Agenda item - Cabinet Members' Items - Report of the Business & Economic Growth Portfolio Holder - A.7 - Operational considerations for the Sunspot (Jaywick Sands Covered Market and Managed Workspace)

To agree that the operational management of the Sunspot is no longer outsourced longer term to a third party but delivered by the Council in-house.

To advise Cabinet that the project’s external partners will provide on a short term, interim advice and support to the Council for a fee and for Cabinet to receive an update on progress with the construction phase (Jaywick Sands Covered Market and Managed Workspace).

RESOLVED that Cabinet:

a) approves that the operational management of the Sunspot (Jaywick Workspace) is now not outsourced, longer term to a third party but delivered by the Council in-house;

b) approves reliance on the previous exemption to the Council’s Procurement Procedure Rules to proceed with a contract with Colbea together with HAT projects to provide interim management and operational support to the Council for a period of 7 months;

c) delegates authority to the Corporate Director (Place & Economy), in consultation with the Portfolio Holders for Housing and Business and Economic Growth, to agree the final terms of the contract;

d) approves an allocation of an additional £80,000 to the year one operational budget and in year 2 an additional £40,000 that is to be met from a corresponding reduction in the current revenue contribution to the HRA Capital Programme in 2022/23.

e) agrees that the operation of the in-house management of the Sunspot be accounted for in the General Fund, with corresponding recharges made to the HRA, as appropriate and all related property transactions including management, maintenance and rental payments being accounted for in the HRA; and

(f) authorises the Council’s Section 151 Officer to undertake the necessary changes to the budget to reflect the approach set out in (e) above within the financial parameters set out within the Portfolio Holder’s report and its appendices.

Cabinet considered a report of the Business & Economic Growth Portfolio Holder (A.7) which:-

(i) sought its agreement that the operational management of the Sunspot was no longer outsourced longer term to a third party but delivered by the Council in-house;

(ii) advises it that the project’s external partners would provide on a short term, interim advice and support to the Council for a fee; and

(iii) updated it on progress with the construction phase (Jaywick Sands Covered Market and Managed Workspace).

Cabinet recalled that, their meeting held in May 2021, it had approved the development of a Covered Market and Managed Workspace facility at Jaywick Sands. Cabinet had subsequently determined in October 2021 to outsource management of the building, with a direct award to the Colchester Business Enterprise Agency (Colbea) by means of a service contract and licence with a value of £90,000 in year one. However, after a change of management at Colbea, the organisation had subsequently informed the Council that they were no longer in a position to take on the licence agreement, which might have been driven by the financial risk associated with the building. Those risks would therefore remain with this Council. Colbea did however remain content to enter into a service contract for a period of 7 months. In order to increase their capacity to deliver at pace however, Colbea would partner with HAT projects for additional support. Colbea had also offered a further service once the 7 months activation period had ended, which would consist of drawing on their specialist expertise in this area to manage staff within the building, until such a time as Council staff were fully trained and self-sufficient.

Members were advised that, as a result of this change in position, it was recommended by the Portfolio Holder to bring the operation of the building in house, to be run by staff directly employed by the Council. Colbea currently held the contract to provide the Council’s Business Support Service and were committed to provide the support needed to any future tenants in the Sunspot.

It was reported that the activities associated with this in-house approach would be undertaken within the General Fund, with the costs charged to the HRA via existing internal processes. Direct property related transactions such as maintenance and rental income would be accounted for within the Council’s HRA. Based on this approach, the financial risks associated with bringing the operation of the building in-house would fall to the HRA. The shorter to medium term impact was set out within the Portfolio Holder’s report and in the longer term the operation and management of the units would be considered as part of the HRA Business Plan.

It was considered that there were three key options available to refocus Colbea’s service contract:-

a. In-house only: Council staff activate and run the building: £80,000 net

b. Outsource activation of the centre from February 2023: Colbea contracted to develop policies, procedures, training and market the building ahead of opening in the summer; £150,000 or

c. (Recommended) Outsource activation and offer short term ongoing management support for the operation of the centre for 7 months, with the option to continue with a reduced support service after the 7 months had expired, to ensure the council had the required expertise to deliver. £170,000 net.

The Portfolio Holder’s recommendation was that Cabinet allocated anadditional £80,000 to the year one operational budget, and in year 2 an additional £40,000 out of the reserve set aside to support the project.

Members were informed that the above approach would therefore require an associated reduction in the revenue contribution to the HRA Capital Programme. This inherently increased the construction cost risk but based on the project update set out elsewhere in the Portfolio Holder’s report and the additional funding recently secured, this was expected to be successfully managed during the on-going delivery phase of the capital works.

Cabinet was made aware that the construction costs of the building, which was scheduled to complete in the summer of 2023 had risen and the project had been delayed due to significant ground contamination. Additional funding towards the development had been secured externally from SELEP in December 2022 and ECC in January 2023 and allocated internally.

In order to:-

(1) allow the building to open in a timely and efficient manner, giving businesses and the community confidence in the Sunspot and builds a strong reputation with the wider District;

(2) ensure the Council retained control on this important project and contributed positively towards the ongoing regeneration of Jaywick Sands; and

(3) commission Colbea and HAT Projects for a short-term period to provide interim management and operational support and establish a process for continued success of the building embedded in the operational culture and as such, contributing towards long term sustainability.

It was moved by Councillor Newton, seconded by Councillor P B Honeywood and:-