Workers at the deep end

Leisure has become big business for council employees. Paul Gosling on a workplace revolution

Workers' control is hardly a New Labour expression, but there has been a dramatic trend among councils over the last two years to hand over the running of leisure centres to their employees. The results have shown impressive improvements in income, investment, customer numbers and quality of service.

It was the London borough of Greenwich which began the process five years ago, and it has since been followed by another 15 - including Liberal Democrat and Conservative councils - with many more considering doing the same. When Bristol created a workers-run business to run its sports centres last year, it became the largest business of its kind in the country with 320 employees, after an amazing 99.8 per cent of staff voted in favour of its creation.

Leisure centres have become an acute problem for councils. Many are run- down and short of investment, with declining numbers of users. Swimming pools have closed, and few council gyms compete with the best of the private competition.

Opportunities to maximise revenue - for example by selling drinks and food to parents while children swim - are often over-looked. When a council comes to choose between renovating its houses or its swimming pools, it is usually the homes that win.

By 1993 the spiral of decline in Greenwich had reached the stage that two pools were about to close as part of a pounds 35m cuts programme. But through consultation a radical alternative emerged - the buildings transferred to a trust, with the workforce managing facilities.

It was felt that greater staff involvement might improve management, but other financial benefits were obvious. Trust ownership of the buildings attracted rate relief, revenue was exempt from VAT and the new business would no longer be subject to the costly bureaucratic procedures of compulsory competitive tendering. The business is also now more free to attract private finance and Single Regeneration Budget, millennium and lottery funding.

An industrial and provident society - which provides limited liability, but is more suited to a trust than is a company - was established. The 140 staff elect 11 staff representatives on to the board, using a college system to ensure not only all parts of the business being represented but also a gender and racial balance reflecting the workforce's composition. Three councillors and a trade union representative are appointed board members, and two customers are elected. The society's managing director is on the board as of right.

Peter Bundey, head of development at Greenwich Leisure, says that this structure has been a key factor in the business's strength. "We are converts to the co-operative movement," he explains. "We were aware of it, without realising the strengths of it and of involving the staff. The basis for everything we do is having employees on the board, across all areas of the business right down to the people who meet the customers, which is where we have always been weakest.

"It has turned round the quality of the provision. We have become a customer- designed service. Initially we were hesitant about having customers on the board, but it is one of the best things we have done."

The enthusiasm of Mr Bundey is shared by users, many of whom come from other boroughs to use facilities that are now among the best in London. Instead of closing two pools, Greenwich Leisure has opened three more. Unused pool space has been converted into profit-making gyms, catering standards have risen and staff involvement has helped identify savings in energy and water useage. Annual sports centre income has doubled in five years, while council financial support has been cut from pounds 2.5m a year to just pounds 1.5m.

In addition, each year pounds 1m of profits goes as investment into improved facilities. Profits have also been used to increase discounts to poorer residents.

The Greenwich model guarantees continued staff ownership and management of the facilities in perpetuity. This avoids duplication of the problems caused when councils sold bus operations cheaply to their workforces, after which most were sold on to major bus operators, netting large profits for their worker-owners. Greenwich Leisure is itself acting as consultant to many of the copycat ventures around the country, providing it with a further source of income.

But the success of the outsourcing to staff of sports centres raises some uncomfortable questions for councils. One of these is whether councils can run commercial undertakings effectively. "When you look at local authorities, you realise that leisure is the only service where you need an entrepreneurial spirit," says Mr Bundey.

Without sports centres, though, do councils need leisure departments at all? Parks maintenance is now essentially a matter of contract monitoring, and there are serious questions about whether it would be more appropriate to hand over the running of youth services and community buildings to councils' education departments, reducing service duplication.

We may be in the process of seeing the beginning of what turns out to be profound changes for council involvement in leisure provision.