Concern over Aneurin Leisure Trust financial reserves

The dire financial warning was issued at a meeting of Blaenau Gwent County Borough Council’s Partnerships scrutiny committee on Thursday, November 16, as councillors discussed a performance report for Aneurin Leisure Trust (ALT) for the 2022/2023 financial year.

In that year, Blaenau Gwent paid a management fee of just under £3.2 million to the not-for-profit organisation, which runs the sports centres at Abertillery, Ebbw Vale and Tredegar.

The report explained that the trust had financial reserves of £1.260 million at the end of March 2022 – but had to use just over £450,000 of this to balance the books.

This leaves ALT with a reserve of £810,000.

The report said: “As things stand the forecast deficit will virtually wipe out the Trust’s reserves in this financial year (2023-24).

“This means that ALT will be in an extremely vulnerable position for 2024/25 onwards and will need to achieve significant cost reductions which is likely to lead to reduced service delivery. ”

The report also explained that energy costs had jumped by 207 per cent from what they had been in 2019/2020.

Cllr Chris Smith said: “Does it come to a point where you would not be able to operate without any reserves?”

ALT director of operations Phill Sykes said: “Potentially yes, energy costs this year have gone up by £1.1 million for us hence why our reserves will be eliminated or be very little by the end of this (financial) year.

Abertillery Leisure Centre - from Google Streeview.

“We’re meant to have three months’ worth of staff salaries in our reserves at any one time.

“There will come a point where we have to notify the Charity Commission that we are in this position.”

He added that they would have to look at all aspects of the services provided and gauge what can continue “with the money available.”

Mr Sykes said: “We maintained that we would use reserves this year because all data suggested that energy prices will fall in October.

“They are falling.”

But “where it gets tricky” he explained is in predicting what the energy costs will be.

At the moment the trust is paying 43 pence per kilo watt hour, (kWh) they had estimated that this would drop to 34 pence per kWh for next year which leaves a deficit budget.

But Mr Sykes said that energy prices could drop to 28 pence per kWh.

If this happened it would save the trust £116,000 explained Mr Sykes.

Mr Sykes said: “We need to be prepared for whichever price we end up with.”

Cllr Lisa Winnett said: “The financial pressures are really concerning.”

She asked if the trust were accessing all the grant funding opportunities available to them.

Mr Sykes said: “We’re applying for every grant we can possibly access, we’re well aware that’s crucial to stay sustainable while gas and electricity costs remain so high,

“We’re trying to identify every possible way of making our services sustainable – because it’s only that will ensure our services are there for years to come.”

“We were successful in securing a £269,000 grant from Sport Wales – that’s what’s paid for the solar panels on the roofs of Abertillery and Tredegar (leisure centres).

Tredegar Leisure Centre. From Google Streetview.

He added that the trust had been successful in another grant bid to pay for improve “air handling” at leisure centres that would provide a “£60,000 to £70,000 saving a year.”

He added that the trust had been working with the Welsh Government Energy Service to identify every possible energy efficiency scheme needed to decarbonise their buildings.

Established in 2014, the trust’s contact with the council is now through Blaenau Gwent’s Education directorate.

Committee chairman, Cllr Wayne Hodgins said: “Certainly now more than ever the relationship with the authority needs to be really strong.

“How often are these meetings taking place as there’s an urgency due to the financial turmoil they find themselves in.”

Young people and partnerships service manager Joanne Sims said: “We are meeting more than once weekly over the last few months; at times it’s been three or four times a week.”

She added that these meetings were also being attended by the council’s senior financial chiefs.

Ms Sims said: “We’re looking at this collectively so that any proposals put forward consider the wider picture as well – it’s very much a coordinated approach.”

Recommendations from the committee will be added to the report which will be presented to the Cabinet at their next meeting on November 29.