Agenda and draft minutes

Apologies for absence were submitted by Councillors Hugh Irving, Anton Sampson and Elfed Williams.

Councillor Rhys Thomas queried whether he should declare an interest from his position as a director of the board of Denbighshire Leisure Limited. The Monitoring Officer advised that a personal interest should be declared but the interest was not regarded as being a prejudicial interest because Councillor Thomas had been appointed to the board by the Council, in line with the Members’ Code of conduct provisions. A councillor with a declared personal interest only was permitted to fully participate in the discussion and voting on the business.

Councillor Thomas duly declared a personal interest in agenda item 3 ‘Denbighshire Leisure Limited’ from being a director on the board of Denbighshire Leisure Limited.

Councillors Paul Keddie and Diane King also declared a personal interest in agenda item 3 ‘Denbighshire Leisure Limited’ from being a director on the board of Denbighshire Leisure Limited.

Councillor Bobby Feeley declared a personal interest in agenda item 3 ‘Denbighshire Leisure Limited’ from being a former director on the board of Denbighshire Leisure Limited.

Councillors Huw Hilditch-Roberts and Peter Scott declared personal interests in agenda item 3 ‘Denbighshire Leisure Limited’ each arising from the employment by Denbighshire Leisure Limited of a family member.

The Monitoring Officer (MO) summarised the reasons for the recommendation to exclude the press and public from the meeting during consideration of agenda item 3 ‘Denbighshire Leisure Limited’. The MO considered the public interest in treating the information as exempt, which included sensitive financial and business information relating to Denbighshire Leisure Limited as well as information relating to individuals, to outweigh the public interest in holding the debate in public.

Councillor Gwyneth Ellis proposed that the item be considered in open session and having secured the support of more than one sixth of the members present a recorded vote was taken on whether to exclude the press and public.

In favour of excluding the press and public:

Councillors Butterfield, Chamberlain-Jones, Pauline Edwards, Chris Evans, Hugh Evans, Feeley, Heaton, Hilditch-Roberts, James, King, Matthews, May, McLellan, Mellor, Metri, Roberts, Scott, Thomas, Tomlin and Cheryl Williams.

Against excluding the press and public:

Councillors Blakely-Walker, Chard, Davies, Ellis, Elson, Justine Evans, Harland, Hughes, Brian Jones, Delyth Jones, Mendies, Parry, Price, Sandilands, Huw Williams, Wynne and Young.

Abstaining were:

Councillors Karen Edwards, Hogg and Holliday.

RESOLVED that under Section 100A of the Local Government Act 1972, the Press and Public be excluded from the meeting for the following item of business on the grounds that it would involve the likely disclosure of exempt information as defined in paragraphs 12, 13 and 14 of Part 4 of Schedule 12A of the Act.

To consider a confidential report by the Corporate Director:  Governance and Business (copy enclosed) in relation to Denbighshire Leisure Limited.

The Corporate Director – Governance and Business (CDGB) introduced the confidential report (previously circulated) on an alternative structure for Denbighshire Leisure Limited.

The CDGB reviewed the significant financial challenges the Council had faced in 2019 which had led it to review the way leisure related activities were delivered, leading to the creation of a company limited by guarantee called Denbighshire Leisure Limited (DLL), which had been trading since 2020 and is wholly owned by the Council. He advised members that the Council had achieved its objectives including ensuring growth and sustainability in the high-quality leisure, sports and cultural services DLL delivered for the Council at no additional cost to the Council.

Council was advised that DLL had absorbed the increased running costs caused by inflation and pay awards since 2020 and had neither sought, nor received, any increase in funding from the Council during that period. DLL had achieved this by growing certain parts of its business in a commercial manner.

The CDGB explained how the proposed new structure for DLL would work, by the creation of a new company which would be limited by shares owned by the Council through DLL. The business of the current DLL would be transferred to this new company. The shares in the new company would be subsequently transferred to a management buy-out funded by a private equity fund investor. The new company would hold the contract for services with the Council. The Council would receive a one-off payment for the shares in the new company. In addition, the contract granted to the new company would provide for the same services currently provided at the same cost in year 1 as the current contract with a requirement for that annual cost to reduce by a fixed percentage in each subsequent year of operation.

Members were informed that the impact upon staff was a key consideration for the Council. Staff working for DLL at the time of the transfer would transfer to the new company on their existing terms and conditions including their membership of the local government pension scheme. New staff employed after the transfer could be employed on different terms and conditions provided that they were ‘no less favourable’. The new company would not have to offer new staff membership of the local government pension scheme but would have to offer suitable pension arrangements in line with pensions legislation.

Members noted that the Council would retain freehold ownership of all the facilities currently operated by DLL. The CDGB referred to information in the report on the options available to local authorities for the provision of leisure functions and to the provisions to be included in an amended contract for leisure services. It was noted that the list of provisions was not exhaustive and would include other elements such as the use of the proposed company’s facilities for election purposes.

The Head of Finance (also Section 151 Officer) reported on the results of the Council’s checks on the private equity firm which had been given a low-risk status.

Councillor Rhys Thomas, as Chair of the board for DLL advised members that he had been sceptical of the plans to create DLL 5 years ago but now viewed it as the right decision and had seen DLL develop to be a very successful company. The issue now was that DLL had outgrown its present structure. Councillor Thomas referred to the DLL staff emails that supported the proposed new structure and members were shown video clips of DLL staff endorsements.

Councillor Gwyneth Ellis objected to the sale of DLL and was opposed to its privatisation in  ...  view the full minutes text for item 3.