Report to the Executive Commissioning Committee

22 July 2019 Wards : none

Hull Culture and Leisure Ltd – Performance Report Year end 2018/19

Report of the Deputy Chief Executive

This item is not exempt

1. Purpose of the Report and Summary

1.1 To provide members of the Executive Commissioning Committee (ECC) with a summary of the year end performance of the wholly owned company Hull Culture and Leisure Ltd (HCAL) for 2018/19.

2. Recommendations

2.1 The Committee acknowledges the achievements of the company in 2018/19 and the impressive combined visitor numbers of 3.16m, and considers this when revised targets are provided for consideration for 2019/20.

2.2 The Committee notes the balanced outturn for the operating contract and the £100k excess in Theatres and Halls.

2.3 That performance targets set for 18/19 will continue into 19/20 (with closure adjustments).

3. Reasons for Recommendations

3.1 The ECC recommended some stretching performance targets for the company for 2018/19, seeking to maintain the momentum built up during 2017. All but 2 have been achieved, the overall combined total being well within the 10% tolerance. These figures reflect the direction determined by this Committee to seek such stretching targets and represent significant achievements by HCAL, demonstrating the improvement in relation to pre-2017 levels of participation and suggest the ‘new normal’ is a positive baseline upon which to build further achievements and impact given the continued investment profile. Targets have been proposed by HCAL but the Committee should consider, as a minimum, maintaining such performance levels, accounting for the

Page 1 of 16 proposed closures of facilities planned for periods of refurbishment.

3.2 For the second year the company has successfully managed the 2% reduction in management fee and continues to over achieve the income target in City Hall and New Theatre (if not as significantly as in 2017/18).

3.3 The increased income target for Hull New Theatre and City Hall for 2019/20 is significant and the client and the company must work together to reduce the level of risk of its achievement and monitor progress closely.

4. Impact on other Executive Committees (including Area Committees)

4.1 None

5. Background

5.1 The company has been operating a contract for leisure related services along with a management agreement relating to the operation of Hull City Hall and New Theatre on behalf of the Council since April 2015.

5.2 It was agreed that the management fee provided by the Council would be reduced by a minimum of 2% per annum from 2017/18 until 2019/20. Due to the financial position of the Council the reduction for 2019/20 was increased by £296k. It is the intention of the contract that the reduction in Management Fee would be offset by increased income and efficiencies within HCAL.

5.3 The Company covers any increases in national insurance, inflation and pay awards (relating to the contract). The Company retains income generated from the catering, retail and Parks service along with all secondary income relating to the Theatres and Halls Management Agreement. Income from ticket sales at the New Theatre and the City Hall is retained by the Council. Contractual issues regarding the management agreement, including incentives, will be considered as part of the Value for Money Review.

5.4 As previously presented to this Committee, in the year 2019/20 the Client and HCAL are working together to undertake the contractual Value for Money review which will set the contractual relationship for the next 5 years of the contract. Work has commenced on the review, in terms of a ‘baseline’ assessment of achievements in preparation for the compiling of the report regarding any proposed improvements that this Committee may wish to consider for the remaining five years of the current contract.

6. Issues for Consideration

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Performance Indicators

6.1 HCAL has achieved all performance targets required by the ECC (within a 10% margin) with the exception of ‘in person’ and ‘virtual’ visits to Museums and Galleries. Overall visits to HCAL operated venues have achieved the combined stretched target set by the ECC of 3.25m (within the 10% tolerance), reporting a grand total of 3.16m visits smashing pre 2017 figures. Detail is shown at Appendix 1. The overall target acknowledged by the HCAL Board was 2.85m.

6.2 Museums and Galleries service advises that high profile exhibitions continue to draw in good numbers although, the scale of the programme is significantly reduced and HCAL’s ability to stage large scale events is also reduced (in comparison to 2017) recognising the relationship between visitor numbers being essentially proportional to the exhibitions and events programme and the marketing spend. All marketing capacity (other than that provided by the Council) is externally funded. HCAL has confirmed that they no longer reach the size of core audience they did in 2017 in the absence of the 50,000 Hull2017 social media followers. This is clearly a concern and the Client will work with HCAL to keep them advised of the developing marketing and audience development channels that are now in place.

6.3 Whilst the new website is much more user friendly there are security issues with the collections website which has been fully shut down to enable investigations, this has and will impact on museum virtual visitor numbers.

7. Annual Indicators – To Improve Customer Satisfaction

7.1 Satisfaction levels are consistently high across all services areas with the exception of Parks Management and the Catering Services. Parks have improved in relation to the previous year but not yet equalling the levels of 2016/17. Satisfaction with the catering service has dropped significantly to 80%. Detail can be found at Appendix 2.

7.2 The slight reduction in satisfaction at leisure facilities is attributed to the short notice cancellation of a temporary closure at Ennerdale and teething problems at the reopening of Woodford. The reduced satisfaction with the catering service relates to price increases and proposals to close/reduce operations at certain sites following a catering viability review. These changes were agreed by this Committee on 22 nd October 2018 as part of HCAL’s savings proposals.

8. Customer Feedback

8.1 HCAL operate their own independent feedback scheme spit into categories: compliment, comment and concern.

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Table 1 Compliment Comment Concern Stage 2 Catering & 2 7 15 1 Hospitality Libraries 16 9 18 1 Museums & 7 5 9 1 Galleries Parks & 7 4 31 0 Gardens Sports & 18 23 168 25 Leisure Theatres & 14 35 417 70 Halls total 64 83 658 98

With a total of 3.16m visits concerns equate to just 0.02% of the visits made.

8.2 The majority of complaints in Theatres and Halls have arisen since February as a result of the management of security checks and confiscation of confectionary items (then donated to food banks). This is currently under review by HCAL and options will be provided for consideration.

9. Accreditation /Achievements

9.1 Customer Service Excellence - Leisure Services, Hull City Hall and New Theatre have all achieved the external Customer Service Excellence award.

9.2 The Royal Life Saving Society awarded Ennerdale staff a Certificate of Commendation and Albert Avenue staff a Certificate for Meritorious Action, for saving the lives of 2 customers, both have made a full recovery.

9.3 Zoo Licence Status - The Animal Education Centre (East Park) has achieved this status and is now developing an updated education and conservation programme.

9.4 Green Flag – East Park was awarded Green Flag status in 2018.

9.5 Archives Accreditation - the History Centre has become an Accredited Archive Service, as administered by The National Archives. This recognises the good performance in all areas of archive service delivery that is undertaken.

9.6 The was shortlisted for the Art Fund Museum of the Year Award 2018.

Page 4 of 16 9.7 The Heritage Learning Team has won external recognition for its work including national awards for excellence for ‘Education Initiative’ 2017 (a Hull Curriculum Project) and the ‘Project on a Limited Budget’ 2018 (Exploring Galleries for the under 5’s) and the Sandford Award 2018 (an independently judged, quality assured assessment of education programmes at 500 heritage sites, museums, archives and collections across the British Isles).

9.8 All our museums have achieved the Arts Council’s Accredited Status and several of the collections (local archaeology, Wilberforce and local maritime collections) are recognised as ‘Designated Collections’ which is an accolade given only to those of national and international significance.

9.9 Makerspace – the first facility in the region has opened in Central Library providing individuals, groups and businesses with access to a vast range of tools, equipment and expertise from simple hand tools to a CNC (Computer Numerical Control) machine, 3D printers and kilns. It facilitates ‘making’ in all fields and at all levels.

10. Food Hygiene Rating (Scores on the doors)

The Venue: • Hull City Hall - 5 (Very Good – 11/01/2018) • Hull New Theatre - 5 (Very Good – 08/03/2018) • Central Library - 5 (Very Good – 15/01/2019) • Ferens Art Gallery - 5 (Very Good – 14/03/2019) • The Guildhall - 5 (Very Good – 28/03/2018) • Woodford - 5 (Very Good – 19/06/2018) • Ice Arena - 4 (Good – 01/03/2018) • Ennerdale - 3 (Generally Satisfactory – 17/03/18) • History Centre - 3 (Generally Satisfactory – 22/06/18)

11. Financial Performance

11.1 HCAL Preliminary Outturn Position

11.1.1 There is a small over-spend relating to the Operating Contract of £29k (this does not impact on the Council as it is within the 4%+/- margin).

11.1.2 In 2018/19 the Theatres and Halls Agency Contract achieved the income expectation for the year exceeding the target of £1.597m by £107k with a total outturn of £1.704m. The additional £148k (activity related recharge) is included in the outturn position.

11.1.3 From 2017/18 the surplus income generated has been allocated so far as follows:

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Table 2 £k 2017/18 Surplus 558,882 Audience Development 110,000 City Hall Enhancements 230,000 EITM Conference 20,000 University Longitudinal Project 25,000 City Hall Consultant 50,000 Balance 123,882

11.1.4 HCAL have proposed the allocation of the balance in the following way: • £10k to support enhanced digital marketing • £110k balcony and gallery seating & Improving the base technical infrastructure of City Hall to further expand the technical capacity

11.1.5 This proposal is on hold pending the outcome of the City Hall review.

11.1.6 Performance by Service – Operating Contract

Table 2 Service Budget Preliminary Variance 2017/18 (£'000s) Outturn £'000s Central 2,557 2,263 -294 2,397 Services & Overheads Catering -70 45 115 -20 Leisure 34 219 186 530 Parks 1,242 1,250 7 1,272 Libraries 1,683 1,697 15 1,627 Museums 1,677 1,698 21 1,572 and Galleries Theatres -195 -216 -20 -221 and Halls - Secondary Income Total before 6,928 6,957 29 7,155 Operating Management Fee

Central Services and overheads are showing a significant variance; the budget whilst loaded centrally was spent within each service, this has offset the overall position and contributed to the overall outturn.

Page 6 of 16 11.1.7 In comparison to 2017/18 the performance of the catering service has declined whilst secondary income in Theatres and Halls has remained buoyant. The performance of Leisure has improved in comparison to 2017/18 as a result of the investment and commitment to the re- invigorated Woodford Leisure Centre and in spite of continuing budget pressures relating to the Ice Arena, Sutton Golf Course and Costello Stadium. The cost of running Museums and Galleries and libraries has increased.

11.2 Income & Expenditure – Operating Contract

Table 3 Budget Preliminary Variance 2017/18 £000s Outturn Outturn £’000 Government -1,127 -1,081 45 -2,311 Grants Other grants -938 -1,244 -306 -1,141 reimbursements Customer & -6,503 -6,167 335 -6,030 Client Receipts HCC -6,512 -6,512 0 -6,916 Operational Delivery Total Income -15,078 -15,004 74 -16,397 Employees 10,594 10,561 -33 10,224 Premises 536 452 -83 589 Transport 89 107 18 83 Supplies and 2,511 2,768 256 4,126 Services Support 1,574 1,496 -78 1,465 Services VAT on 191 66 -125 150 expenditure Total 15,495 15,450 -45 16,637 Expenditure Net Budget 417 445 29 239

The overall grants budgets combined have significantly overachieved target but fell short of the previous year’s outturn by £1.4m. Customer and Client receipts haven’t achieved target but have exceeded 2017/18 levels.

11.3 HCC Agency Contract (Hull New Theatre and City Hall)

Table 4 Service Budget Preliminary Variance 2017/18 £000s Outturn Outturn £000s

Page 7 of 16 City Hall -168 -188 -20 -224 New -1,344 -1,479 -134 -1,168 Theatre Booking -84 -185 -101 -92 Fees (net of costs) Activity 0 148 148 92 related Recharge HCC Net -1,597 -1,704 -107 -1,392* income *New Theatre was closed until Sept.

All services have exceeded target.

11.3.1 For 2018/19 the subsidy provided by the Council for the running of City Hall & New Theatre was increased by £277k to enable supplements to the operation and programme:

• £45k – Audience Development • £122k – Technical staffing

Including £110k allocated from surplus income from 2017/18 to provide:

• Equipment • Access Performances • Signage • Education • Young People Drama

11.3.2 There was an expectation that at least £100k surplus would be achieved as a result of the impact of some of this additional budget and it is reassuring to report that this has been achieved. Some of the additional income has not yet been allocated and is planned for 2019/20.

11.4 HCAL: Income and Expenditure – Agency Contract

Table 5 Budget Preliminary Variance 2017/18 £000s Outturn Outturn £’000 Government 0 0 0 0 Grants Other grants -2 0 2 -3 reimbursements Customer & -496 -843 -347 -835 Client Receipts

Page 8 of 16 HCC Agency -1,657 -1,657 0 -1,295 Agreement Total Income -2,155 -2,500 -345 -2,134 Employees 1,398 1,562 164 1,276 Premises 15 26 11 18 Transport 4 3 -2 3 Supplies and 321 492 171 485 Services Support 0 0 0 0 Services VAT on 0 0 0 0 expenditure Total 1,738 2,083 345 1,782 Expenditure Net Budget -417 -417 0 -352

The positive position of -£417 is allocated to central costs and offsets the net budget target at 11.2.4.

11.5 HCAL Total

Table 6 Budget Preliminary Variance 2017/18 £000s Outturn £000s Outturn £000s £000s Total -17,233 -17,504 -271 -18,532 Income Total 17,233 17,532 300 18,419 Expenditure NET Budget 17,233 28 28 -112

Income is £1m less than the previous year balanced with expenditure just under £1m less.

11.6 Management Fee 2019/20

The fee has been set as follows:

Table 7 Management Fee 18/19 £8,223,393 (starting position) Contractual 2% reduction (£132,000) Parks Equipment budget (£147,030) Transfer Additional Saving 187,246 remaining (£108,754) of the 296,000 East Park Library increase £300 in costs Theatres and Halls increase £103,869

Page 9 of 16 in costs: inflation, activity levels T&H Building Cleaning SLA £32,226 increase Management Fee 19/20 £7,972,004

11.7 As agreed by the ECC the remainder of the £296k savings target (£187,246) has been added to the income expectation for City Hall and New Theatre along with the relating uplift costs resulting in an income expectation of £1,920,657, hence the budget pressure remains.

11.8 It is of concern that due to the additional pressures on the income expectation the target for 2019/20 is considerably greater than previously. This will be closely monitored and updated to the ECC regularly. Whilst it is anticipated that the performance of the New Theatres will continue to grow as a result of both the significant investment in the New Theatre and City Hall, and the ongoing commitment of the management and operations team, a risk still remains.

12. Relations

12.1 Property:

12.1.1 Overall, the Council, through its capital programme continues to seek to invest in the assets operated by HCAL. In addition to the general repairs and maintenance requirements the following improvements have been realised: • £8m collaborative delivery of the upgrade and new pool at Woodford Leisure Centre • City Hall - £320k upgrades to CCTV/Security systems and fire alarms • History centre fire enhancements £213k

12.1.2 Property and Assets work collaboratively with HCAL to ensure that as a critical and key consultee within any construction or maintenance works their valued input as operator shapes and defines all aspects of work especially to those properties which were not fortunate enough to have a major refurbishment. We continue to make incremental improvements to all areas of leisure, arts, museums, libraries and parks to ensure that the aspirations met at New Theatre, Woodford and Ferens are exceeded across the entire HCAL portfolio and that the public continues to see investment and improvement.

12.2 Major Projects:

12.2.1 Hull New Theatre – support remains from Major projects working collaboratively with HCAL post-handover with any outstanding issues being resolved.

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12.2.2 Woodford Leisure Centre – partnership delivery of an extremely popular facility has been delivered and Major Project continue to assist and support with challenges and approaches to building issues.

12.2.3 Lessons learned from the Ferens project have ensured the teams engage with HCAL from project inception, Major Projects have increased their knowledge of the operational restraints of HCAL and the site teams to maintain a first class service to users, this approach continues through the development of plans for:

• Hull ’s Maritime City; • Albert Avenue Baths; • Beverley Road Baths; • New Ice Arena; • East Park Splash Pad; and • Pickering Park Education Centre

Major Projects consider that the relationship is strong and they continue to assist and support with challenges and approaches to building issues as they arise.

12.3 Public Health

12.3.1 HCAL have worked closely with Hull City Council’s Public Health team and other local partners during 2018/19 to produce the ‘Towards an Active Hull 2018-2028’ Strategy for increasing levels of physical activity across the City. HCAL have led the production of the strategy and the wide-ranging consultation to inform its development. HCAL also facilitate the Strategic Partnership group that has overseen the development of the strategy and will now drive forwards its implementation. In addition HCAL have been an active partner in the ambitious local work to develop a whole system approach to tackling childhood obesity.

12.4 ICT

12.4.1 Work on developing the E-recruitment system is complete with HCAL managers having more control over the recruitment process.

12.4.2 Significant enhancements are planned for HCAL in 2019/20:

• All Staff PCs will be upgraded/replaced with Windows 10 (completion by January 2020); • All public PCs will be replaced with Windows 10 (completion by January 2020); • All libraries and leisure centres will have links upgraded from 10MB > 100MB; • Increased WIFI coverage and speed increases in public areas;

Page 11 of 16 • Upgrade / replacement of library management system (SIRSI); and • Replacement of public access PC software, which will introduce online PC booking and WIFI printing capabilities.

Planning discussion and funding identification is already underway for the above with HCAL.

13. Service Level Agreements

13.1 Issues remain in some areas in relation to drafting and agreeing the terms of arrangements for 2018/19 i.e. Building Cleaning with no resolution in sight for 2019/20 and HCC budget pressures building. The HCAL board is currently reviewing their options and will provide their positon as part of the Business Plan to be provided for consideration in October. The client will work with HCAL and duly consider any implications for the Council, any significant changes will need to be approved by Cabinet as it will represent a change to the delivery of the service

14. City Hall

14.1 As approved by this Committee technical advice is in the process of being procured to review the current operation of the City Hall and provide independent insight into its future, a report with options for consideration is anticipated by year end. This exercise is intended to re-position the City Hall within our new Cultural Landscape and provide the opportunity to develop a sustainable future and add to the wider venue offer.

14.2 In the meantime a number of improvement works have been identified to take place throughout 2019/20 and 2020/21. Details can be found at Appendix 4.

15. Value for Money Review

15.1 The Transformation team have started to gather the information described in the project’s Terms of Reference previously approved by this Committee and a mid-way update will be provided for the next meeting of this committee.

15.2 In order to gather valuable insight into the company’s and stake holders perceptions of the first five years of the contract, opinions and perceptions are to be gathered to feed into the outcome of the review. The Research and Evaluation Strategy can be found at Appendix 3.

16. Options and Risk Assessment

Page 12 of 16 16.1 Risks in relation to the increase pressure on the Theatre and City hall income target for 2019/20 is significant. In 2018/19 the outturn was £1.7m, the target for 201920 is over £1.9m.

16.2 HCC SLA Budgets remain at risk as issues are ongoing with no resolution. Outstanding balances remain in Building Cleaning from 2018/19.

17. Consultation

17.1 HCAL have contributed to and had the opportunity to comment on this report.

18. Comments of the Monitoring Officer(Town Clerk)

18.1 The Town Clerk notes the performance of HCAL. If a business case shows benefit to the Council as a whole in transferring the cleaning operation to HCAL then given the ECC’s role is one of monitoring any decision to transfer should go before Cabinet for approval. In monitoring performance the ECC is fulfilling the role of ensuring that the Council exercises decisive influence over the company.

19. Comments of the Section 151 Officer (Director of Finance and Transformation)

19.1 The Section 151 Officer notes the report. The balanced outturn and the achievement of the savings in 18/19 on the operating contract are positive.

20. Comments of the Assistant Director of HR and OD and compliance with the Equality Duty

20.1 There are no staffing or equality issues arising for the Council.

21. Comments of Overview and Scrutiny

21.1 This report has not been subject to pre-decision scrutiny. (Ref. Sc5431)

22. Comments of the Portfolio Holder for Culture, Leisure and Tourism

22.1 “The Portfolio Holder notes the report and agrees the recommendations.”

Trish Dalby – Deputy Chief Executive

Contact Officer: Malcolm Relph Telephone No.: 615002

Page 13 of 16 Officer Interests: None

Background Documents: -

Appendix 1 – Performance Indicators – 2015/16 to 2018/19 Appendix 2 – Customer Satisfaction Levels – 2015/16 to 2018/19 Appendix 3 – VFM: Research & Evaluation Strategy

Page 14 of 16 Implications Matrix

This section must be completed and you must ensure that you have fully considered all potential implications

This matrix provides a simple check list for the things you need to have considered within your report

If there are no implications please state

I have informed and sought advice from HR, Yes Legal, Finance, Overview and Scrutiny and the Climate Change Advisor and any other key stakeholders i.e. Portfolio Holder, relevant Ward Members etc prior to submitting this report for official comments I have considered whether this report Yes requests a decision that is outside the Budget and Policy Framework approved by Council Value for money considerations have been Yes accounted for within the report

The report is approved by the relevant City Yes Manager I have included any procurement/commercial Yes issues/implications within the report

I have considered the potential media interest Yes in this report and liaised with the Media Team to ensure that they are briefed to respond to media interest. I have included any equalities and diversity Yes implications within the report and where necessary I have completed an Equalities Impact Assessment and the outcomes are included within the report Any Health and Safety implications are Yes included within the report Any human rights implications are included Yes within the report I have included any community safety Yes implications and paid regard to Section 17 of the Crime and Disorder Act within the report I have liaised with the Climate Change Yes Advisor and any environmental and climate change issues/sustainability implications are

Page 15 of 16 included within the report

I have included information about how this Yes report contributes to the City Plan/ Area priorities within the report I have considered the impact on air quality, Yes carried out an appropriate assessment and included any resulting actions or opportunities necessary to improve air quality in the report.

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