Sesnan questions Tower Hamlet insourcing decision – says it will increase costs by £2.1m a year

Mark Sesnan, CEO of GLL, has pushed back on Tower Hamlet Council’s decision to take the operation of its leisure services back in-house when GLL’s contract ends in April 2024, saying it will increase costs.

Sesnan told HCM “We’re obviously extremely disappointed with the decision to change delivery arrangements, particularly given the clear recommendations of an independent Leisure Recommissioning Report, which advised that the current delivery model offers the best value-for-money.“

He said “We’ve always maintained excellent working relationships with Tower Hamlet Council and will continue to work closely with them as we approach 2024, however, it’s hard to understand why some councils have decided that insourcing their leisure centres is in the interests of customers, the staff or the wider community; particularly as – in the case of Tower Hamlets, it has been calculated by the independent review that it will cost local ratepayers an additional £2.1m every year.

“Insourcing will also stifle staff career opportunities and restrict customer choice, as their access to leisure services will be limited to ‘home borough facilities only’ – but it is of course the council’s right to so choose,” he said.

Tower Hamlets Council is the latest London authority to take direct control of its leisure services, following Southwark and Lambeth Councils.

Tower Hamlets currently owns seven leisure centres, which have been managed by GLL for the past 18 years.

To accompany the announcement, the council pledged to invest £35m in leisure, as part of a renewed focus on providing a service that “benefits hard-to-reach communities”, such as BAME women and children with special educational needs.

The £35m investment in services revealed by the council includes the building of a new leisure centre in Shadwell.

According to Lutfur Rahman, mayor of Tower Hamlets, the decision to insource services aligns with the council’s leisure strategy, to “enable and support local people to live healthier and physically active lives”.

“It is important for local people to have access to high-quality facilities to play sport, stay healthy and come together as a community,” Rahman said.

“The decision to bring leisure services in-house is as much about public health as it is about managing our services on behalf of residents.

“The new leisure centre at St George’s (in Shadwell) will be a great asset for local people and demonstrates our commitment to providing affordable and accessible facilities and housing for residents,” he said.

However, Sesnan said GLL has already been offering strong support for community access and inclusion, commenting: “As a staff-owned charitable social enterprise, we’re proud of the progress we’ve made providing leisure services to the local Tower Hamlets community over the past 18 years. During that time we’ve consistently invested in the local area and worked with all ages, fitness levels, ethnicities and cultures to promote the benefits of exercise to residents’ physical health and mental wellbeing.

“Initiatives we’ve delivered in Tower Hamlets include highly successful targeted women-only swimming, gym and activity sessions, intensive learn to swim classes for children from deprived backgrounds and a Young at Heart activity programme for older people. We also provide financial and practical support to talented young athletes from Tower Hamlets through our GLL Sport Foundation.”

The council’s decision has sparked discussion among those involved in managing public leisure facilities – including on LinkedIn.

David Rushton, director at the Sport Leisure & Culture Consultancy, said: “Insourcing, particularly through a pure in-house model, will almost always result in higher costs compared to procuring a leisure contract to a multi-site operator.

“However some councils are looking for more control of their services and for them to work as part of a wider health and wellbeing system.

“They believe this can be better achieved through in-house management, or through a LATCo model (local authority trading company), and are prepared to invest more to deliver this.

“However I don’t anticipate a major shift back to insourcing. Many councils simply don’t have the capacity or desire to run services themselves.”

Neil Hutchinson, MD of Bolton Middlebrook Leisure Trust – and former head of group operations at Burnley Leisure Trust – said: “It feels as though the industry is going full circle.

“I started my career with the council in-house before moving to a trust – and now I see many going back to in-house or using LATCos.

“We need to get consistency across the country so users have the same opportunities and variety of services and facilities everywhere. Another exciting time to be in the industry,” he said.

Dan Flahive, centre manager at Circadian Trust, said: “Interesting to see this and if more councils follow suit.

“Councils taking on leisure facilities need to maintain high standards in operation, as this is where they’ve fallen down in the past. Interesting times.”

Some in the industry see the decision as a, trend with an increasing number of councils opting to bring services in-house or to adopt a LATCo model, as a way to manage costs, generate revenue and deliver positive outcomes.