Agenda item

The Commission considered a report of the Director of Corporate Resources which provided an overview of the themes explored in the Leicestershire Traded Services (LTS) Scrutiny Commission workshop held in October 2023 and an interim update on the performance of Services during 2023/24.  The report also set out some suggested criteria for how the Council’s traded services might be evaluated, beyond financial performance alone. A copy of the report marked ‘Agenda Item 13’ is filed with these minutes.

The Lead Member commented that the report set out an honest assessment of where LTS was currently.  The Commission’s concerns raised at the workshop last year had been taken on board, and the Lead Member now welcomed its views on the criteria for evaluating each service and the prioritisation to be awarded to these. Plans were in place to address those Services that were not currently performing and over the next 12months if circumstances did not improve, alternative options would be considered.  The criteria to be applied would be key in considering those options. 

Arising from discussion, the following points were made:

(i)               A Member criticised LTS, suggesting that despite the Commission receiving several reports suggesting that services would be improved, most continued to make a loss. 

(ii)              A Member commented that the financial contributions made by the cafes was minimal and questioned whether outsourcing these had been considered, similar to the café at Snibston Country Park.  The Director reported that an assessment had been undertaken but this had shown that the return likely to be generated by outsourcing would be comparable with current income levels. 

(iii)            In response to questions raised, the Director advised that if the country parks cafes were to be operated by the private sector, this would be on an internal repairing only lease.  The external parts of the property would therefore continue to be a liability to the Council.  Given their location, the sale of the cafes would not be an option.

(iv)            A Member argued that the capital repair costs for Beaumanor Hall would be high, particularly as the long access road would soon require work which they suggested could cost in excess of £1m.  This would outweigh the financial returns likely to be generated even if performance improved, noting that the service currently made a loss and had done for some years.  The Director reported that the scale of repairs needed to the access road to Beaumanor Hall had been estimated to be significantly less than £1m, more likely patching works would be in the region of £100,000.  Members were reminded that whilst the Hall was required to generate an income, it also generated wider benefits, such as the outdoor activities for school children, which needed to be considered when assessing the future of the service.

(v)             The School Food service had resulted in significant financial losses and forecasted income was still expected to be below target.  The Director reported that good progress was being made, the service having gone through an extensive review which had significantly reduced costs.  A return to the service generating a profit, as it had done before the Covid- 19 Pandemic had hit, was looking more likely.  In terms of timing, the Director confirmed that this year a loss had been forecast due to contract renewal cycles.  However, the service was expected to make a contribution the following year.

(vi)            A Member expressed serious concern regarding the Council’s contracts for the School Food Service, as he felt these should have been drafted to ensure that all increased could be passed onto the user.  The Commission was assured that legacy contracts had been reviewed and updated following legal and specialist external advice, to better manage these types of cost in the future.  Members noted that some of the contracts had been in place for many years, long before LTS had be established, when it could not have been forecast that, for example, food inflation costs would rise by more 20%.  The Director commented that the review of contracts had taken time as these had to be assessed on a school by school basis. 

(vii)          Some Members raised concerns regarding the tone of the discussion being held and commented that whilst generating a financial return was important, more recognition needed to be given to the wider benefits delivered by LTS, in particular relating to School Food. The Council had provided meals to all schools before the academisation programme began and had continued to do so on a traded basis for a number of years.  Until relatively recently this had been a success and generated a good rate of return.  Whilst it was taking time to recover, it was suggested that this service should be looked at as a longer term project.

(viii)         A Member commented that whilst the private sector provided alternative school food options that might be cheaper, the Council’s service, despite the financial pressures faced, had deliberately not sought to be the cheapest, instead prioritising good quality, wholesome foods that provided good nutrition for children.  A Member suggested that this was to be applauded given that for some children this would be the only hot meal they received all day. 

(ix)            It was noted that the Century Theatre was a small, 200 seat capacity venue.  Ticketing numbers and pricing could not therefore meet costs as it was too small an operation.  Such theatres tended to operate for the benefit of the community and large organisations were not interested in taking these over.  Whilst the wider benefits of the Theatre were noted, a member questioned whether the Council should continue to subsidise this.

(x)             Regarding the criteria for evaluating each LTS, it was suggested that focus should be given to those areas in which the Council held some expertise and/or where there was a gap in the market.  For example, professional services provided by the County Council could offer customers a greater level of assurance over and above private sector providers. It should also seek to prioritise those that delivered benefits in Leicestershire.  Members agreed that this should be the second highest priority after financial return.

(xi)            A Member commented that given the breadth of services provided through LTS it was difficult to have a single conversation that fairly encompassed them all.  It was suggested that in future, they should be considered individually taking account of their wider benefits against the level of financial return or loss expected.

RESOLVED:

(a)  That the interim update on the performance of Leicestershire Traded Services be noted;

(b)  That the 6 criteria to evaluate each traded service detailed within the report be supported but that criteria (d) ‘benefits to Leicestershire residents’ be given the highest priority after financial return.