low incomes, people living in poverty, people with long-term health conditions and older people, many of whom rely on public leisure and culture for their physical, mental and social wellbeing. 

Facility management

To manage the increase in expenditure, leisure and culture trusts have to consider increasing the activity costs and membership prices. This is something they do not want to do, but with the rising cost of living and operating costs, for some it is essential in order to remain financially viable. There is a balance to be struck between remaining financially viable yet continuing to offer accessible and inclusive service provision for the local community. Leisure and culture operators have already made investments in energy efficient systems where they can. However, nearly two thirds of the leisure estate is ageing and past its replacement date and with the current financial pressures, leisure trusts are unable to invest further in decarbonisation and facility refurbishment. 

They are also unable to access the Public Sector Decarbonisation Scheme if their Local Authority does not apply for it, or include them, despite the majority of members’ facilities falling under the scope 3 emissions of Councils and contributing on average up to 40% of a Council’s emissions.

Therefore, facilities and venues are reviewing their opening hours in an attempt to save costs, and, in some cases, will be forced to permanently close facilities. 

Yet it is not just facilities and venues that have a high energy consumption which are at risk of closure. It is also those facilities that have previously been saved from closure by communities through a community asset transfer and are now run by local community organisations. 

These single sites are an important part of our membership and the public leisure provision across England, and they do not have a contractual relationship with Councils that they can rely on for support. Having a single facility to operate, they are also unable to share income between venues and across the organisation to support the continued opening of their facility like our other members can.

Member examples

Below are two examples from members that illustrate the impact of increased costs leading to price increases, potential closures, and a lack of investment.

tmactive, Kent:As a small Trust (t/o c. £8m) we are facing excess utilities charges estimated at £1m in the current financial year alongside inflation running at 7% and serious problems around recruitment and retention given pay inflation. Our not for profit model normally targets profit on turnover at c1% and we are still recovering from the pandemic it is clear that without further support following significant Covid support over the past two years from our LA this will bankrupt the Trust in 12 months despite the fact we hold a healthy cash reserve for a Trust our size.
All this despite purchasing utilities through a large buying consortium (LASER) utilising advance purchasing in a Price Within Period framework designed to reduce the impact of the most violent swings in the market. We have also awarded 4% as a pay award with higher increases for front line staff and paying well above NLW just in order to enable us to open vital services – swimming pools in particular.  We have increased charges to customers between 6-7% on average – by far the largest price increases in the last decade.
We, and/or our LA and others like us desperately need a package of support to cover unprecedented utilities costs otherwise I fear many smaller Trusts will simply fold.
Tadcaster Community Swimming Pool:An example of the current [March 2022] rates quoted:  Electricity (due for renewal in September 2022), currently pay £50,000; quoted rate £135,000. Gas (due for renewal in September 2023), currently pay £35,000; quoted rate £55,000.
This a minimum increase of £105,000 in 12 months. We are having to look at everything we do and how we operate in the future.
Our local authority has no money and didn’t apply for the decarbonisation funds, therefore we are not eligible as we own our own facility. We are looking to invest in new boilers and the Air Handling Unit but are struggling to get any grants or funding.
See also: https://www.youtube.com/watch?app=desktop&v=F9OMWthcuFM 

Future-looking

With the current landscape already changing the way public leisure and culture is delivered, without changes or financial support,  there will inevitably be further changes that will limit leisure and culture trusts’ ability to support government priorities such as Levelling Up, addressing inequalities, reducing the demand on our NHS, and the move to net zero.

In addition to direct challenges faced by operators, the local government landscape is changing, which poses a threat if the current trend of focus on cost management rather than the delivery of public services continues. Although the Local Government Finance settlement offers a 7.4% increase in council core spending power, this is based on an assumption on all councils increasing council tax, thus impacting on households. As significant parts of the local authority budget are ring-fenced, there is little flexibility to support non statutory services, including leisure and culture. 

In the aftermath of local government elections, there is an added risk of rationalisation of assets, especially where Councils may change political majority, or where there is a transition to a unitary authority There is a need to ensure new Councils are able to make informed decisions and understand the value and contribution of public leisure and culture.

But while public leisure and culture are not statutory services, with the exception of libraries, they are essential for the health and wellbeing of our nation, and for the local economic development of places. So while budgets will continue to be under pressure, it is paramount that leisure and culture continues to be included in the Council’s investment plans for their locality.

Operational changes

Recruitment challenges have always existed in the leisure sector, but for both leisure and culture, this has been exacerbated by the Covid-19 pandemic and have not been resolved yet. In addition to the challenges with recruitment, if the current financial challenges remain, retention will become increasingly difficult with pay differentials eroding and leisure and culture trusts losing their appeal as an employer.

Further, the cost of living crisis and people’s changed habits coming out of the pandemic has shifted priorities where leisure and culture is being seen as a nice-to-have but not as essential. Therefore, with return rates having stalled for months, public leisure and culture will need to rethink how to re-engage communities and increase participation in leisure and culture activities.

Finally, the value of public leisure and culture is ultimately determined by the investment made into the services. Leisure and culture trusts reinvest every penny of profit through their cross-subsidy model, and ensure that money generated through these services is ring-fenced for reinvestment. 

However, the reduction in  management fees from local authority partners signals a worrying trend in terms of how they value public leisure and culture. Undoubtedly, Councils are facing budget constraints themselves, yet we caution against viewing leisure and culture services as income generators, which only continues the ongoing race to the bottom for the sector..

We are already seeing examples where Councils make decisions based on cost management rather than the delivery of essential public services, with leisure trust contracts being terminated prematurely or not continued based on the perception that other models are more cost effective. 

Changing contracts from a trust to an alternative model is unlikely to support Councils with their budget pressures nor will it increase the investment going to quality public leisure and culture services. The Trust model is a charitable approach to service delivery, focused on public benefit and working in partnership with local councils. Trusts are transparent organisations working with local partners and run by board members from the local community.

In addition, a contract change means that the Local Authority will need to assess the relative value of an alternative model to its current arrangements. Undertaking such a procurement exercise would take at least 14 months and incur significant costs (circa £150-200k) and management resources.

Changes in the local government landscape

Both the local government and public leisure and culture landscape is changing. 

With more Councils moving to a single tier of ‘unitary’ authorities, there will also be a change in how public leisure and culture is delivered and there is increasing uncertainty around existing contracts with leisure and culture providers, who have contracts with Councils that are merging as part of local government unitarisation.

In practice, we are seeing that this leads to a period of instability with difficulties for Councils to make decisions on investment, leaving operators in a state of limbo. This poses a risk not only to the continuation of essential public leisure and culture services, but also to the support given to the leisure and culture trusts in the future unitary area in what is an increasingly challenging landscape.

With changes in how public leisure and culture is delivered, we predict that there will be  more community asset transfers where either the Council or a leisure/culture trusts have to make the decision to rationalise and close facilities given the significant financial pressures they are under, or because they no longer have the capacity to manage certain facilities and venues.

This means that there may be  new community-run charities and social enterprises that take over their local leisure or culture facilities to save them from closure. This is a trend we have witnessed in the past two years with more single sites being established and joining our membership.

Conclusion

In summary, there are a number of risks and challenges for leisure and culture trusts across England, some of which existed prior to the Covid-19 pandemic, and others which were not on the horizon, notably the energy crisis. 

However, there is an overwhelming desire from our members to continue working to deliver services and support communities across the country and some incredible work continuing to happen. We need to collectively ensure the protection and value of public leisure and culture and the charitable organisations running these services. There are opportunities to do more to support the Levelling Up agenda and improve the health and wellbeing of communities. 

In order to do this, there must be care and ownership of public leisure and culture within both local and national government, and a commitment to continue to invest in these vital services, both in the short-term to support through the ongoing financial challenges, as well as into the longer-term.

Leisure and Culture Trusts in Wales: Landscape Report

May 2022

Summary:

  • Leisure and culture trusts have received significant and welcome support from Local Authorities and Welsh Government in the past two years covering the Covid-19 pandemic, yet the current landscape is volatile. 
    • This risks the delivery of the Wellbeing of Future Generations Act on a local level, and for Local Authorities and Welsh Government to address national persistent problems including sustainable health care, eliminating inequalities and addressing climate change.
  • While Welsh Government’s long-term plan Together For A Safer Future is fully in place, and Covid support funding scaled down, leisure and culture trusts’ recovery has been stagnating.
  • Leisure and culture trusts are facing an unprecedented increase in their expenditure which is putting an unsustainable pressure on their operations, especially around utilities, payroll and the supply chain.
  • With the trust model focused on cross-subsidising access and people, this level of change in income and expenditure will alter the way they can operate, and risks increasing inequalities where leisure and culture are perceived as a nice-to-have rather than essential to health and wellbeing.
    • Leisure and culture trusts have to consider changes in operations, including reviewing opening hours and increasing activity costs.
    • While leisure and culture trusts have made investments into the decarbonisation of their facilities, they are unable to make additional investments without further (financial) support.
  • The value of public leisure and culture is ultimately determined by the investment made into the services. While leisure and culture trust are committed through their non-profit distributing model, they operate on behalf of Local Authorities.
  • Managing 115 physical buildings in communities across nearly every region in Wales, welcoming over 16.6 million visitors a year, and having a combined workforce of over 3000 people, leisure and culture trusts are a vital support to the Welsh economy and to the NHS.
  • We need a clear directive from the Welsh Government to Local Authorities to support leisure and culture as part of the local government Settlement.
  • It is paramount that leisure and culture continues to be included in Local Authorities’ investment plans for their locality, specifically around health, reducing inequalities, and decarbonisation.

Contents

Introduction 1

In focus: Income reduction 1

Changes in financial support 1

Customer and audience income 2

In focus: Expenditure Increase 3

Utilities 3

Payroll 3

Supply chain 4

Impact to communities and operations 5

Facility management 5

Member examples 6

Future-looking 7

Support from local government for leisure and culture trusts 7

Leisure and culture trusts’ support for national priorities 8

Conclusion 9

Introduction

While leisure and culture trusts have received significant and most welcome support from Local Authorities and Welsh Government in the past two years covering the Covid-19 pandemic, the current landscape for leisure and culture trusts is volatile. There are trends of significant income reduction paired with unsustainable increases in expenditure that are changing the way public leisure and culture can be delivered.

The current global economic climate poses yet another unprecedented challenge coming out of a pandemic, and with Local Authorities – a key partner to public leisure and culture – under significant pressures themselves, there is a need to prioritise and invest in public leisure and culture on both a national and local level for the benefit of communities across Wales.

Leisure and culture trusts are place-based organisations, rooted in their communities and providing inclusive and accessible leisure and cultural activities that improve our nation’s health. They are the deliverers of the Wellbeing of Future Generations Act at a local level, and – through their investment – address national persistent problems such as poverty, health inequalities and climate change.

Our report highlights the current trends and the impact of the challenges faced by leisure and culture trusts on their ability to deliver public services. It also looks at the future and warns against overlooking cherished charitable organisations and community assets, as without them, the Welsh Government will struggle to achieve its priorities on sustainable health care, protecting vulnerable people, eliminating inequalities, a green future, and a thriving sports and arts industry.

In focus: Income reduction

While the Welsh Government’s long-term plan ‘Together For A Safer Future’ is fully in place, and Covid support funding scaled down, leisure and culture trusts’ recovery has stagnated. These trends create a challenge for leisure and culture trusts and lead to an unsustainable reduction in their core income.

Changes in financial support

In the past two years, various forms of government-backed financial support have kept leisure and culture trusts stable, most notably through the Coronavirus Job Retention Scheme and the Hardship Fund which leisure and culture trusts were able to access through their Local Authority partner.

Our members’ data has consistently illustrated the importance of the Hardship Fund to the stability of leisure and culture trusts, with over a third claiming more than £1 million through the Hardship Fund to make up for lost income during the pandemic in the previous financial year. In the same year, half of leisure trusts projected that their actual income would be c. 25% lower compared to their normal, pre-Covid income, despite financial support through the Hardship Fund.

The Welsh Government has now removed the Hardship Fund and replaced this with an uplift in revenue funding for local government. This announcement came at a time where recovery was already delayed by new restrictions and Wales moving to Alert Level 2 at a traditionally busy time for the culture and leisure sector. In addition, with Covid-19 risk assessments for businesses staying a legal requirement until well into the first quarter of 2022, leisure and culture trusts operated under reduced capacity for months into their recovery to follow Welsh Government guidelines.

While the Finance Minister “recognised the ongoing impact of the pandemic on services which authorities will need to manage” when announcing the Settlement to local government, in practice leisure and culture trusts are being told locally that there is no additional funding that can be used to support public leisure and culture. 

This is despite the same letter to local government stating that the increased funding will allow Local Authorities to use their budgets “to continue to deliver the services your communities want and need as well as supporting national and local ambitions for the future”.

While Covid has not gone away and people have changed their habits and expectations, as evidenced below, there is now limited financial support to manage the long-term impact of Covid-19 on the public services that our members provide.

Customer and audience income

Customer returns in public leisure have been stagnating at the 70-80% mark when compared to pre-Covid levels since October 2021. The exception is the increased demand in swimming lessons, but recruitment challenges limit operators’ ability to meet the demand for this activity.

There is a similar picture for the culture sector with the Insight Alliance’ research showing that only 78% of audiences had returned in the first quarter of 2022. Research from the Centre for Cultural Value, which has monitored the impact of Covid-19 on the culture sector throughout the pandemic, also reveals that willingness to attend and levels of anxiety or impatience have remained stable in each wave (i.e. time period) of their research. Their latest collected data from November 2021 shows that a majority of respondents expected the pandemic to “still have an impact on our lives and activities” well into the future.

With the cost of living in the UK increasing and inflation reaching a high of 6.2% earlier this year, this will undoubtedly continue to impact people’s choices to return to leisure and cultural activities. The World Bank has further warned that global prices will stay at “historically high levels through the end of 2024” signalling that the cost-of-living pressures are not going away any time soon.

In focus: Expenditure Increase

Charitable trusts are facing an unprecedented increase in their expenditure which is putting an unsustainable pressure on their operations across three principal categories: utilities, payroll and supply chain.

Utilities

Since January 2022, we have been reporting on the spike in energy prices and the financial challenges this poses to leisure and culture trusts. Back then, the average increase in costs were projected to be £724k per organisation above regular expenditure. In just two months’ time, however, our report in March revealed a UK-wide 113% increase in energy costs compared to the average cost in 2019.

Energy forecasts amongst our membership suggest a further rise in 2023. It paints a bleak picture for the sector; especially for operators of large facilities, including swimming pools, ice rinks, theatres, events spaces and heritage buildings. In addition to the significant increases to global energy prices, water has soared too, adding to the pressures.

While in some cases utility costs for regular use are covered by Local Authorities through leisure and culture trusts’ contract arrangements, this is not the case for all trusts. Where utility costs are not covered, leisure and culture trusts can tap into Local Authority contracts, and can therefore access more favourable rates, particularly as these are not subject to VAT if the local authority is responsible for the payment of utilities. However, rates are increasing globally and therefore this access makes little difference. 

Payroll

The increase to the National Living Wage puts pressure on the payroll expenditure of leisure and culture trusts as the rate of pay for lower paid roles is increasing at a faster rate than the pay increases across organisations as a whole. This has been an ongoing challenge for a number of years, but is now impacting more acutely in terms of recruitment and retention, specifically for roles with senior responsibilities where there is little reflection of the level of accountability within the pay. This is resulting in the gradual and continual erosion of the differential between different job roles. 

The most challenging roles identified by trusts in terms of managing the roles are Duty Managers/Officers, senior leisure assistants, recreation officers/assistants, swimming instructors, and childcare assistance.

The 6.6% increase in April 2022, with a further prediction of a rise of 10.7% in 2023 is far above the level of pay awards possible, with 19% of members paying on the National Living Wage/National Minimum Wage increases as pay awards in 2021, and of those who gave pay awards, most gave 1-3% increases.

An increase is rarely in isolation. Most members operate a grading scheme for posts with gaps between each grade. However, as the baseline is lifted the gap is reduced or even removed, therefore organisations end up having to increase two or often more paygrades to retain a differential.

Most pay rates for leisure and culture trusts are based on local authority rates and grading models, thus it is not sustainable to pay staff who score lower at the same rate as others, particularly where qualifications are an essential requirement. This, therefore, has the effect of creating artificial wage inflation for roles currently being paid above the National Living Wage rate, further adding to the financial pressures.

In addition, this year the National Insurance contributions have increased too, adding another point of significant pressure.

Supply chain

Due to the current global economic climate, there are significant challenges across the supply chain impacting on leisure and culture trusts’ ability to operate and invest in their facilities and venues.

In particular, there is a shortage of pool chemicals mainly due to global labour and container shortages and some chemical plants of key suppliers closing, which have caused significant delivery delays. This means that pools across the nation are running out of the chemicals needed to keep sites open. One way to mitigate this is to switch chemical usage, however this will take time and poses a risk as it requires additional staff training and new contracts.

In addition, there are global shortages of raw materials including packaging and building supplies that drive up prices and make it increasingly difficult for operators to invest in (refurbishing) their facilities and (adapting) services.

Impact to communities and operations

The trust model operates on small margins, and any profits generated are reinvested back into the organisation. They work with a cross-subsidy model with a:

  1. cross-subsidy of services i.e. more profitable leisure activities (e.g. fitness memberships), will subsidise some health, community, library activities, swimming activities etc., and;
  2. cross-subsidy of individuals i.e. where those that can afford to pay support those who cannot afford to pay.

As such, there is a real risk that with the core focus shifting towards survival and business viability that other activities that are currently subsidised including health and wellbeing programmes, outreach and neighbourhood programming, family support and other charitable activity, will reduce or cease.

It is imperative that we continue to see public leisure and culture as an integral part of public services that are invested in. 

This should be aligned with investment in health care, reducing inequalities, and decarbonisation programmes, to ensure that leisure and culture trusts can continue to deliver accessible and inclusive services in all parts of Wales, including to the most vulnerable and disadvantaged communities where they form a vital part of support networks.

Facility management

To manage the increase in expenditure, leisure and culture trusts have to consider increasing the activity costs that will be charged to their customers and audiences – both through regular activity prices and increasing concessionary pricing. This is something they do not want to do, but some have had to make the difficult decision to increase membership prices, and more operators may have to make this decision in the near future.

There is a balance to be struck between remaining financially viable yet continuing to offer accessible and inclusive service provision for the local community. If prices continue to rise, there is a real risk that leisure and cultural activities will be seen as a luxury, available for those who are able to afford to participate. 

This will inevitably exacerbate existing health inequalities, with Sport Wales research indicating that the pandemic has worsened the gap between active and inactive people, with people from lower socio-economic backgrounds, people with long-term health conditions, and children worst affected.

Leisure and culture operators have already made investments in energy efficient systems where they can. However, nearly two thirds of the leisure estate is ageing and past its replacement date and with the current financial pressures, leisure trusts are unable to invest further in decarbonisation and facility refurbishment. 

Therefore, facilities and venues are reviewing their opening hours to save costs, and, in some cases, have already reduced opening times or made the decision to close on certain days such as Bank holidays.

Member examples

Below are member examples evidencing the impact of the current landscape.

We have had a strategic environmental work stream in recent years which has seen the introduction of energy saving technologies, local energy champions, recycling at all of our centres, bulk and forward buying powers to reduce impact and green travel plans.
However, whilst we have made great strides, energy prices have been rising at an unprecedented rate for a number of months. These energy price increases have been compounded by the wider economic challenges faced by all businesses, including us, through increased supplier costs (chemicals etc), inflation, interest rate rises, pay awards and the general cost of living increases.
Leisure centres and in particular those with swimming pools, due to their high utility requirements, are being significantly impacted.To put this into context, for the majority of sites that we manage, the electricity and gas costs for 2022 are estimated to be at least 200% higher than 2019.
At this stage we have not forecasted for 2023 due to volatility but we can be confident that whilst prices may stabilise, a return to 2019 levels is highly unlikely.We will need to work together to find solutions so that we can protect local public services, especially as they are playing a vital role in the health of the nation as we rebuild from Covid.
We have had a contractual agreement for the Local Authority to pay the utilities from the beginning of our contract, to date the LA have had significant savings from the energy reduction measures and over time tariff reductions – until now.The LA funds the energy for the facilities within the contract, but we are exposed on other sites which we lease. 
With no further financial support, the impact on our operations will will lead to:Potential facility closesEmployee reductions – job losses and redundanciesCustomer price increasesReduced operating hours

Future-looking

With the current landscape already changing the way public leisure and culture is delivered, there will be further changes that will limit leisure and culture trusts’ ability to support government priorities.

Recruitment challenges have always existed in the leisure sector, but for both leisure and culture, this has been exacerbated by the Covid-19 pandemic and have not been resolved yet. If the current financial challenges remain, staff retention will become increasingly difficult with pay differentials eroding and leisure and culture trusts losing their appeal as an employer.

The cost-of-living crisis and people’s changed habits coming out of the pandemic has shifted priorities where leisure and culture is being seen as a nice-to-have but not as essential.

In addition to direct challenges faced by operators, the views of local government on the delivery of public leisure and culture is changing, which poses a risk to the continued delivery of vital public services.

As explained earlier, there is less funding available for public leisure and culture, especially when considering that significant parts of Local Authorities budget are ring fenced or going towards statutory services. We are also conscious that there is less development funding available to Wales overall following the UK’s exit from the European Union and consequent loss of direct regional development funding. 

But while public leisure and culture services do not have a statutory status, with the exception of libraries, they are essential for the health and wellbeing of our nation, and for the local economic development of places. Given that budgets will continue to be under pressure, it is paramount that leisure and culture continues to be included in Local Authorities’ investment plans for their locality.

Support from local government for leisure and culture trusts

The value of public leisure and culture is ultimately determined by the investment made into the services. While leisure and culture trust are committed through their non-profit distributing model, they operate on behalf of Local Authorities.

Leisure and culture trusts receive a management fee from their Local Authority to manage the services on their behalf. However, these contributions have stagnated in their value at best and therefore not accounting for inflation, or decreased in value in the past few years.

This trend forces leisure and culture operators to be more reliant on income from trading which, as outlined earlier, is also reduced, and therefore leaving little to invest in public services for communities or to manage the significantly increased expenditure.

With investments having reduced through decreased management fees signalling a worrying trend towards the value placed on public leisure and culture, and with councils facing budget constraints themselves, upcoming contract renewals are posing a risk for the continued delivery of public leisure and cultural services.

We caution Local Authorities to not make decisions based solely on cost management but instead focus on the delivery of leisure and culture as public services. Changing contracts from a leisure or culture trust to an alternative model is unlikely to support councils with their budget pressures nor will it increase the investment going to quality public leisure and culture services.

This is especially relevant in Wales with Labour’s national policy of insourcing public services. A blanket approach to insourcing neglects to consider the charitable purpose of leisure and culture trusts reinvesting their profits into accessible services that improve the health and wellbeing of communities across Wales. The Trust model is a charitable approach to service delivery, focused on public benefit and working in partnership with local councils. Trusts are transparent organisations working with local partners and run by board members from the local community.

Leisure and culture trusts’ support for national priorities

Managing 115 physical buildings in communities across Wales, welcoming over 16.6 million visitors a year, and having a combined workforce of over 3000 people, leisure and culture trusts are a vital support to the Welsh economy. 

Leisure and culture trusts integrate care into communities. Their public leisure and culture portfolio not only provides reliable infrastructure across Wales to keep people well nearer to home, away from clinical settings, but also considers people’s personal preferences, needs and ability to engage. Their programmes and activities:

  • reduce inequalities in ill health by providing access to tailored and supervised physical activity and cultural activity that improves people’s physical and mental health.
  • reduce the time patients spend in hospitals & in NHS care through prehabilitation, rehabilitation, and preventative services.

The majority of this work is cross subsidised through the charitable trust model and with leisure and culture trusts struggling to keep up with their expenditure and reduced income, they will need to make decisions on which community services they can continue to provide. While health and wellbeing are a key priority to leisure and culture trusts, the reduced access to their facilities may hinder the effective delivery of these vital support programmes without further support. 

In addition, while leisure and culture trusts have made investments into the decarbonisation of their facilities, they are unable to further support the Government’s targets of net zero without further financial support and full consideration of the value and importance of public leisure and culture.

They also struggle to access the free Energy Service from the Welsh Government as this needs to be initiated by the Local Authority. Most councils also do not include facilities managed by leisure and culture trusts, despite the majority of members’ facilities falling under the scope 3 emissions of Local Authorities. Therefore, leisure and culture trusts are missing out on advice for improving energy efficiency and potential future investment in the decarbonisation of their facilities. 

Finally, the Welsh Government wants to eliminate inequalities in all forms. It is vital that this includes access to public leisure and culture. Having leisure and culture trusts under pressure to deliver public services not only reduces the ability for the Government to achieve its health and wellbeing targets, it also eliminates the possibility to close the inequality gap.

Conclusion

Leisure and culture trusts’ priority has been and continues to be the health and wellbeing of their communities. Having accessible leisure and culture services helps reduce inequalities, and their investment in facilities supports the move to net zero.

While the current landscape challenges are not limited to public leisure and culture, the impact on leisure and culture trusts is significant and risks the delivery of the Wellbeing of Future Generations Act on a local level across Wales.

Our members have received significant and welcome support from their Local Authorities as key partners, and from the Welsh Government throughout the pandemic, but now need immediate support and inclusion in (local) investment and development plans. 

This will require a clear directive from the Welsh Government to Local Authorities to support leisure and culture as part of the increased Settlement that can be used to invest locally following the pandemic, and for Local Authorities to align support with leisure and culture activities with investment in health and decarbonisation.

Leisure and Culture Trusts in Scotland: Landscape Report

May 2022

Summary:

  • Public leisure and culture charities are facing significant financial pressures, threatening the delivering and sustainability of services.
  • Local Authorities are seeking ways to manage their own financial pressures. This forces trusts to be more reliant on income from trading.
  • Covid-19 financial support has been removed while operations have not returned to pre-Covid levels.
  • Leisure and culture charities are facing an unprecedented increase in their expenditure which is putting an unsustainable pressure on their operations, especially around utilities, payroll and the supply chain.
  • Leisure and culture charities have to consider changes in operations, including reviewing opening hours and increasing activity costs.
  • They have already made investments in energy efficient systems where they can. However, they are unable to further invest in decarbonisation and refurbishment. 
  • The local government landscape is changing, which poses a threat if focus is on cost management rather than the delivery of public services.

Contents

Introduction 1

Acute Financial Pressure 1

Changes in financial support 1

Customer and audience income 1

Unprecedented rises in operating costs 2

Utilities 2

Payroll 3

Supply chain 3

Council contracts 4

Wider landscape challenges 4

Recruitment and retention 5

Facility management 6

Member examples 6

Future-looking 7

Introduction

The current landscape for leisure and culture charities in Scotland is volatile. Against a backdrop of significant income reduction, increased demands and expectations along with unsustainable increases in expenditure are resulting in serious threats to the viability of charitable public leisure and culture in Scotland.

As the current global economic climate poses yet another unprecedented challenge coming out of a pandemic, this evaluation of our members’ position illustrates an under-appreciation of the value of public leisure and culture as vital public services. Public leisure and culture must be prioritised and invested in for the benefit of communities across Scotland.

We are at risk of losing place-based charities that are trusted and well-known by partners and their communities. These charities are in a prime position  to listen to communities’ needs, and provide inclusive and accessible leisure and cultural activities that improve wellbeing. 

Our report spotlights the current trends and highlights the impact of the challenges faced by leisure and culture charities on their ability to deliver public services. It also looks at the future and warns that if we do not reconsider how we invest in public leisure and culture, not only will we lose charities and community assets, but the Scottish Government will struggle to achieve its priorities on delivering a fairer and more equal society.  

Acute financial pressure and risks to delivery

There is no doubt that current and projected financial pressures will make it impossible for leisure and culture charities to continue to deliver services as they did prior to the pandemic. The immediate impact of the position includes the potential for: 

  • Reduction or stopping health and wellbeing work;
  • Reduction in opening hours and closure of facilities and services;
  • Erosion of pay differentials between staff leading to workforce drain and retention challenges.
  • Limited to no ability to invest in facility refurbishment or decarbonisation.

Prior to the pandemic, the landscape for public leisure and culture was challenging with reducing management fees from local authorities, combined with increasing demands and expectations for services. This has been further exacerbated by the pandemic, with a return to decreasing management fees from local authorities for 2022/23, with some indicating the intention to move to zero management fee within the next 5 years. 

Leisure and culture charities work with a cross-subsidy model where:

  1. cross-subsidy of services i.e. more profitable leisure activities (e.g. fitness memberships), will subsidise some health, community, library activities, swimming activities etc., and;
  2. cross-subsidy of individuals i.e. where those that can afford to pay support those who cannot afford to pay.

This model operates on small margins, and any profits generated are reinvested back into the organisation. Therefore, anything that changes the balance of income and expenditure will automatically mean changes in the way these organisations can operate.

As such, there is a real risk that with the core focus shifting towards survival and business viability that all other activities that are currently subsidised including health and wellbeing programmes, outreach and neighbourhood programming, family support and other charitable activity, will cease.

There has been a fundamental loss of focus from both local and national governments on the value of public leisure and culture as a public service, viewing it as a cost rather than an investment. There is overwhelming evidence of the benefits for wellbeing of leisure, culture and sport, with significant returns on investment and impacts across a range of portfolio areas:

Regular physical activity provides a range of physical, mental, social, environmental and economic benefits; reducing the risk of many long-term conditions, managing existing conditions, maintaining musculoskeletal health, developing and maintaining physical and mental function, enabling people to retain independence in later life, supporting social inclusion, helping maintain a healthy weight and reducing inequalities particularly for people with long-term conditions.” 

Arts programmes can be used to address and reduce social inequalities and inequities.”

“Cultural activities can be offered alongside or as an alternative to medical treatment to improve or relieve a number of physical and mental health conditions.”

The  Human Rights Commission identified access to leisure services as a significant inequality in Scotland. This highlights the role of publicly accessible leisure and culture services across Scotland’s communities. the importance of public sport.

The risk of moving to an approach of no investment into leisure and culture from local authorities is that services will be forced to operate commercially in order to remain viable, which may involve increasing membership and access charges, reducing concessionary and free access and stopping the delivery of non profitable activities. 

This would have a devastating impact by exacerbating health inequalities, and significantly impacting on the wellbeing of individuals across the country. Countless people rely on their local leisure trust to access physical, cultural and social opportunities, particularly individuals who have long-term conditions or may require additional support. The focus of Community Leisure Scotland members is firmly on the wellbeing of their local communities and supporting the delivery of Scotland’s Public Health Priorities. “As public funded community assets, sport and leisure services are uniquely placed to meet the needs of the local communities they serve”. 

Decreasing management fees from local authorities

Throughout the pandemic, the Coronavirus Job Retention Scheme and support from local authority partners were essential to ensure that leisure and culture charities across Scotland were able to remain solvent. However, as we move through the recovery period, there is no longer any additional financial support available to these charities, despite the reduced reserves levels and reduced income from customers. Management fees from local authorities were decreasing year on year prior to the pandemic, and these reductions have started again with projections for some trusts of becoming self-sufficient within 5 years. 

However, we are acutely aware that local authorities are, themselves, under significant financial pressures and, as a result of limited budgets, much of which are ring-fenced, they are unable to provide support to meet the shortfall in funding alone The Scottish Government’s Budget for 2022/23 shows that the “core” revenue allocation to local government remains the same in cash terms between 2021-22 and 2022-23. However, in real terms, including inflation, this is a reduction of £284 million (-2.5%). According to C0SLA, the settlement represents a real-terms shortfall of £371 million. 

Customer and audience income

Insight from our membership base shows that customer returns in public leisure have been stagnating at the 70-80% mark when compared to pre-Covid levels since October 2021. The exception to this is the increased demand in swimming lessons due to the Covid backlog, but recruitment challenges impact operators’ ability to meet the demand for this activity.

For the arts and culture sector, there is a similar picture, with the Audience Research latest insight showing that only 78% of audiences had returned in the first quarter of 2022. 

With the cost of living in the United Kingdom increasing since early 2021 and inflation reaching a high of 6.2% in March this year, this will undoubtedly continue to impact customer and audience choices to return to public leisure and culture.

Unprecedented rises in operating costs

Leisure and culture charities are facing an unprecedented increase in their expenditure which is putting an unsustainable pressure on their operations. Specifically, there are a range of cost increases that are coming together to create an unsustainable pressure: 

  • Energy costs
  • Pool chemicals low in supply and increased cost
  • Water charges increase
  • National Living Wage increase
  • National Insurance increase
  • Building supplies cost increase
  • Price increase to raw materials including paper, cleaning products

Utilities

Public leisure and culture is experiencing unprecedented increases in energy costs, with no end of increases in sight. As operators of large facilities, many of which have high energy costs – notably swimming pools, ice rinks, theatres and events spaces, the ongoing rise in prices is unsustainable without further financial support.

Increased costs lead to an uncertain future for the trust in an already challenging environment

Swimming has been highlighted as an area of particular pressure due to pools’ high energy consumption. While there are mitigation measures being considered and implemented across venues, including: the use of pool covers, reducing pool temperatures, reducing heating, energy efficient air handling units, automatic meter readers and monitoring, boiler optimisation, combined heat and power systems where possible, LED lighting upgrades, pool covers where possible, variable speed drives, voltage optimisation, inverters fitted to pool circulating pumps and air handling units and energy reduction assessments planned for sites. 

However, these measures are not going to offset the astronomical increases in costs. As we move through summer into the colder months again, there will need to be financial support or face the risk of venues not being financially viable..

Salaries

The increase to the National Living Wage puts pressure on the payroll expenditure of charities, as the rate of pay for lower paid roles is increasing at a faster rate than the pay increases across organisations as a whole. This has been a challenge for a number of years, but is now impacting more acutely in terms of recruitment and retention, specifically for roles with senior responsibilities where there is little reflection of the level of accountability within the pay. 

Members are committed to fair pay and welcome the National Living Wage, however the levels of increases are resulting in the gradual and continual erosion of the differential between different job roles. The most challenging roles identified by members in terms of managing the roles are: Duty Managers/Officers, senior leisure assistants, recreation officers/assistants, swimming instructors, and child care assistance.

The 6.6% increase in April 2022, with a further prediction of a rise of 10.7% in 2023 is far above the level of pay awards possible, with 19% of members paying on the National Living Wage/National Minimum Wage increases as pay awards in 2021, and of those who gave pay awards, most gave 1-3% increases. 

An increase is rarely in isolation. Most members operate a grading scheme for posts with gaps between each grade. However, as the baseline is lifted the gap is reduced or even removed, organisations end up having to increase two, or often more, paygrades to retain a differential.

Many pay rates for leisure and culture charities are based on local authority pay rates and grading models, thus it is not sustainable to pay staff who score lower at the same rate as others, particularly where qualifications are an essential requirement. This, therefore, has the effect of creating artificial wage inflation for roles currently being paid above the National Living Wage rate, further adding to the financial pressures.

Further, the increase to National Insurance contributions this year adds another point of significant pressure to a system that is already close to breaking point.

Supplies

Due to the current global economic climate, there are significant challenges across the supply chain. In particular, there is a shortage of pool chemicals due to global labour and container shortages and the closure of some suppliers’ chemical plants, which have caused significant delivery delays. Pools across the nation are therefore running out of the chemicals needed to keep sites open. One way to mitigate this is to switch chemical usage, however this will take time and poses a risk as it requires additional staff training and new contracts.

In addition, there are global shortages of raw materials including packaging and building supplies that drive up prices and make it increasingly difficult for operators to invest in (refurbishing) their facilities and (adapting) services.

Wider landscape challenges

In addition to the critical financial pressures, there are significant ongoing challenges within the wider landscape, combining to create a perfect storm scenario for our members.

Facility management

To manage the increase in expenditure, leisure and culture charities have to consider increasing the activity costs that will be charged to their customers and audiences. This is something they absolutely do not want to do, but given the significant challenges, some have had to make the difficult decision already to increase membership prices.

Leisure and culture operators have already made investments in energy efficient systems where they can. However, with an ageing infrastructure across much of Scotland, there is a need to upgrade and improve many facilities. Yet, at present, leisure and culture charities, and their local authority partners, are unable to invest further in decarbonisation and facility refurbishment. 

Therefore, facilities and venues are reviewing their opening hours and operations in an attempt to save costs, and, in some cases, will be forced to rationalise and permanently close facilities. 

Future-looking

With the current landscape already changing the way public leisure and culture is delivered, without changes or financial support,  there will inevitably be difficult decisions to be made by local authorities and their leisure and culture partners to ensure the future provision of services.

In the aftermath of local government elections, there is an added risk of rationalisation of assets, especially where Councils may change political majority, and where there may be a loss of knowledge regarding the leisure and culture landscape. There is a need to ensure new Councils are able to make informed decisions and understand the value and contribution of public leisure and culture.

But while public leisure and culture are not statutory services, with the exception of libraries, they are essential for the health and wellbeing of our nation, and for the local economic development of places. So while budgets will continue to be under pressure, it is paramount that leisure and culture continues to be included in councils’ investment plans for their localities, and that councils are adequately resourced to do so. 

Operational changes

Recruitment challenges have always existed in the leisure sector, but for both leisure and culture, this has been exacerbated by the Covid-19 pandemic and have not been resolved yet. In addition to the challenges with recruitment, if the current financial challenges remain, retention will become increasingly difficult with pay differentials eroding and leisure and culture trusts losing their appeal as an employer.

Further, the cost of living crisis and people’s changed habits coming out of the pandemic has shifted priorities where leisure and culture is being seen as a nice-to-have but not as essential. Therefore, with return rates having stalled for months, public leisure and culture will need to rethink how to re-engage communities and increase participation in leisure and culture activities.

Finally, the value of public leisure and culture is ultimately determined by the investment made into the services. Leisure and culture trusts reinvest every penny of profit through their cross-subsidy model, and ensure that money generated through these services is ring-fenced for reinvestment. 

However, the reduction in  management fees from local authority partners signals a worrying trend in terms of how they value public leisure and culture. Undoubtedly, Councils are facing budget constraints themselves, yet we caution against viewing leisure and culture services as income generators, which only continues the ongoing race to the bottom for the sector..

Conclusion

In summary, there are a number of risks and challenges for leisure and culture trusts across Scotland, some of which existed prior to the Covid-19 pandemic, and others which were not on the horizon, notably the energy crisis. 

However, there is an overwhelming desire from our members to continue working to deliver services and support communities across the country and some incredible work continuing to happen. We need to collectively ensure the protection and value of public leisure and culture and the charities running these services. There are opportunities to do more to support the improve the health and wellbeing of communities. 

In order to do this, there must be care and ownership of public leisure and culture within both local and national government, and a commitment to continue to invest in these vital services, both in the short-term to support through the ongoing financial challenges, as well as into the longer-term.

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