Local Government and Housing Committee, 23 March 2023 | Open Senedd

Open SeneddCymraeg

Local Government and Housing Committee, 23 March 2023 | Open Senedd

Owen Hathway

Thanks, Chair. Good morning, everyone. Firstly, I just fully concur with what Jen and Glenn have said there. I'll try not to repeat too much, because I think they've made the case quite strongly, but, certainly, I fully agree with the health and educational benefits that those facilities and provisions provide. I think one of the critical aspects of public leisure services in whatever format they may take—and there are different mechanisms and operating models across Wales—is that there is a duty on them, obviously, to be representative of the communities they are based in. So, it's an opportunity to ensure that delivery models are looked at through the lens of equalities and tackling the undervalued or underrepresented groups that you may not necessarily see if it's a sport-specific model or a commercial-specific model.

A couple of the other points I thought I'd pick up, just to be slightly different, I guess, in terms of the perspective, are, when we look at, say—. Sport Wales, for example, really push this principle of non-early specialisation in sport. We know that anyone can have a lifelong enjoyment of sport; they might just not necessarily have found the sport that most appeals to them. So, having multisport offers is really critical to that exposure to different sporting opportunities, which then bring about different skill sets both within a sport and physical context, but also different skill sets that set people up for life, from communication skills, leadership traits, self-confidence et cetera, and, very often, those local public leisure services are that multisport offer. It's central in terms of its location very often, but also houses a wide range of different sporting opportunities, in a non-competitive environment, that can be done at leisure, so I think that's a really important critical component.

And then secondly, that setting as well—we do know that it's really difficult to engage families—in family offers. Particularly through the pandemic, where we did see some positive traits in terms of physical activity trends, it was around family activities. And that particularly had an impact in terms of female participation in sport and, again, those local leisure services do create family offers, which you might not necessarily see in other services. So, I think that is also a really critical component that local leisure services can facilitate that we might not often see in other delivery models.

09:08Watch #Official Record

Owen Hathway

Only because I can see that my mike is already on, so it'll save someone the job of having to switch it on and off. And I imagine that I'm probably likely to repeat what at least Jen will certainly say, and maybe others as well, which is that I think the three for me that stand out are the operating costs, especially those with swimming pool facilities. We've seen major increases, increasing costs, to facility providers in recent weeks and months, and so managing that is going to be a key challenge.

If I give you just one example: we run a capital funding scheme at Sport Wales, where local authorities and leisure trusts have been able to bid in over the last year. We'll be reopening that in April as it goes. There were a number of instances in the last round of that funding where Sport Wales agreed significant—hundreds of thousands of pounds in fact—awards to some applicants, but there was a match funding element to that and, just within the weeks when those applications came in, some of those leisure trusts and local authorities were not able then to see that through, because the picture had changed so dramatically for them. In one instance, that was a 90:10 split in favour of Sport Wales providing 90 per cent of the funding, but that 10 per cent was no longer able to be found just because of the increase in energy costs and inflation. So, you can see the pressures that are there.

Second is the issue around the cost of living. We've seen that impact individuals and communities quite heavily. That obviously has an impact in terms of their ability to spend or prioritise leisure investments. We've seen, through our quarterly Wales activity tracker that we do with Savanta ComRes, that there's a significant proportion of the population saying that they're changing their physical activity habits—they're having to source free or cheaper physical activity offers, or indeed reduce their physical activity to not doing it. That has an impact in terms of footfall and then the spend that those facilities are receiving. And then I'm sure there are issues around staffing, both retaining and recruiting staff into those facilities as well, and the cost-of-living awards that are associated with that.

So, that's almost—. Coming out of a pandemic, the sector was quite resilient. It did a lot of really innovative work to protect itself, and the Welsh Government invested in leisure services to protect them through the pandemic. We were probably in a slightly better place in Wales than most other areas of the UK, as a result of some of the work that had gone on through the pandemic. Unfortunately, that perfect storm of staffing, the cost of living and operation costs and inflation and the energy crisis that have come about now have almost, to an extent, undone a lot of that work, or at least set us back to a point—. We would have thought this would be a really positive, redemption year almost, if I can use that term, and, instead, it's just firefighting new and emerging challenges.

09:11Watch #Official Record

Owen Hathway

Yes, of course. So, to answer those two questions in turn, yes, they are able to access funding for decarbonisation projects through that capital funding stream, but it isn't exclusively to that, so we have a number of—. We've funded athletics tracks, or pump tracks for cycling, so actual projects that are delivering new facilities—3G pitches, et cetera—through that fund. But we've also funded a number of projects that are around reducing energy costs and decarbonisation.

Where we've invested in solar panels, we've actually done that on the basis of a 50/50 split, because we know there's a return on investment to the facility. In a perverse way, actually, that return on investment is slightly better now, because of the increases of energy costs. Whereas the repayment might have taken seven, eight, nine years in the past, it's now going to take two or three years, because the energy costs are so high. But to answer the question, certainly, they are able access funding for energy costs.

In terms of who can access the funding, it is specific to national partners that we fund, local authorities and national governing bodies, because those three groups are on our capability framework, so, giving us assurances around where we invest public funding. However, there is nothing, in theory, stopping those organisations that you noted there having conversations, and the local authority, an NGB, or a national partner coming in on their behalf, and we have funded a number of organisations, be they specific clubs, leisure trusts, community-run facilities. We have had community-run facilities and co-operatives in the past that have accessed that capital funding through local authorities, that have acted as the interim, both in terms of, then, supporting, and there are some VAT benefits, where actually going through the local authority is beneficial to the individual applicant as well.

So, they should have those conversations with their local authority, and any governing bodies that may be relevant to the sports. But, certainly, they're able to access it via that third party.

09:15Watch #Official Record

Jennifer Huygen

Thank you. I definitely agree with everything that Owen has said. I just wanted to give a bit more context to two of them. In terms of the utility costs—and we really welcome the Sport Wales capital investment that Owen just talked about—I just wanted to give that context on the utility costs. There's obviously the high increases in gas and electricity prices that is causing the bulk of this challenge, but one of the main areas contributing to this is that a lot of our leisure and culture facilities are dated buildings. So, they're past their expiry date, if you can say that. And, also, the free energy service from the Welsh Government, and the audits that can be done by local authorities through that, have found that leisure facilities are consistently in the top five of high-emitting buildings from local authorities. So, obviously, that contributes to the scale of the problem, because, obviously, our buildings are unfortunately not as efficient as they can be.

The second element to add to what Owen said around staffing, is we have, of course, from 1 April, a 9.7 per cent increase in the national living wage, which is the right thing to do, but to be able to afford to put a 9.7 per cent increase across all pay scales in an organisation adds a lot of pressure on the bottom line. So, in addition to the recruitment and retention challenges, there is that risk, and that threat, to keeping differentials, because, obviously, the national living wage increases it so much. So, that means that, in some cases, those on the national living wage, or just above, will get a 9.7 per cent increase, but that might not be for everyone in the organisation; they may get a 3 or 6 per cent increase, because 9.7 per cent is unaffordable across the organisation. And that's not to say that operators do not want to pay; of course they do want to pay that, it's just talking about budgets and the affordability of that.

And, then, the third one, just to add to what Owen said, in terms of our key challenges, there's also the high inflationary costs in the supply chain. So, things like food—yesterday, I heard an example of tomatoes, and how much they cost now for one box, which, obviously, is a key ingredient in cafes and that kind of thing, but operators are unable to pass that on to customers. So, obviously, that puts another pressure on budgets. Thank you.

09:17Watch #Official Record

Jennifer Huygen

Just to add to this and everything that has been said around this topic, I just want to emphasise that a facility closure is the last thing that you will see happening to the service, because, especially in the case of leisure and culture trusts—so, both from a leisure and library perspective—they've been working really hard with local authorities and councils to keep the buildings open. So, thankfully, we've only seen a very small percentage of facilities at risk of actual closure in Wales, although there is, of course, that risk that that will come in the new financial year. But there is that partnership working.

But I think the point that you made earlier, Chair, around the dependency on additional income, I think this is definitely a trend that we've been seeing in the past five, if not longer, years. And that is mainly because leisure and culture trusts specifically receive a management fee from local authorities to manage the service, and that management fee has stayed flat, so that's actually a real-terms reduction, or, in some cases, they've also been reduced in the past few years. Now, where there was a reduction, that was frozen during COVID in recognition, obviously, of the pandemic pressures, there is, of course, an intention to reduce the services further, and that makes sure that, actually, the operators become then more reliant on income from trading, so that means you are more reliant on your cafes or on your events taking place, in parks, summer events—those kinds of things.

I think that the final thing to point to on this is that the Welsh Local Government Association, they warned that Welsh local government is facing a £784 million budget black hole next financial year. Now, of course, the local government settlement was better than everyone anticipated, but that still comes to £400 million, so there's still at least £300 million, almost £400 million, of a gap, and that will, of course, impact on the ability of local government to invest in these services.

09:27Watch #Official Record

Jennifer Huygen

There are some examples, we believe, of where the standards framework has ensured consistency. One example is free Wi-Fi across Welsh libraries—and there's the question: would it have been possible without that standards framework and the core entitlement? But one of the cautions that we would argue for is, obviously, every community is different and every community has different needs as well, so if it's about equity of access, it's important that there's not a one-size-fits-all offer.

The other element to that, of course, is that there is great innovation happening across library services in Wales that can be applied in terms of programmes in other local authority areas as well. That isn't necessarily needed to be included in a standards framework, but is just generally in terms of sharing best practice. One example that I can—I mean, there are many examples—but one example to mention is again going back to Aura Leisure and Libraries in Flintshire in north Wales. They have been working with StreetGames on their Fit and Fed programme, which is a well-known school-holiday programme. And what they did last summer is genius, in my opinion; they made it a 'Fit, Fed and Read' programme, so they integrated the leisure and library services into that to obviously encourage reading, as well as being physically active, and merging those two services, which is a programme in itself that can be implemented in other local authority areas in Wales, and that's just an example of best practice and innovation. It doesn't necessarily mean that this needs to happen in every area, but it is something that can be shared through other means, through other networks, in terms of best practice sharing.

And the second example that I will mention, if I may—and it's just because I love this example so much—it's from Aneurin Leisure in Blaenau Gwent, a leisure trust that manages, again, both leisure and library services, and last year, they implemented sports libraries in all of the library services, and that actually means that the public can take out dumbbells or resistance bands from the library as if they were taking out a book, and actually, the staff in that library can actually direct the public to online exercise videos and guidance as well. So, again, an integration of library and leisure services. Again, this is not something that would come up potentially through the library standards framework, but it is best practice and innovation in library services and integration with leisure, which I think should be celebrated and recognised. So, I get quite passionate about this—apologies. I'll hand over to other colleagues now.

09:49Watch #Official Record

Owen Hathway

Thanks, Chair, and thanks, Sam. Just to give our experience, I guess, where this has been evident to us has been in that capital fund, in the process that I've spoken to, where, in particular, because of our capability framework and ensuring that we invest specifically and exclusively in organisations that have gone on that capability framework, then, leisure trusts, community council-run facilities and others are having to come through their local authority partners. Broadly, I'd say that that has worked really well. Now, obviously, we are talking about applying for funding, and there is a benefit both to the operator and the facility owner in that instance, so I guess everyone is a winner in that process. But, ultimately, we've had applications that have been done in partnership and worked really well.

There are definitely examples where there is a much closer relationship between the local authority and the leisure trust or the other partner that's delivered it than in other instances. But broadly, where Sport Wales has come into contact with those as a partnership, because they've both been applying at the same time, concurrently to our funding, it's generally worked well. And we've had relationships going back and forth directly with the deliverer, because we need to ascertain information around the projects they're putting forward, but also, then, the assurances we need from the local authority partner in terms of supporting those deliverers as well. So, it's worked well with us, and it seems that there's a good relationship between them, but, again, I am coming from the context of everyone is trying to get to a positive end goal of releasing funding and spending funding on good projects. So, I guess we haven't seen it where it's been done in a position of tension, I guess. But, certainly, the broad experience where it's involved us has showcased that, in many different ways of delivering, the relationship generally has been working quite well.

10:13Watch #Official Record

Owen Hathway

Thanks, Chair. Thanks, Joel. I’m not sure I can speak explicitly to if local authorities place enough emphasis on social value; it’s probably a question better directed to them. But I suspect as a rule it will vary, and often that emphasis on social value is then tested by the financial challenges that, potentially, override them a little bit. I know that there are definitely examples where we’ve seen different areas of Wales exploring the social return on investment, and they’re aiming to better understand the impacts on health, well-being, education—the kind of thing that Jen spoke to in the opening discussion. So, it definitely is evident there, and I think it varies from different area to different area.

In terms of social value, you’re right, it’s a really broad way in which you can capture that. We have at Sport Wales—not explicitly to leisure services, but to sport in general—previously done a social return on investment study in Wales. That did show that for sport—again, not leisure services per se, but sport—you can see around a £295 million return on social value as a result of the impact of sport. It works out at something like £2.88 return for every £1 invested in sport. We’re in the process at the moment, actually, of having recommissioned Sheffield Hallam University, who are one of the world’s leading experts in this social return on investment study, to redo that work in Wales around sport, and there are examples where different local authorities will have done some of that work themselves, and different sports have done some of that work. So, there is a bit of a picture.

To me, in terms of that study, however, I wouldn’t necessarily say that is a absolute given in terms of those outputs. What it does do is really help create the conversations that are required between not just local authorities, but also health services, education services, about how we pool resources to see the preventative impacts of that funding, the preventative impacts of those collaborative programmes around social prescribing, around education and so forth, to maximise the impacts of leisure facilities.

One of the things that I would also stress is that one of the changes that we’ve instigated at Sport Wales is around our relationship with local authorities. Rather than working with 22 local authorities on sport development, in future we’re working at the regional sport partnership level. This means that we are working with those regional entities through local authorities, but also housing associations, third sector charities, universities are involved, sport deliverers—so, we’re bringing a broader sense to the table, essentially, bringing in different and novel expertise, who are coming at it from a different perspective. I think that is a way of creating some social capital in the decision making that involves sports decisions and physical activity decisions and investment that actually looks at things from that social perspective and what is the impact here going to be for the wider community in terms of health, well-being, education, housing and so forth. So, it’s a community investment in the social value of that sport investment, not just sport for sport’s sake. I think that is one model of delivery in future that will help in terms of shifting that emphasis onto social value, as well as the fundamental brass tacks of the funding involved.

10:20Watch #Official Record

Glenn Bowen

Thanks, Chair, thanks, Joel. It's a good question, because social value means different things to different people, doesn't it? I'm going to comment on the economic part of social value and procurement, as opposed to the social outcomes of delivery of the service. I think that it's been like wading through treacle over the last 10 to 15 years to improve our procurement processes, to make them more effective, to keep more money and more spend local and impact on our communities. But we have seen some changes. There is some good practice in local authorities, where they now publish the amount that they invest within the radius of their local authority area, or in south Wales et cetera. So, that's good. But we, as Cwmpas, want to go further, really, in terms of looking at the social value of budgets, and we want to look at where there are supplier voids. Because, from a social business perspective, we're trying to get local authorities and public bodies to put procurement opportunities out there for social businesses to respond to. In the worst-case scenario, a commissioner will say, 'Well, we put it out, and nobody responded', and I would say, 'Well, I could have told you that, because we know the supply chain.' So, I think that there are opportunities to go further, in terms of looking, where there are supplier voids, where we can work with a locally established anchor institution, be that a leisure trust or a.n.other social business—work in a proactive way to be able to respond to a future tendering process.

To me, public bodies, local authorities, health boards should look and say, 'We've got £100,000-worth of spend that goes outside of the authority, outside of the country for A. How can we turn that into 10 jobs in Kidwelly?', and look at it in a much more proactive way. So, that's where we are coming from, from a social-value perspective, in terms of trying to turn that budget into economic outputs and jobs and local opportunities through the foundational economy.

10:24Watch #Official Record