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BLAENAU Gwent council made a one-off payment of £100,000 to a leisure trust to help it offset a predicted trading loss, it has been revealed.
The Aneurin Leisure Trust, which runs leisure services on behalf of the council in Blaenau Gwent, was predicting a trading loss of £135,000 when the payment was made.
A Wales Audit Office (WAO) review of the council’s approach to leisure services says the Trust wrote to the council “highlighting concerns with its current financial position” last autumn, following a pay award to staff.
Staff at the leisure trust voted to go on strike after rejecting a wage offer in November last year, before accepting a much-improved offer.
A WAO report says the council agreed a payment of £50,000 “to help finance” the pay award.
The report adds: “The Trust wrote to the council highlighting concerns with its current financial position and its impact on the sustainability of the business.
“The council responded positively to these financial concerns and is working with the Trust to identify solutions.
“In December 2018, the managing director, in consultation with the leader and executive member, under delegated authority, approved a payment of £100,000 to the leisure trust to partly offset the leisure trust’s projected trading loss of £135,000.”
Blaenau Gwent council outsourced its leisure services to the Trust in 2014, but it is currently reviewing future delivery options.
Options being considered include keeping the current set up with the Trust, returning all services to the council and exploring an “alternative delivery model”.
At a meeting of the council’s community services scrutiny on Thursday, Cllr Wayne Hodgins warned against future payments becoming a “long-term drain” for the authority.
“We do not want this to become a long-term financial implication for the authority, otherwise it wipes out what the Trust was set up for,” Cllr Hodgins said.
Cllr Lyn Elias also said he also had concerns over the “considerable amount of money” the council had put into the Trust.
But Michelle Morris, managing director of the council, provided assurance that no more money would be paid to the trust because of the authority’s own financial constraints.
“The money we put into the Trust last year was a one-off,” Ms Morris said.
Ms Morris said the Trust has since taken action to reduce its costs, including having to make some redundancies.
A spokeswoman for the Aneurin Leisure Trust confirmed it received an approved payment from Blaenau Gwent council “to offset a forecast loss partly created by an increase in competition to the area”.
“The Trust have now restructured the business to meet those demands and are working closely with the local authority on an alternative sustainable approach to the future provision of health and well-being services in Blaenau Gwent,” the spokeswoman added.