BIRMINGHAM CITY COUNCIL PUBLIC REPORT Report to: CABINET Report of: Strategic Director for Major Projects Date of Decision: 22 March 2016 SUBJECT: BIRMINGHAM MUSEUMS TRUST CONTRACT 2016-21 AND LEASE AGREEMENTS Key Decision: Yes Relevant Forward Plan Ref: 001224/2016 If not in the Forward Plan: Chief Executive approved (please "X" box) O&S Chairman approved Relevant Cabinet Members Cllr Penny Holbrook – Skills, Learning & Culture Cllr Stewart Stacey – Commissioning, Contracting & Improvement Relevant O&S Chairman: Cllr Victoria Quinn – Economy, Skills & Sustainability Wards affected: All 1. Purpose of report: 1.1 To seek approval for new contractual and lease agreements with Birmingham Museums Trust (BMT) for museums and heritage services in the period 2016-21. 1.2 To establish a basis for long term planning in relation to the management of the city’s museum collection and the programme of activities in city museums through a Memorandum of Understanding between Birmingham City Council and Birmingham Museums Trust. 2. Decision(s) recommended: That the Cabinet:- 2.1 Agrees the Memorandum of Understanding attached at Appendix One, setting out the principles of joint working with Birmingham Museums Trust (BMT). 2.2 Delegates to the Cabinet Member for Commissioning, Contracting and Improvement jointly with the Strategic Director of Major Projects, authority to agree the terms of a five year contract for Museums & Heritage Services in accordance with section 4.2.2 below at a cost of £3.183m in 2016-17, at a cost of up to £ 2.933m in 2017-18 and at a cost of up to £2.683m in each of the three years from 2018-19 to 2020-21. 2.3 Delegates to the Assistant Director (Culture & Visitor Economy) the authority to negotiate an annual Service Level Agreement with BMT, to be applied during the contract term. 2.4 Authorises the Director of Property, to negotiate and agree the terms for the grant of leases for the Council’s eight museums sites to BMT as set out in section 4.3. 2.5 Authorises the Strategic Director of Major Projects to agree the terms of a loan agreement for the Museum Collection for a period of twenty-five years, subject to a contract for Museum & Heritage services being in place and the ability for the Council to terminate the loan agreement simultaneously with any permanent termination of the leases or the contract for services. 2.6 Authorises expenditure of £167,000 in 2015-16 to reimburse BMT for costs arising from a rent and service charge review at the Thinktank museum for the reason given at 4.2.3. 2.7 Authorises the continuation of current funding arrangements for reimbursement of BMT costs relating to their management contract at Thinktank, at a cost not exceeding £1.417m in 2016-17 and each of the following four years, (unless payment process arrangements are amended during the contract period) as set out in 4.2.3. 2.8 Authorises the City Solicitor to negotiate, execute, complete and seal all necessary documents to give effect to the above recommendations. Lead Contact Officer(s): Val Birchall, Assistant Director Culture & Visitor Economy Telephone No: 0121-303 2919 E-mail address: [email protected] 3. Consultation 3.1 Internal Deputy Leader, Cllr Ian Ward has been consulted. Senior officers in Legal Services, City Finance and Property Services have been appropriately involved in the preparation of this report. Cllr Phil Davis, Chairman of the Trusts and Charities Committee, has been consulted in relation to issues affecting Sarehole Mill, as this is in Trust to the City Council. All in are in favour of this report proceeding for executive decision. 3.2 External Cllr Muhammad Afzal and Cllr Randal Brew, the City Council’s nominated directors on the BMT Board have been sent a copy of this report at the draft stage. Trustees on the Board of Birmingham Museums Trust and senior officers of BMT have been involved in the development of the Memorandum of Understanding. A “sustainability group” including representatives of Arts Council England and Heritage Lottery Fund has been meeting regularly, chaired by the BMT Chairman, since April 2015 and has input into the BMT business plan for the future. Public consultation has been undertaken on the proposals for future savings through the corporate exercise and further consultation will be undertaken on specific proposals from BMT in relation to implementation of savings in future years. 4. Compliance Issues: 4.1 Are the recommended decisions consistent with the Council’s policies, plans and strategies? The proposals in this report will contribute to the Council 2020 Vision by supporting the agenda of Growth and Jobs in enhancing the city’s offer as a place to live, work and visit. The BMT programme provides opportunities to work with communities and volunteers to develop engagement and support the delivery of services through partnership, including at Heritage Sites and in the delivery of community collecting. Through the contract proposals, local people as well as visitors will be engaged in cultural activities which contribute to their quality of life, with a range of learning outcomes. 4.2 Financial Implications 4.2.1 The leases to the eight museum sites will be granted at peppercorn rent. As BMT operates as an agent of the Council, the costs of occupation are met by the Council and if a charge for rental were levied, the Council would be expected to transfer an amount equal to this charge to BMT. While this would be cost neutral for the Council, it may indicate that BMT operates the business in its own right (as principal), rather than as a service to the Council (as agent) and this could have material financial ramifications for the VAT liabilities of both parties. 4.2.2 The proposed five year plan for service delivery includes the following contract sums: 2016/17 2017/18 2018/19 2019/20 2020/21 £m £m £m £m £m 2015/16 contract sum 3.433 3.433 3.433 3.433 3.433 Savings requirement (0.250) (0.500) (0.750) (0.750) (0.750) Proposed contract sum 3.183 Indicative contract sum (subject to future budget decisions) 2.933 2.683 2.683 2.683 The recommended BMT contract sum of £3.183m for 2016/17 will be funded from within the Museums budget for that year. The contract sums for the following four years to 2020/21 are indicative and are subject to approval of the Council’s annual budget cycle. Cabinet approval will be sought via a new report for any proposal that may emerge, to award annual sums in excess of the above amounts for 2017-18 onwards. 4.2.3 Costs were incurred by BMT in 2015-16 relating to the collections and visitor attraction at Thinktank, arising from a rent and service charge review. As a cost for maintaining the provision of admission to the Council’s collections, such costs are borne by the Council and £0.167m will be reimbursed to BMT for this purpose from the Council’s Museums budget for that year. The Council retains a further budget for reimbursement of costs incurred by BMT at Thinktank as a result of its relationship with the Council. This arrangement has been in operation for four years and will continue for the proposed contract period (2016-21) unless a full review of these arrangements, currently in progress, amends this process. The amount to be transferred from this budget for 2016- 17 will not exceed £1.417m. In the following four years, an amount not exceeding £1.417m will be made available for processing in the current or any revised arrangement. 4.2.4 BMT is a signatory to the Birmingham Business Charter for Social Responsibility. Its Action Plan will be reviewed and updated as part of the process of agreeing the terms of the new contract. 4.3 Legal Implications The Council has a duty to efficiently manage its assets and has power to hold, appropriate and dispose of land under Sections 120-123 of the Local Government Act 1972. 4.3.1 Leases for Aston Hall, Blakesley Hall, Museum of the Jewellery Quarter, Soho House; and Weoley Castle will be negotiated each for 25 years from 1st April 2016 and with the lease for Sarehole Mill being aligned with the above heritage sites following Charity Commission formalities being satisfied. The Museum of the Jewellery Quarter includes part of an adjoining City Council multi-let block and appropriate break options will be considered. 4.3.2 A lease for Birmingham Museum and Art Gallery will be negotiated for a five year term from 1st April 2016 and containing a rolling break option in favour of the Council exercisable after year 1 to allow for probable future refurbishment works. 4.3.3 A lease for the Museums Collection Centre at Dollman Street will be for 5 years allowing for probable impact of HS2. 4.3.4 All such leases will be excluded from the security of tenure provisions of the Landlord and Tenant Act 1954 Part II and in addition will contain provisions terminating the leases co terminus with the end or sooner determination of the applicable service agreement. 4.3.5 The power to award grants and to do, or arrange for the doing of, or contribute towards the expenses of doing, anything necessary or expedient for the provision of an entertainment is given under Section 145 of the Local Government Act 1972. The Public Libraries and Museums Act 1964 gives the power to make contributions towards expense incurred by any person in providing or maintaining a museum.