Council wants to transfer sport and leisure services to a charitable trust 4

Finance | Kirsty Weakley | 19 Jan 2012

Durham County Council is considering putting its leisure centres, libraries and theatres into a charitable trust as a way to save money.

The council has to make spending cuts of £145.8m in the next five years and hopes it can save money by putting the services into a charitable trust known as a non-profit distributing organisation (NPDO). It predicts it could save more than £865,000 in national non-domestic rates in the financial years 2012/13 and 2013/14 because the new organisation would be eligible for a discount of 80 per cent.

An NPDO would be exempt from VAT on fees and charges at sport, leisure and cultural facilities and libraries. It would also be able to apply for funding from bodies such as Sport England and the Heritage Lottery Fund.

NPDOs must reinvest any profit in the organisation and fall under the jurisdiction of the Charity Commission.

A report looking at potential funding options has been published on the council’s website and recommends that the council either create a new trust or transfer the services to an existing one. Cabinet members will be asked to agree to the move ‘in principle’ at a meeting on 25 January. If they do so, the council will then prepare information on transfer agreements and collate this in a service delivery transfer plan.

Maria Plews, cabinet member for leisure, libraries said: “In these difficult times the status quo is almost certainly unsustainable and a trust like this could prove the best way to protect and even improve these services.”

Transfer will take place in phases

Durham council plans to transfer services in two phases, the first phase will include the council’s 39 libraries, 15 leisure centres and three theatres and arts centres. The second phase will include museums and learning services.

Two leisure centres and two arts centres included are already run for the council by the Derwentside Trust for Sport and the Arts which is registered as an independent provident society and trades under the name Leisureworks.

Leisureworks has been consulted by the council and has stated its preference to become the NPDO for the whole county but has said it will co-operate to transfer services to a new NPDO if that is what the council decides.

Durham is not the first council to transfer its services to a charitable trust, last summer Falkirk council created a similar trust for its services in order to take advantages of the tax breaks.

Directory: Charity Commission

Place a comment

Ben Wittenberg
DSC
23 Jan 2012

Well done to Durham for holding out so long - most other LAs have been cynically outsourcing leisure services to self-created charities to cut their costs and pension liabilities for nearly ten years now.

[Reply]

Kevin Allard
20 Jan 2012

Seems great for Durham but not so good for the country as a whole if the net result is that less tax is being raised.

[Reply]

Chris Zealley
Charity Trusteeships various
19 Jan 2012

The most important issue is whether the properties in which the activities take place will be transferred to the NPDO. Unless the assets are transferred, or at least long leases on them, 20 years or more, the trustees will have no means to operate truly independently from the authority, and find themselves in a type of trusteeship one would do well to avoid.

If the assets are transferred with the service provision its a worthwhile idea. But not otherwise.

[Reply]

Michael Hodgson
19 Jan 2012

Scottish Charity Regulations differ, but I believe Aberdeen City Council may have done something similar. http://www.aberdeencity.gov.uk/xsl_SportsRecreation.asp

[Reply]

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