“Motion: Leisure Services VAT 1. That this Council is pleased at the outcome of the legal challenge which has concluded in March that local authority leisure services are to be treated as nonbusiness for VAT purposes and welcomes the Leisure VAT refund of almost£3M now due from HMRC to support the past and continued subsidisation of the Council’s Leisure Services. 2. This Council asks that a report be prepared for the appropriate Policy Development Group to consider the various issues and options available and then make recommendations to Cabinet and Council in the usual way in relation to the budget. 3. That the Council should consider changes to the Leisure Services Pricing structure after a full review and recommendation from the relevant PDG. 4. That this council should fully review all leisure pricing in an open and transparent way by conducting a review of pricing through the appropriate Policy Development Group before making recommendations to Cabinet in the usual way for implementation from1st April 2024 (2024-2025) financial year. And that the review should have due regard for the subsidy given to the leisure services and the impact on the wider district Taxpayer of any reduction. Consideration was given to: • That decisions required discussion with facts and consultations reviewed, with reviews of the leisure charges conducted openly and transparently. • Collaborative work was needed and that there was a need to be fiscally responsible, in the interest of all residents. • Leisure Centres were important to residents and council tax would be spent wisely and carefully in the interest of residents. • Without subsidies leisure services would be unaffordable and there was an aim to maintain affordability for leisure services. Subsidises had been carried out through improved energy efficiencies. • An options report had been commissioned to make sure pricing would be done openly and that there was a need to look at information before a decision was made. • The Leisure pricing strategy was due to be presented to the Community Policy Development Group. • That the VAT refund be re-invested back into the leisure capital budget. • Concern that written amendments included predeterminations. • That these amendments lack context, breached procedure rule 16.4 and that delays would be caused. • The Council spent£1.4m per year to subsidise the leisure centres which would equate to an extra£200 per leisure centre member and that the cost of living crisis was also a factor to consider. The District Solicitor & Monitoring Officer advised that there could be some contention within point 3 of the written amendment, as reference was made to ‘only consider’. To which the Chairman suggested that the word ‘only’ be removed. Upon a vote being taken, the AMENDMENT was declared to have CARRIED.”
“... an independent service review for [the Council] for its Leisure services. The Council was keen to understand how current performance compares to the wider public leisure sector and its offer against local competition.”
“All public servants whether paid or elected are expected to abide by the Nolan Principles of public life. These seven principles are selflessness, integrity, objectivity, accountability, openness, honesty and leadership. These are important elements of public service, important for outcomes of good governance, ethical culture and legitimacy. Where in those principles does it state that intimidating members of the public arriving at meetings, suppressing debate and legitimate comment, labelling tax payers as ‘scurrilous’ and using threatening advice of the paid staff to those same members of the public, are acceptable behaviours under those principles? Secondly, agenda item 12, Leisure Pricing…. the public are not satisfied that this discussion should be taking place without public scrutiny. To date there have been three changes of approach to the Leisure Centre refund. Firstly that it will be used to offset bad debt which was back in June time. Secondly following a Motion by Cllr Woollatt that the money would not be used in such a way and thirdly that it will be used like a previously unmentioned annual loss to the tax payer of either£1.8m or£2.1m depending on whether you include missed membership targets. The inconsistencies of this approach have only been highlighted and u-turns forced through public scrutiny. To the public, excluding item 12 from public debate looks very much like a fourth approach in as many months. That will not see value for money to the tax payer. This is precisely the sort of decision being made behind closed doors which so enraged the Lib Dems when they were in opposition but seems to be the go-to mode not only now that they have moved into the Cabinet system but decided to keep it despite the clear decision 6 months ago to move to a Committee structure.”
“... councillors absolutely complied with the Nolan Principles and if anybody had a complaint about a councillor this could be taken to Standards Committee. As regards discussing the Leisure pricing item in Part II, he hoped Mr Bridger could appreciate the sensitivities involved and the commercial nature around that particular agenda item seeing as the Council wanted to provide good value at the Leisure Centres which obviously faced a lot of competition whereas if the Cabinet were to discuss that in the public domain he was sure Mr Bridger wouldn’t want the Council to be losing revenue to it’s [sic] competition.”
“In looking at the leisure pricing, both the Community Policy Development Group and the Cabinet gave consideration to how we can encourage greater participation, and increased activity, amongst young people by giving access to the full facilities at an affordable rate. This is particularly important given the life-long health benefits early access to health, fitness and sports can provide. This is something that Mid Devon Leisure is uniquely positioned to deliver due to the high quality of its pools and courts, fitness equipment and instructors amongst its peers. Inflation affects us all. Whilst funding the service to ensure it continues to deliver that high quality, we need to be confident we do not put barriers up that prevent low-income users from accessing these services, and we must ensure we don’t pass on the increasing costs of the service to those least able to afford it. Mid Devon Leisure will continue to support those members of the community accessing means tested benefits via Concessionary discounting to pay and play fees and charges, in addition to discounted membership opportunities. And staff have already identified new services to offer that cater to younger people and help increase access to physical activity in fun and collaborative ways. Additionally, we have also committed to making it easier for care leavers to access our leisure services by agreeing to offer care experienced young people (up to the age of 25) a leisure membership at an effective 100% discount rate. We were the first district council in Devon to exempt care leavers from paying Council Tax, and this is the latest part of a wider package of support intended to provide care leavers with the best possible start in their adult lives. It can feel like a cliché to say this, but our Mid Devon Leisure staff are our biggest asset. This is evidenced by the growth and market-leading quality of the services they design and deliver. For example, their outstanding learn-to-swim programmes and aquatics training reached second place in the Swimming Teacher Association awards just a few weeks ago. Our swimming pools are operating more effectively than our peers in both the public and private sector. I have no doubt this is largely down to the quality of our aquatic staff – and their passion to deliver for Mid Devon residents, as I have heard feedback to that effect. But it is not just the aquatic services. Our fitness instructors, business managers, front-of-house, and support staff are all (without exception) passionate about Mid Devon Leisure and seeing our facilities thrive. Those are not my words – those are quoted from an independent report that recently evaluated every part of our leisure services. By supporting the leisure pricing strategy, we can create stability that allows staff to innovate services further while remaining competitive and reflecting the cost-of-living challenges our community faces. The change in national VAT treatment for Council-run leisure services will allow us to absorb inflationary increases for general memberships, and hold down increases for Concessionary users. That is a significant reinvestment in our service users. Our proposed pricing is highly competitive and protects our ability to deliver new and innovative improvements to the way people across the district are able to access fitness, leisure and community sports. This Council will this week start to work on an ambitious plan to develop these improvements, and I welcome any feedback or suggestions from anyone who is as passionate about increasing access to fitness and leisure as I am.”
“Whilst the motion as passed requested an ‘open and transparent approach’ when setting fees and charges for our Leisure service, there is a legal exemption: “Charge Strategies are Commercially Sensitive which are Exempt from publication under paragraph 3, Part 1 of Schedule 12A to theLocal Government Act 1972 (as amended) as it contains information relating to the financial or business affairs of any particular person (including the authority holding that information).”
“1.3. ... 3 Charges that are fully within the Council’s control in determining the amount that should be charged. These are discretionary charges and are intended to offset the cost of delivering services that the Council is not mandated or under a duty to provide but instead chooses to provide for the benefit of the residents. The Council therefore has greater flexibility and full control in setting these. In some cases, the Council may choose to partially subsidise a service to ensure everyone can access the service. Examples include Leisure or Parking fees It may also choose to charge above inflationary increases the market allows, such as venue hire.”
“1.6 The Council has three key principles for setting discretionary charges: 1 First, the discretionary charging arrangements for any service must recover the full cost of providing the service and include sound arrangements for income collection, in line with the Councils constitution and Medium Term Financial Plan. The full cost of provision includes the relevant share of central costs. 2 Second, the Council must comply with all legal requirements for setting charges and income generation. Where appropriate, this will override other factors to ensure the Council is not exposed to the risk of legal challenge with potential repayment of fees and other costs. 3 The Council also recognises that these two principles may need to be balanced against other relevant factors. The appropriateness of charges set may be dependent on the wider aims and context of the service. Relevant factors are set out below and officers must consider all these factors and assess their relative importance when setting charges for individual services: • Charging decisions will be taken in the context of the Council’s goals and values as set out in its Corporate Plan; • Access, affordability, and elasticity of demand should be fully considered; • Consistency with the Council’s principals of Value for Money, Equalities and Customer Access, e.g., consideration should be given to any disproportionate impact on vulnerable groups and those least able to pay; • Where services are provided on a trading basis, charges will be set at the maximum level the market can sustain without eroding demand to a point at which the overall financial position of the service offering is weakened; • Benchmarking with comparable local authorities and where charges are identified as being significantly lower than in other comparable authorities, increases should be fast tracked in order to bring them in line; • The Council should not distort local market conditions.”
“At the Cabinet meeting on9 Jan 2024 , in answer to a question from me, regarding the review of Leisure Pricing, the Cabinet Member for Community and Leisure (Cllr David Wulff) said: "The Council had commissioned a specialist Leisure Consultancy Company to look at the service before any fee changes were considered. The outcome of their extensive report was that our fees could increase when compared to the market, locally and nationally. The external report formed the basis of the 'commercially sensitive' report presented to the PDG in October 2023, as required by Motion 593 point 2…….. The Charges were published and open to public scrutiny and comment three months before implementation. (Note: The Audio recording of this meeting has been published and this statement has been transcribed from that recording.) Please supply me with copies of these two reports - i,e. the report prepared by the “Specialist Leisure Consultancy Company” and the report prepared by the MDDC Officer which was presented to the Community Policy Development Group, for their meeting on24 October 2023 . I should also like details of the publication of the new 2024 Leisure Charges, which the Cabinet Member stated was done: “Charges were published and open to public scrutiny and comment three months before implementation”
“The arguments against include first and foremost the need for companies to protect specific financial information from competitors. That such disclosure would interrupt the market and in turn impact the wider public. It is also in the public interest of the public that the council has the capacity to produce revenue from the facilities they provide. Particularly in the case of a service with the importance of leisure services.” b. In relation to the 2024 Leisure Charges Publication: “The Agenda and Reports were published online for Cabinet on the 22nd of December with a Supplementary agenda item on Fees and Charges and is therefore exempt under section 21.”
“It is clear the Cabinet Member for Communities and Leisure did state, at the meeting of Cabinet on9 January 2024 , that the new leisure charges had been “published and open to public scrutiny and comment three months before implementation”
“... the council put forward both sides of the public interest argument, but found that in the case of pricings of leisure services that the arguments in favour are, beyond transparency, limited. While we appreciate there is an interested in knowing how price rises can be justified. At this time this is tempered by an understanding that inflationary pressures are key in a lot of these decisions. Therefore it is not unreasonable to expect a price rise. However it is far more important to both the wider public and users of Mid Devon Leisure that these intrinsic services remain competitive. With this in mind the public interest clearly favours non-disclosure.”
“The Appellant believes that commercial Leisure providers cannot match the no-VAT grant aided, cost recovery only, prices that the Council is able to offer. The Tribunal have been provided with a copy of the minutes of the Council SDCI Policy Development Group in which the cost per visit performance of the Leisure Service has been highlighted. It is reported that “in the financial year 22-23, this cost was£2.94 per visit, in 23-24 it was£1.30 and in the current year it stood at£1.05 and the Management team are working hard to reduce that further”. e. The Council has failed to adduce any evidence to indicate that disclosure of the withheld information would be likely to prejudice its commercial interests. f. The Appellant rejects the proposition that the entirety of the Max Associates Report is exempt from disclosure pursuant to s43(2) FOIA when much of the information relating to the Council’s leisure service operations was in the public domain at the time of the Request: “the Centre Names and Locations, the Facilities available at each Centre, the old and new prices for activities, the staffing, the cost of staffing, the total costs of operations and income as well as the supplier payments.” g. It is in the public interest that Council members’ statements as to the approach taken in considering the pricing of leisure services can be tested by “seeing the evidence”
“In the Closed session the Tribunal explored with Mr Girling, by reference to his statement of25 June 2025 , the Council’s submissions (undated) and further material in the Closed bundle, the application ofs43(2) Freedom of Information Act 2000 to the withheld material. The Tribunal explored that issue section by section/page by page of the withheld material from 10.45 a.m. until 2.50 p.m., with an hour's break between 1.00 p.m. and 2.00 p.m. The Tribunal asked a number of questions of Mr Girling to which he responded. The Tribunal identified an annex to a document in the withheld material in the Closed bundle and the Council agreed to make it available to the Tribunal as soon as possible. The document was provided during the break and the Tribunal will review it. The Tribunal also took the opportunity to ask Mr Girling about an issue specifically raised by the Appellant at paragraph 63 of the Appellant’s further written submissions dated9 July 2025 . The Tribunal explored with Mr Girling in evidence the Council’s reasoning for withholding the currently redacted information in the Leisure Pricing Strategy of 2024/25. The Council confirmed that the contents of the document are exempt from publication under paragraph 3, Part 1 of Schedule 12A to theLocal Government Act 1972 (as amended) as the document was prepared on the basis that the charge strategies were commercially sensitive. The Council confirmed to the Tribunal that Mr Girling was the Senior Information Officer at the Council and was not at the time of refusal of the request in a role where he had responsibility for the Council’s strategies relating to Council Tax, Business Rate, Benefits, Corporate Recovery, Planning & Leisure. The Officer responsible for those matters at the time of refusal of the request was Mr. Dean Emery, now Head of Revenues, Benefits and Leisure. The Council confirmed that the Equality Impact Assessment and the table of new prices as referred to in the Leisure Pricing Strategy 2024/25 are not withheld as confirmed in paragraph 21of Mr Girling’s witness statement.”
“We interpret the expression “likely to prejudice” as meaning that the chance of prejudice being suffered should be more than a hypothetical or remote possibility; there must have been a real and significant risk.”
“1. It is clear that the public leisure industry faces ongoing challenges post Covid -191. It was within the post-Covid 19 situation that Mid Devon Leisure (as it then was) commissioned the Max Associates Report in 2023. 2. The Report was a significant investment which looked in-depth at demographics, gender, age populations, socio-economic groups, key health statistics, ethnicity, and price comparisons. It also detailed quite precisely the market and growth opportunities. The Report also highlighted the national picture for leisure and contained financial information which remains market sensitive. 3. A look at the Max Associates website clearly shows that it is a market leader in strategic outcomes planning models, feasibility studies, alternative management options, leisure strategies and leisure procurement. It also has a number of local authorities as its clients. 4. The nature of the information contained in the Max Associates Report (and by association the Cabinet Report) would if disclosed to a competitor be liable to cause significant harm to Mid Devon Leisure. The kind of information in the Report is technical, unique and was obtained by a not unsubstantial investment. The Report has not even been disclosed widely within the Second Respondent’s organisation which indicates the ‘secret’ nature of the information. The suggestion that the Second Respondent’s Leisure Centres do not operate as commercial ventures/activities as a result of being classified as non-business for VAT purposes does not hold water. ‘Non-business’ for VAT purposes is not the same as non-commercial and allows a local authority which provides ‘in-house’ leisure centres to treat some of its services as non-business for VAT purposes. 6. The legal challenge to the VAT position has resulted in local authorities being able to apply the non-business treatment to the supply of leisure services. Any other income received by a local authority is not affected by this change3. 7. The analysis and projections of Max Associates of the strategic documentation provided and information gathered has informed some of Mid Devon Leisure’s decisions and behaviour. That information may continue to inform Mid Devon Leisure’s activities for some time to come. To disclose it would prejudice Mid Devon Leisure's commercial activities and impact on its market position. It would provide competitors with valuable information about the leisure market and growth opportunities. 8. On the basis of the above and the witness statement provided it is clear that the Max Associates Report (and Cabinet Report) was at the time of the refusal, and is still even today, commercially sensitive and if released would prejudice Mid Devon Leisure and the Second Respondent.”
“While it is conceded that this section is unlikely to be classed as commercially sensitive information on its own. It is believed that, based on the limited nature of the information provided that this would give little or no information to the Appellant of value.”
“Information about both national and local strategies and then interprets them to formulate a strategy specific for Mid Devon Leisure. The analysis and interpretation of these strategies are commercially sensitive as they are intrinsically linked to Mid Devon Leisure’s ability to function in a competitive market. The analysis of the strategic documentation provided would, if disclosed, expose Mid Devon Leisure's position prematurely allowing competitors to amend their own strategies. A private company would not release a long-term strategic document. It is reasonable to conclude that competitors could gain access to this information and use it as stated above. This shows a causal link between release of the information in this section and the prejudice that would be caused to Mid Devon Leisure. While it is acknowledged that some of the information within this section is publicly accessible in different locations (e.g. Sports England website, Mid Devon District Council website, xx [sic]) it is the bringing together and analysing of this disparate information into the Max Associates Report that makes the information commercially sensitive. Max Associates compile their analysis at significant cost, taking substantial time and effort. If disclosed to competitors it would effectively imply the strategies and analysis that in itself is commercially sensitive and not available in 1 document. It is the work done by Max Associates that adds the overall commercial sensitivity to the report irrespective of the individual pieces of information.”
“Includes aggregated demographic and healthcare data and comparative analysis of other districts. This information is commercial in nature as it is linked to Mid Devon Leisure’s clientele and is used to provide strategic recommendations later in the chapter in relation to the demographics. As with section 2, some of the demographic information is publicly available, it is the added value provided by the Max Associates evaluation that imparts a commercial sensitivity that goes beyond the source material. This analysis and the subsequent recommendations could point competitors to the target clientele, allowing competitors to gauge their own offers to counter Mid Devon Leisure, thus reducing revenues and prejudicing the business. This is not an unreasonable assumption considering the competitive nature of the leisure market.”
“Includes a variety of information with varying levels of commercial sensitivity. Sections 4.1 to 4.4 are detailed market analysis, the vast majority of which is not in the public domain. It provides specific details of the market that Mid Devon Leisure is functioning in. This is further broken down into site-based analysis. This is information that is highly sought after by competitors in the area and would amount to providing them with free analytics upon which the Second Respondent has based its leisure strategy. The primary threat of harm to Mid Devon Leisure by placing these subsections in the public domain is that competitors and other facilities would use this information to mimic or improve upon the Mid Devon Leisure overall strategy. Allowing them to undermine Mid Devon Leisure’s financial position and thus causing prejudice to the Second Respondent. Sections 4.5 to 4.9 are commercially sensitive as this builds on facility specific analysis. This looks at latent demand of the 3 leisure centres including figures designed to show Mid Devon Leisure specifically who they should be targeting, when, how and why. This is information that is commercial in nature and there would be expectation of confidentiality around the information in these sections. Disclosure would prejudice Mid Devon Leisure in a clear and tangible way. This would be providing competitors with exactly who Mid Devon Leisure is aiming to capture within the market and how to gain the individual customs. A competitor would almost certainly be able to use this to their advantage adjusting strategies, changing offers in order to bring in customers who would otherwise have used Mid Devon Leisure.”
“The Financial Review. The information includes a comprehensive and detailed financial review of the Second Respondent’s Leisure service. The information within the financial review goes into specific details around the services that are provided, highlighting weak spots within the Leisure Service financial model and performance benchmarking. The information within this section is exempt from disclosure. This information is then utilised by Max Associates in later parts of the section where it provides specific recommendations to improve Mid Devon Leisure’s revenue stream and how to target for maximum profitability. If this information was placed in the public domain, competitors could potentially utilise this to adapt their own marketing to exploit the areas where the leisure facilities are most likely to be making a profit. This would impact the leisure facilities abilities to generate revenue. By placing the information in the public domain, competitors will be able to scrutinise details of Mid Devon Leisure’s financial model. It is clear there is a causal link between the release of recommended strategies to improve the Leisure service profitability and competing leisure services amending their own strategies to take advantage of the released recommendations in the report.”
“A digital strategic review. It provides detailed insights into data driven processes, critical infrastructure, and Mid Devon Leisure’s approach to digital services. The Second Respondent contends that this section is commercially sensitive. This section concentrates on digital strategy and highlights the strengths and weaknesses of the digital infrastructure in place at the time of the report. The information is commercial in nature as it relates to a commercial wing of the Second Respondent and provides details and analysis that Mid Devon Leisure would have an expectation that this would not be placed in the public domain. This information could potentially prejudice Mid Devon Leisure as it provides analysis of perceived strengths and weaknesses with the strategy itself. Something that could, if placed in the public domain, be exploited by competitors to highlight efficiencies within their own business model. Something they could only be able to do with active competitor research of their own. To some degree the section’s review of critical digital infrastructure could present a potential cyber security risk, which if exploited could cause real harm to Mid Devon Leisure, the Second Respondent and the supply chain. This could also result in reputational damage to Mid Devon Leisure and the Second Respondent.”
“Provides an asset and quality review, including showing maintenance strategies through to 2050. This is a long-term strategic document that highlights improvements in the infrastructure of Mid Devon Leisure. It reiterates concerns raised in prior sections and looks at areas of improvement. As this relates to information of a commercial nature and looks at long term strategies, the Second Respondent believes that it is the case that the information is commercially sensitive. The projected costs relating to the infrastructure improvements and maintenance costs is included in these sections. Having this information would give both competitors and contractors an unfair advantage in competition and negotiations respectively. Competitors could use access controls and quality standards as an opportunity to highlight better practices. This could lure customers away from Mid Devon Leisure and reduce revenues. Negotiators would likely have seen the negotiating position and adjust their prices accordingly. Both these circumstances would reduce revenues for Mid Devon Leisure and potentially impact on services.”
“This presents strategic recommendations that at the time of the request were not available to inspect. The information is in a confidential report, and this is not information the Second Respondent would expect to be placed in the public domain as such it falls under the definition of commercial sensitivity. By placing the list of strategic recommendations of Mid Devon Leisure in the public domain it is effectively allowing the competitors and vendors to either mimic, counter or price gauge depending on the recommendation.”