Losses accrued by The Brentwood Centre are expected to leave taxpayers as much as £500,000 out of pocket.
The centre, in Pilgrims Hatch, closed on October 28 – threatening almost 140 jobs – after a deal to keep solvent its operator the Brentwood Leisure Trust (BLT) was rejected by Brentwood Borough Council when the trust realised it could not meet its payroll obligations for October.
It came after a request by the BLT for further funding from the council – already owed £343,000 – was rejected. This debt has been written off in the end of year 2020/21 accounts.
The coronavirus crisis has badly affected the centre’s finances and the council – which has taken the operation back in house – now faces a £500,000 deficit that it will have to honour for 2021/22.
It means that over a 12-month period The Brentwood Centre may cost taxpayers around £850,000.
Since taking back the Brentwood Centre, the council has had to endure essential compliance costs on the property in order to bring it back to an acceptable standard, as well as staff the centre and manage general operational running costs.
But it admits the immediate pressure is to appoint a third party operator to manage the facilities on the council’s behalf, which will reduce the council’s financial pressures in relation to business rates and staff.
The ease of finding such an operator willing to accept favourable terms while Covid-19 presents such uncertainty for the leisure industry is to be seen.
The council also does not receive exemptions on business rates for the property, adding further pressure to its finances.
It has received a grant of £117,000 from the national leisure recovery fund which has been used to offset the running of the centre, as well as income losses due to Covid-19 lockdown and restrictions.
But how much extra national funding is available is also uncertain.
A statement in a report to the Community and Health Committee said: “Following the Brentwood Leisure Trust going into liquidation, the trust was a debtor to the council and subsequently the balance of £0.343m which was held on the council’s balance sheet has been written off in 2020/21 year end accounts.
“As part of setting 2021/22 it was assumed that the Brentwood Centre finances should break even, and at the time of setting the budget various variables were unknown. Officers have been working closely with the centre managers as well as our consultancy support to ensure that current financial forecasts are as realistic and accurate as possible.
“The current position is forecasting a deficit of approximately £500k for the year 2021/22. The council is expecting to reduce this pressure by looking to appoint a third party operator.”