Decision Maker: Cabinet

Outcome: Recommendations Approved

Is Key Decision?: No

Is Callable In?: Yes

Date of Decision: February 9, 2026

Purpose:

Content: Purpose of Report   The report recommended extending Plymouth Active Leisure's (PAL) existing contract beyond its current end date of March 2032 and providing further financial investment to support its ambitious new strategic plan, which envisions a £160 million investment in sport and physical activity across Plymouth over the medium term, generating greater social value, improved health outcomes, and new income streams for Plymouth City Council.   Decision   Cabinet: Approved a cashflow loan of up to £975,000 to Plymouth Active Leisure (PAL). Approved the reprofiling of two existing loans to PAL to increase the repayment term by three years, including a utility costs loan of £565,983 and a start-up loan of £365,000, totalling £930,983 plus accrued interest. Approved an extension of 10 years to the existing contract with PAL to conclude in March 2042, including the provision of a break clause in 2035/36. Agreed to support feasibility studies and the submission of capital funding business cases through the Council's capital governance process for enhancements to facilities. Noted the following contract amendments: (a) the drafting of new Key Performance Indicators as set out in Appendix B; and (b) a requirement for an annual performance update to the Housing Scrutiny Panel. Noted the positive impact of the Agency Model, as approved by Cabinet on 10 March 2025, and the generation of VAT savings, which have been included in the PAL financial model.   Reasons for Decision   1.    The support from PCC is to cover the working capital deficit built up across the current contract period to date, which was largely a result of start- up costs and the impact of COVID: restoring working capital balances will provide PAL with a sustainable platform to grow and thrive   2.    Extending the contract will enable PAL to repay outstanding loan debts over a longer period, provide operational stability, and allow PAL to continue to align its services with PCC’s wider corporate priorities and those priorities of the City   3.    Extending the contract provides operational stability, whilst a break clause, provides a mechanism for managing the financial risk for the authority.   4.    Noting the feedback from the Scrutiny Committee held on 10 December 2025 to enhance the oversight and risk management of the contract and to ensure robust monitoring of KPIs, financial and contract performance   Alternative Options Considered and Rejected   1.    Cease the Service (reject)- Leisure provision is discretionary, but the service delivered by PAL is vital for sustaining physical activity, generating significant social and economic value, and supporting Council objectives. Ending the service would risk reduced participation and jeopardize long-term Sport England funding, making this option untenable. 2.    Establish a Fully Independent Trust (reject)- Creating an independent charitable trust was explored for tax benefits, but HMRC VAT changes and post-COVID financial instability have made the model unviable. Transferring operations would replicate existing challenges, reduce Council control, increase risk, and incur high set-up costs, so the option has been rejected.   3.    Bring the Service Fully In-House –(reject)Returning the service to full Council control would incur substantial additional costs, including NNDR liabilities and enhanced staff terms and pension obligations. This option is not likely to be viable and has been rejected.   4.    Outsource the Contract (reject)- Engaging a national leisure management company could provide economies of scale, but it would not resolve existing debt, risks misalignment with Plymouth’s priorities, and leaves PCC with legacy asset issues. With high procurement costs, lengthy timelines, and uncertain revenue benefits, outsourcing is not recommended now, though it may be reconsidered at a future break point