The decision to have the Brentwood Centre closed down was engineered to “buy the assets cheaply” and avoid legal obligations to staff, it has been claimed.
And although Brentwood Borough Council (BBC) has said it cannot legally continue to support the running of the Brentwood Centre, there are examples around the country of other authorities doing just that.
The Brentwood Centre was closed on October 28, threatening almost 140 jobs, after a deal to keep solvent the Brentwood Leisure Trust (BLT) – its operator – was rejected by the council when the trust realised it could not meet its payroll obligations for October.
The trust, formed in 2004, said it believed it was still working in good faith and continued discussions until Wednesday, October 21.
“In spite of a deal agreed in principle this has been subsequently rejected by BBC. Following further meetings on October 26 and 27 with no resolution the trustees have been left with no option other than to wind up the business with immediate effect,” a statement from the trust said.
Leader of Brentwood Council, Chris Hossack, said: “The Brentwood Leisure Trust wanted funding from us and to give them more money to pay their staff because the providers did not have enough money. The Brentwood Leisure Trust still owe us £350,000, and we cannot legally give them more.”
However, individuals close to the centre say this is not the full story – BLT has invested £1.9 million on new and upgraded facilities in the last 10 years, which the council “may forget to mention”.
Some of the debt dates back to 2010, but a large part – totalling £180,000 – was agreed as a commercial loan in 2018, which allowed the trust to replace the sports hall floor and BBC is charging interest on.
In exchange BLT agreed to waive the £100,000 management fee BBC paid the trust.
The trust has already saved £200,000 since this deal was done and BLT has operated at a £0 subsidy and management fee since 2018, which reduced every year from 2011 when it was at £392,500.
Key to its decision are rules around state aid – where councils are restricted in the amount they can support organisations.
“Brentwood Borough Council is a publicly funded local government authority and there are various legal rules and regulations that means the council cannot lawfully provide any further monetary, or other assistance that would give them an advantage in the market, to the trust,” BBC said in a statement.
But there are other examples around the country of local authorities supporting their leisure operators including leisure trusts.
The London Borough of Southwark decided to continue with its contract with its leisure management contractor, Sports and Leisure Management Ltd (SLM), until June 2023.
To date, the council has agreed a package of financial support to SLM for £4,227,000. And specifically a report to cabinet says this proposal is consistent with the guidance from Government in its public procurement policy notes in response to the pandemic.
Braintree and Suffolk Councils have also found ways to support with grant funding and loans of £750,000 and £1million respectively.
A source close to BLT said: “BBC will no doubt tell you about the legal position they are in and how they cannot legally support the trust. I would challenge them to provide a long list of local authorities that have adopted a similar position. They are in a very small minority.
“We were made aware of this position on July 7 and had extensive good faith meetings to try and work around it to avoid the current scenario like just about every other local authority has done and is doing all over the country.
“Their public pronouncements right up until October 27 that they were trying to find ways to help and support the trust are disingenuous. Their off the record comments clearly show they have engineered this position to avoid their legal obligation to TUPE (Transfer of Undertakings (Protection of Employment) Regulations) over the staff and buy the assets cheaply.”
The council has subsequently revealed BLT, as leaseholder, still has not returned the keys in a formal sense, to the council.
Furthermore BLT will not be holding its meeting to go into liquidation until Friday November 6 – some 10 days after closing the doors.
This means that the Insolvency Practitioner cannot formally be appointed until this meeting takes place.
Cllr Hossack said: “Despite this, the council is progressing its contingency planning with an interim operator to get the centre back up and running.
“A mobilisation meeting is already planned for Monday and we will proceed to progress plans under the rights we have as landlord. Our plan, even in the event the trust folded, which it has, was always to get the centre and halls re-opened again asap.
“However, following the Prime Minister’s statement it has become apparent that leisure centres will now close across England as part of the new lockdown measures that will come into effect on Thursday, November 5, for at least a month. These circumstances are of course beyond our control.
“Notwithstanding the council will continue to make preparations at pace, so that when the halls and centre can re-open again we are ready to do so.
“I am also conscious that the situation is fluid and that there is pressure on the Government to consider facilities such as the Brentwood Centre as ‘essential’ given the vital contribution it makes to physical and mental wellbeing. So we must be prepared if circumstances change.
“The centre will re-open again under new management as planned and when permissible.”
The decision to renegotiate a new operating arrangement for BLT is separate from a longer term vision for the Brentwood Centre, including investing as much as £5million into creating a major seven-pitch football hub.
The plans for seven pitches at the Brentwood Centre – two of which will be all weather 3G surfaces – are part of the Brentwood Council leisure strategy.
The strategy also includes the potential multi-million pound revamp of the Brentwood Centre and its plans for King George’s playing fields, for which it has pledged more than £7million of investment.
Under the plans for the football hub, the Brentwood Town FC stadium may move to accommodate a revamped Brentwood Centre and to future-proof the area in case of any A12 widening that may take place in the future.
Ideas submitted to Brentwood Council suggested Brentwood Town’s main pitch and stadium will move to land closer to Hatch Road, while two 3G pitches and five grass pitches will be built on land closer to the A12.
A feasibility report from 4global Consulting indicates that the Football Foundation sees the project to be of “significant strategic value” to the delivery of the organisation’s priorities in Essex, and as such would be prepared to commit £1.3million to the total £3.5million cost of the first phase of the project, that would also see new changing rooms and a 200-space car park built.
Brentwood Council could contribute £1.5million towards this phase.
The shortfall would require to be identified from other funding sources.
It is thought the phase one element could generate around £30,000 a year.
Speaking to Phoenix FM, Cllr Hossack said: “The Brentwood Centre is already in our leisure strategy. It’s already mentioned in my corporate plan for this year to invest in it. We are not about to abandon that.
“The Brentwood Leisure Centre site is absolutely key in terms of sport health and wellbeing and it will remain so.
“And this might be a bad day today but I think this might be the beginning of being able to get hold of it and do something positive with it.”
A spokesman for BBC said: “The council took both internal and external legal advice which made it clear that for the authority to continue supporting a financially challenged Brentwood Leisure Trust was not legally possible.
“Events have now changed of course with the new lockdown on Thursday.
“While the council had hoped to open the centre very shortly this will now not be possible under the new restrictions.
“However, the council has been working at speed to resolve the situation and re-open when lockdown is lifted. Currently there is an ongoing legal process and it would not be appropriate to comment on legal issues at this time.
“The council’s priority is and remains to support all those affected and get the centre reopened as soon as possible. We would ask anyone affected by the closure to contact our officers on 01277 312500.”