This illustrates that overall;

Over the last five years, the Council have completed a number of investigations into the level of investment required to maintain and develop the leisure portfolio in Fife. A range of reports have incorporated condition surveys and feasibility studies at different levels that clearly indicate that a significant level of investment is required in the short term if the Council is to continue maintaining and delivering the existing level of facility provision.

Outlined below are the details of recent reports, which highlight both the extent & magnitude of the challenge facing the Council.

In addition to the `Ticking Time Bomb' report identified in section one, Kit Campbell Associates (2001), Ove Arup (2003) and JQA (2004) reports have all confirmed that major investment in existing facilities is required.

In November 2001, Kit Campbell Associates was commissioned on behalf of the Council to complete a review of the leisure facilities in the Glenrothes and Kirkcaldy area.

The report indicated that a significant capital investment of between £1.8m and £2.4m would be required to retain Kirkcaldy pool in operation and a total investment of £6m would be required if the facility were to be completely replaced.

The report emphasised the following key points:

The report recommended two scenario's dependant upon the future of the FIPRE:

The options were not taken further at the time and the key issues highlighted remain pertinent today.

The survey work specifically focused on the condition of the swimming pool tanks and associated plant at nine of the Council's existing facilities. Arup categorised the works required in relation to immediate repairs required, and the level of expenditure likely to be required within a five and ten year timescale.

Table 3.6 below illustrates the level of investment required (in 2003) in the Council's existing facilities. This estimated that over £11.6m investment in maintenance and upgrading would be required over the next ten years across nine centres to keep the facilities open and maintain acceptable standards of delivery. This figure did not specifically allow for significant levels of capital investment expenditure.

The condition surveys included assessment of the pool plant, tanks and ventilation systems. They also identified significant levels of investment (£7.8m) for additional building works required at Carnegie Leisure Centre and FIPRE, most of which would be required in the subsequent five years.

The FOLWG updated previous figures to all for inflation and estimated the level of investment required into the Council's sport and leisure portfolio is c. £48m, which includes immediate investment, refurbishment and replacement. The estimated level of investment required is set out in Table 3.7 below:

Replacement costs for FIPRE and Carnegie were also presented in this report estimated at c. £40m. Given their position as flagship facilities for the Council, investment in these centres is considered to be a top priority.

However, the replacement costs identified are based on like-for-like facilities, and are considered to be generous. There is a clear opportunity to provide a more focused facility mix, and reduce the projected costs. For example, a new facility incorporating a 25m pool, learner pool, 4-court sports hall and 50-station fitness suite have been delivered for c. £7m.

Following on from the findings of previous reports, this study focuses primarily upon the immediate investment requirements at the Council's three main leisure assets, Kirkcaldy Swimming Pool, FIPRE and Carnegie Leisure Centre. Table 3.8 overleaf provides a summary of the estimated headline costs based on existing data and key considerations for these three facilities.

The figures provided are based on the Ove Arup condition survey of swimming pools referred to earlier. Whilst the information is somewhat historic it is useful in that it provides a base point for the likely levels of investment that are required in the facilities. We are not aware that these figures have subsequently been updated, although it is recognised that these figures will have increased due to further deterioration of the building fabric and cost inflation. We understand that the Council is seeking to prioritise further survey work in early 2006.

A key part of the analysis of `where we want to be' is the need to understand the market, particularly in terms of the demand for sport and leisure facilities and activities matched against the existing and future supply. This will help to determine the appropriate levels of sport and recreation provision required to support the needs of the local community and inform any future funding, investment and development strategy. The key elements of the analysis were:

The key findings and conclusions drawn from the above areas of work are outlined in the following sections.

In analysing the need and demand for sport and recreation facilities, it is important to assess the size and composition of the local leisure markets and the impact they will have upon facility usage.

We have analysed the 2001 Census data to understand the demographic profile of the area and have also produced a Sport and Leisure Potential report, examining the local population's propensity to take part in a variety of different sports.

The propensity to participate is identified using a representative sample derived from Continental Research's Million Plus Panel. This panel comprises a pool of over 2 million UK residents and holds over 3,000 lifestyle, demographic and purchasing details. This panel is a representative sample of the Experian Ltd (ICD) Lifestyle database, which has in excess of 12 million records.

The research undertaken by Continental Research examined the likelihood of participation in a large number of sports and recreational activities, including minority sports. The study asked what activities people would like to do rather than investigating current levels of activity. Respondents who indicated that they are likely to participate in a particular activity therefore represent those with the propensity to participate, rather than indicating actual participation figures.

A summary of the results of the analysis of Census data and the Sport and Leisure Potential Report is outlined in Table 4.1 and 4.2 overleaf. The full Sport and Leisure Potential Report is shown at Appendix C.

The Sport and Leisure Potential report identifies the propensity to participate for different activities within Fife. The results are as summarised in Table 4.2 over the page.

The Facilities Planning Model (FPM) is a planning tool devised by sportscotland to assess the current provision of sports facilities within areas in Scotland. The FPM determines where future facilities should be developed and potentially where an oversupply of facilities is occurring. The model calculates levels of “unmet demand” based upon the area's population demographics and the capacities and accessibility of the facilities.

Using the FPM, sportscotland have calculated the unmet demand and oversupply of athletics tracks, synthetic turf pitches (STP's), main public swimming pools, 80 m² pools and public and school pools, sports halls (three courts and larger), sport halls (three courts and larger including school halls) and sports halls (two courts and larger, including school halls).

The FPM discovered that within Fife there is an (??????):

In summary, the FPM concluded that broadly, Fife has the right number of facilities in the right places. It did not identify any significant gaps in provision, in terms of the number of facilities but highlights that local access to facilities is important.

PMP have carried out a comparative analysis to establish the adequacy of current facility provision in meeting identified local demand. This process has involved three stages:

Existing sports halls available for public use are illustrated in Figure 4.1 over the page. Figure 4.1 illustrates that within the Fife District there are:

In addition, seven public facilities are situated within 3km of the District.

A summary of existing supply is as shown in Table 4.3 below.

For the purposes of demand modelling, accessibility for public use and size of facility are key factors taken into consideration when assessing the level of current supply provided by the network of existing facilities.

For example, within the model the capacity of dual-use sites is reduced by 25% to reflect the balance of school versus casual public access and, of the 29 sports hall facilities within the catchment area (from Table 4.3 above), Table 4.4 below identifies those that have been excluded from the analysis:

On this basis, current supply equates to 104 badminton courts.

The level of demand for sports hall facilities can be determined by applying accepted sports participation rate standards and peak usage parameters to the population within a chosen catchment.

Use of this demand modelling technique for the District calculates a level of current demand equivalent to 74 badminton courts.

If however, dual use facilities provided by schools are excluded from the modelling, the level of supply with Fife is 52 badminton courts. Based on a level of demand equivalent to 74 badminton courts

The findings indicate that there is an over supply of badminton courts. Excluding the provision of sports halls in schools, the findings indicate there is an under supply of badminton courts, which is comparable to the findings of the FPM. The critical factor is the availability and access to dual use facilities for members of the public.

This provides some justification for the rationalisation of the existing facilities, however it would not be recommended that the number of courts available be significantly reduced in any re-provision of facilities.

Figure 4.2 over the page identifies the current level of supply within the District. As evident from the map, current supply within the District includes:

Existing supply of swimming pools is summarised in Table 4.5 below:

Once again the capacity of dual use sites and/or those offering limited public access has been reduced by 25% within the demand modelling to reflect the balance of school versus casual public access.

On this basis, current supply equates to 4491m² of water space.

If however, dual use facilities are excluded, current supply equates to 3612m² of water space.

The potential demand for swimming can be determined by applying accepted sports participation rate standards (by age and gender) to the population profile within a chosen catchment. It should also be noted that propensity to participate in swimming in the District is in line with the national average, with 23% of the population expressing an interest (see Sport and Leisure Potential report at Appendix C).

The `at one time capacity' (the capacity in any peak session) can then be used to establish the level of supply needed to cater for identified demand, based on accepted parameters including peak hours, proportion of visits during peak times, average visit duration and pool area. This approach ensures that supply is sufficient in size to cater for the maximum demand at any point in time.

Use of this demand modelling technique calculates a level of current demand equivalent to 1248m² of water space.

Excluding dual use facilities;

The findings indicate that, currently there is an oversupply of water in the District. However there are a number of factors which need to be noted in the context of considering future facility developments:

We would therefore suggest that a degree of rationalisation of existing facilities is feasible.

Existing health and fitness facilities are illustrated in Figure 4.3.

As illustrated in Figure 4.3 above, within Fife there are:

Table 4.6 below summarises the current provision of health and fitness facilities within the catchment area.

The audit findings illustrate that current supply in the identified catchment area equals 844 stations.

The potential demand for health and fitness can be determined by applying accepted sports participation rate standards (by age and gender) to the population profile within a chosen catchment. It should also be noted that propensity of residents in the catchment area to participate in health and fitness is lower than the national average - 18.5% in comparison to 19.7% nationally.

The current demand equates to 1202 stations. This demonstrates an under unmet demand of 358 stations.

The demand modelling analysis has highlighted the need for further health and fitness facilities in the District to cater for unmet demand. The results indicate that the level of market demand within the identified catchment area is sufficient to support additional health and fitness provision.

In considering any further provision, regard must be given to the performance of the existing facilities, as detailed previously in section 3.

Figure 4.4 below identifies the current level of supply within the catchment area.

As illustrated in the figure 4.4 above there are:

A summary of the supply is shown in Table 4.11 below.

The audit findings illustrate that current supply in the identified catchment area equals 17 STP facilities.

The most comprehensive parameter to assess the level of demand for STP's is the following:

Use of this parameter indicates that for Fife the level of current demand is equivalent to 6 STP's.

However, a large proportion of these are dual use facilities. If these are excluded;

The demand modelling analysis indicates that the level of supply within the identified catchment area is sufficient to meet the demand. In fact there is an oversupply of 11 STP's however the inclusion of school facilities results in a small oversupply (2 STP's). We do not believe that further provision is required.

Given the historical and political rationale for current levels of provision and the scale of investment required in maintaining and upgrading existing facilities, plus any restructuring in terms of management and operation in Fife, it will be difficult to achieve a solution that in the short term can solve all problems simultaneously.

Instead, a pragmatic approach will be required, which phases the redevelopment and upgrading works required according to the level of capital / revenue available to the Council, the priorities in terms of delivering sustainable provision and considers the wider corporate priorities of the Council.

We have therefore considered both the priorities alongside options that offer a deliverable solution to the Council in the short to medium term, and how finance can be released to promote a long-term sustainable service. The key considerations include:

We believe that in order to `sell' a long-term strategy to the residents of Fife, the Council need to demonstrate a number of `quick wins', highlighting development and improvement in service delivery, whilst not launching into schemes that are unsustainable in the long-term.

Collating all of the information presented in sections 1-4, has resulted in formulation of the following hypothesis, which will be tested in the next few sections:

The 3-phase approach is based on tackling the immediate problems highlighted at Kirkcaldy Pool, FIPRE and Carnegie LC, and the need to strategically consider the location of facilities in rural areas in more detail.

Within Phase I, there are two sub-options, as outlined below:

In both options there will be a need to fund short term maintenance and some upgrade works at Carnegie LC, which will allow provision to continue until Phase II can be implemented.

The current position, in terms of provision `fit for purpose' and the ongoing revenue support, particularly at these three sites, but essentially across the portfolio is not sustainable. Key implications of maintaining a status quo are the continued levels of revenue support, operational functionality and continued delivery of services and programmes.

Given the proximity of FIPRE and Kirkcaldy pool there is geographical justification for combining the facilities to achieve alongside the management/usage/financial synergies of a single site solution. However, cognisant of the wider considerations (political/social etc.) we have not focused simply on a single site solution, rather we have investigated three options.

In the next two sections, we will focus on the management and funding opportunities for these pilot projects, outlining the key considerations and decisions required from the Council in order to progress.

It is important to note that, whilst the following sections will focus on delivery of the pilot projects, the management and funding commentaries are relevant for Phases II and III, when the Council is in a position to implement them.

The Council's sport & leisure facilities are currently operated in-house by Community Services.

However, in considering the future form of the service, it is necessary to revisit whether this management arrangement is best placed to deliver the service in the future. We will start by giving a description of the different management options available to the Council and the advantages and disadvantages of each. The three main management options available are:

It is interesting to note that the FOLWG have specifically identified the NPDO as an option requiring further investigation, as this is a route already in operation in many local authorities across Scotland and the rest of the UK.

We have deliberately not focused on in-house management within this section, as this is the current management route, with which the Council will be familiar.

An NPDO is a “not for profit” organisation; meaning that, while profits or surpluses can be made in the general operation, they must be re-invested in the service and not distributed to shareholders or other outside bodies. NPDO or Trust management has become a very popular vehicle for leisure management since the late 1980's. One of the main reasons for this is the savings that the Council generates from the reduction in National Non-Domestic Rates (NNDR) and VAT. NPDO's usually have charitable status as this ensures that NNDR and VAT reduction is maximised.

There are typically three types of NPDO:

The key differences between these Trust structures are outlined in Table 6.1 overleaf:

The Council also has further options with the transfer of management to an NPDO. These include:

With all of these options, the NPDO will employ staff, incur all expenditure and retain all income. The Council will typically have a management contract or funding agreement in place with the NPDO and thus will pay a fixed sum each year for the operation of the facilities.

If the Council decides to transfer to an existing NPDO, there may be lower central costs because the Board will already be in place, it will not be necessary to search for Board members who are willing and capable of performing the job and there will be none of the teething problems which might be encountered in the initial days of a new NPDO. However, an existing NPDO is unlikely to be based in the district and therefore there may be a lack of focus on the facilities and residents in Fife.

If there is a new NPDO set up to manage Fife's leisure services, the NPDO will be able to concentrate its efforts entirely on the Council's facilities and maximise benefits to the local community. However, the set up costs will be more expensive due to all the legal documents that will need to be drawn up, the central costs will be more expensive than for an existing NPDO due to the need for more staff (e.g. Chief Executive, Finance Director etc) and it will be necessary to find people capable and willing to be Board Members, although it is not normally a problem to find people willing to be Board Members for a leisure NPDO.

In terms of Council control, there will be little difference between a new NPDO and an existing NPDO as the Council will be able to control pricing, programming etc through the grant agreement.

The Transfer of Undertakings (Protection of Employment) Act 1981 would apply to staff transferring to the NPDO from the Council.

There are a number of key benefits to using NPDO's compared to other management options. These include:

A NPDO can gain either mandatory or discretionary rate relief, depending upon whether the NPDO is a registered exempt charity or not and the Council's policy relating to discretionary relief. The government meets the cost of the relief provided through mandatory relief and the Council and government share the cost of discretionary relief on a ratio of 75:25 respectively.

Registered charitable organisations can currently claim 80% mandatory relief on NNDR and the remaining 20% may be discretionary. The cost to the Council is 75% of the discretionary element only. Thus there is the opportunity for an NPDO to gain between 80-85% relief from business rates.

Potential financial savings from VAT are much more complex. The basic principle is that VAT paid on expenditure can only be recovered in the same proportion as the VAT charged on services provided. Where, for example, an NPDO charges VAT on only 10% of their activities, they can only recover 10% of the VAT they have incurred on delivery those activities.

Only certain aspects of income when the service is run in house are VAT exempt, including educational classes, use by schools and clubs etc, whereas for an NPDO, all general admissions are VAT exempt, but that has an impact on their VAT recovery.

In effect, this means that circa 90% of a leisure NPDO's sports activities are exempt from VAT. This price advantage of NPDO's compared to in house or private sector management can offer significant benefits, which the NPDO can use either to raise additional income or keep prices down.

For any organisation to be largely dependent on annual funding is a risk, although many sports, arts and community organisations have become reconciled to this fact. NPDO's engaged in leisure provision, however, have demonstrated that it is certainly possible to increase income generation and reduce the dependency on annual revenue grants.

Typically, this has been through investment in the facilities to improve the service, which generates increased income and enables investment in community-focused activities.

An NPDO is able to access the same external funding sources as the Council, including Lottery and the New Opportunities Fund etc. NPDO's are also able to access funds designated for charities as long as they are registered. Joint projects with educational institutions, local health authorities and with regeneration partnerships are sometimes much more attractive to potential partners if the approach comes from an NPDO rather than from a Council.

This is generally because the other institutions see the NPDO as being focused on delivering community services, particularly if it is a charitable organisation. However, this is not always the case and it does depend on the Council's previous track record.

Trustees provide a significant resource to the NPDO. Unpaid Trustees can offer a plethora of specialist knowledge and expertise, business acumen and local community contacts.

Experience from existing NPDO's demonstrates that people of quality and calibre are attracted by the opportunity to contribute to the management of leisure NPDO's. For example, most leisure NPDO's will have accountants and lawyers as well as community representatives as members of the Board.

A well-managed recruitment process can secure these benefits for the new NPDO. In addition, Trustees usually have their own networks and these are likely to offer an invaluable source of business development opportunities and collaborative partnerships for joint working. It should however be recognised that it is not always easy to attract trustee's and it is critical that personal liabilities are limited.

The business focus that a leisure NPDO brings, however, is likely to be the most important benefit. Any senior leisure officer is likely to be required to contribute a significant amount of time to corporate affairs and consider the wider Council benefits when making decisions. Whilst the Council, as a whole, benefits from this support, the quality of direct leisure management may suffer from lack of focus and of time. An NPDO will work exclusively for the benefit of the leisure facilities, which can improve the service significantly.

Flexibility of response is another clear benefit of NPDO management. Leisure trends in particular change rapidly and Councils can be very slow to react. An NPDO, however, upon deciding that a new gym or extension is needed, for example, can plan for and make that investment.

There will be a time in the early stages during which the NPDO needs to build up its reserves, and borrowing may be a problem, particularly if the Council only grants a short term lease, but this can usually be addressed successfully. With the opportunities of prudential borrowing, this may reduce the funding concerns.

It is critical that within the establishment of the NPDO, the Council considers the level of initial and future capital investment and who is going to make the investment. If the Council invests the capital, then the lease can be short term. But if the NPDO is expected to make this investment, then the lease should be long term. In the initial stages it is likely that the Council will be able to invest the capital more cheaply than the NPDO, in which case an initial short-term lease is appropriate.

As well as significant advantages, there are also a number of disadvantages with an NPDO transfer, including:

The factor that is often considered to represent a significant disadvantage of an NPDO transfer is a reduced level of influence, often seen by elected Members as loss of control. This relates to the Local Government and Housing Act 1989 and subsequent regulations, which prevents local authorities from retaining control of NPDOs that provide services or facilities.

There is a 20% rule within the Act that states that elected representatives or employees of the Council should be less than 20% of an NPDO Board. If these limits are exceeded, the NPDO is considered to be a local authority influenced or controlled company and its expenditure is counted as local authority expenditure in central government calculations. The NPDO will not therefore be authorised as a body independent of local authority capital control.

NPDOs are considered to be independent from their local authority if they adhere to the 20% rule, although some NPDOs retain places for members within the 20% rule and the vast majority are still dependent on Council grant aid. Council control is exercised and retained through the mechanism of grant aid and monitoring procedures, rather than by direct representation.

An NPDO will not usually have immediate access to significant funds for capital investment. In the early years, it will need to build a business case to access investment funds, which may be difficult as the NPDO will have no significant track record and the only security will be the lease. During this period, the Council will probably pay for any investment in non-revenue generating schemes, through an increased grant.

Given the current situation with the Council in need of significant capital investment, this is a particularly important point and the Council will need to consider other means of capital investment - for example, prudential borrowing or use of capital receipts.

Prior to commencing operation and in its early days, there will be costs associated with setting up the NPDO. Generally the one-off costs associated with the development of a new NPDO can be in the region of £100,000 - £150,000, which covers external legal advice, any new staff required prior to commencement of the new arrangement, financial advice (VAT) etc. Obviously this will not be an annual cost. In addition, there is the potential for redundancy costs in relation to central support services where a reduced service is required from the Council.

However, in the majority of transfers to date the central services staff can either be redeployed or the remaining work is initially spread over too many people. Savings will then be realised by not filling posts that become vacant, through natural turnover of staff, avoiding redundancy costs.

Another disadvantage of setting up a NPDO is that although they are not legally irreversible, in practice it is very difficult to do so. Therefore, if the Council does take the option of transferring the facilities to a new NPDO, it should not be seen as a short-term solution for management and operation whilst other options are considered. We are not aware of any NPDO operation being reversed, however as the number of transfers increases then the likelihood of this happening increases.

If the Council opted to set up a new NPDO, usually the in house management team would be carried across. In some situations, therefore, the NPDO simply operates like a DSO and if it was performing poorly before, then it is likely to perform poorly after the transfer.

In summary, therefore, outsourcing to an NPDO does mean a reduced level of direct Council control. Influence of the NPDO is exercised through leases of the property and other contractual arrangements, the most significant of which is likely to be a revenue grant agreement or contract.

An NPDO can be an attractive option. Financial savings can be made, the community can become involved in the running of facilities and there may be a more direct focus on the leisure and cultural facilities and services, resulting in improved quality of service delivery.

A partnership with the private sector could be created by transfer of the management of facilities to a private company for a specified period of time, with an agreed refurbishment and development programme, and incorporating a fixed or performance linked fee. In short, a private company operating in partnership with the Council under the terms of whatever operational agreements are put in place.

Contracting services to the private sector means that control is through the contract rather than through direct control of services. The Council defines the scope of the project and services needed. There are a number of different types of private sector management, usually dependent upon the level of capital investment the private sector will be making. These include:

With each of these types of management arrangements, the Council would set out a specification and contract to which a Leisure Management Operator or a consortium of operator, builder and funder would work and the Council would pay a management fee for these services

The private sector would employ staff, incur all expenditure and retain all income. Thus the Council is transferring the operating risk of the service to the private sector. There may also be the opportunity for the Council to enter into a profit share arrangement.

Private sector contracts are a rare occurrence in Scotland as the market for leisure has traditionally focused on either in-house provision or NPDO management. However, as private operator contracts are one of the most effective ways of generating capital, an appraisal of the different contract types has been included below.

The DBFO Contract provides for the Council to enter into a contractual arrangement with the private sector to design, build, finance and operate new or existing facilities and take on the risks of these in return for a management fee, known as a Unitary Charge.

The main drivers for these solutions are:

The Council's ability to provide revenue support is critical, but with new or enhanced facilities resulting in improved income streams and lower operating costs, any `reductions' in the subsidy created as a result of the new facility can then help to pay for the costs of the private sector finance.

In addition, the private sector offers the benefit of wide commercial knowledge and experience, which should lead to financial savings, through greater efficiency of operation and higher income generation. Their culture is highly customer focused and market driven.

It is worth noting that there may be difficulties in developing an appropriate contract that protects any current emphasis on community developments as a private company is ultimately answerable to shareholders, and may have few social objectives or little community involvement. However, the Council should be assured that it can control policy such as pricing, programming and participation targets via the Output Specification, which forms a key part of the documentation to be signed by the selected private sector operator or consortia.

This is a variation of the DBFO contract, where the Council enter into a long-term service contract with the private sector consortium for the design, build, operation and maintenance of a facility, but the Council provide the finance to meet the initial capital costs of the arrangement.

A particular benefit that the private sector has traditionally brought to schemes is the ability to access significant capital investment. However, the advent of prudential borrowing and the removal of borrowing restrictions on local authorities has created the opportunity for a new form of contract, referred to as a Design, Build, Operate and Maintain (DBOM) contract.

The funding of the initial capital costs of these schemes may be from capital receipts, capital grants, land sales or swaps, revenue contributions or from the new prudential borrowing system introduced by the Local Government Act 2003. The financing of these types of contract using public sector resources is likely to be more cost effective than the use of private sector finance.

This contractual arrangement involves the use of the DBFO or a DBOM Contract, but with the use of a commercial NPDO provided by the leading private sector operators, for example, DC Leisure, Leisure Connection or SLM.

It is therefore possible that the Council could enter into a DBFO or DBOM arrangement whereby the Contractor subcontracts the management of the facilities and/ or services to a NPDO. Under such circumstances, the Council could benefit from revenue savings through the allocation of discretionary NNDR relief whilst also being able to attract significant capital investment.

These structures are not able to attract the mandatory relief as they are not deemed to have charitable status. As a result, where the Council agree to discretionary NNDR relief, the Council are obliged to finance 25% of this relief to the NNDR Pool. As a result, these types of arrangements can only lead to a 75% saving in NNDR costs.

In conclusion, the outsourcing of leisure facilities to a private operator can secure significant amounts of capital and ensure efficiency in the operation of the leisure services. The Council can also enjoy a reduction of associated risk and retain an element of control through operational specifications. The financial cost of these benefits can however be high, as the Council could have to pay a significant management fee.

The strengths and weaknesses of the options are summarised in Table 6.2.

Having considered each of the management options in general terms, Table 6.3 compares the routes to some of the key drivers for Fife, as identified in previous sections of the report.

Table 6.3 indicates that the NPDO route is best placed to deliver the integrated community service ethos that the Council is focused on delivering, whilst delivering financial benefits to allow investment in the assets of the service.

We are concerned that, given the size of change required within the service, continuation of in-house management, with existing practices and customs, will hinder this process and continue to provide financial uncertainty to the Council.

However, transfer of 12 leisure facilities will be a major task, and not something implemented easily. It is therefore suggested that the Council consider phased transfer, in line with the phased works on facilities. Phase I transfer would involve the management of FIPRE, Carnegie and Kirkcaldy being transferred to an NPDO, with the financial benefits being used to fund the required capital investments.

Following this first stage transfer, the Council will be in a position to evaluate the success of NPDO management, before rolling-out the vehicle to the other 8 facilities in the District. Longer-term, the Council could then consider including other community assets within the NPDO, such as community centres and libraries. An NPDO covering this range of community services would be in a position to deliver a truly integrated service to the people of Fife.

Having considered the Phase I schemes in outline, and the associated management routes, we will now investigate the financial implications for the Council.

The capital and revenue positions are inter-related, and changes to one will impact on the other, however, for ease of presentation, we will consider each in turn.

The estimated capital expenditure [construction costs] required for elements of the Phase I programme are projected to be:

The capital estimates are based on the previous work undertaken by the Council, and on the costs of recently provided leisure facilities.

The Kirkcaldy replacement pool is considered to be a 25m 6-lane pool, with learner pool and health & fitness provision. Using a SWIM25 model, a capital cost of £5m is considered to be realistic, and includes an allowance for inflation to a late 2006 start on site.

FIPRE replacement has been modelled as a comprehensive wet & dry leisure centre, incorporating 25m 6-lane pool, learner pool, six court sports hall, health & fitness and ancillary provision, plus external provision if required (STP and pitches). A capital cost of £10m is based on recent estimates seen by PMP on other leisure projects, plus an allowance for inflation.

A combined facility, that provide a single facility replacement for FIPRE and Kirkcaldy Pool, would include all of the elements in the FIPRE replacement, but incorporate an enlarged 8-lane competition pool, larger sports hall (8 court), enlarged health & fitness suite (c. 80 stations) and ice rink to replace the existing facility in the town, which we understand to be in a poor state of repair. The capital cost of £16m is based on estimates received on a recent scheme in the North of England with a very similar facility mix, plus an allowance for inflation.

The combined facility would represent a more regional type facility serving the wider area of Glenrothes and Kirkcaldy, as opposed to the two smaller `local' centres in Kirkcaldy and Glenrothes.

The essential maintenance works and upgrade to Carnegie LC is an estimate based upon previous Council commissioned survey work.

The estimated combined capital cost of the different options will therefore be circa £18-£20m, irrespective of whether a one or two centre solution is chosen. Of critical importance therefore will be the revenue positions associated with each option. However, a combined solution would offer a wider facility mix and deliver a solution that offers greater flexibility/accessibility as well as a wider strategic functionality.

Assuming the facility mixes outlined earlier in this section, the revenue positions for each facility have been business planned, using the following assumptions:

The income and expenditure for each facility is detailed in table 7.1: