Waterbeach Parish Council: Tillage Hall Report 4/5/2010

The basis upon which the Working Party was set up and agreed by the Parish Council was covered by a written report produced by Michael Williamson which incorporated the following:

3. The aim of obtaining best value for the community by ensuring optimal use of the building (especially by community groups) without the building being a long term load on the Council Tax payers of Waterbeach

The Working Party comprised initially four Parish Councillors, Peter Johnson, Norma Kay, Michael Williamson and Adrian Wright and was later joined by Katy Astley and Quentin Harmer (WAY trustees), Mark Clack and Jacqui Rabbett representing Waterbeach Community Association and Chris Nelson, an interested party who has had a long involvement with various sports clubs in Waterbeach. The Working Party was chaired by Michael Williamson and notes of the meetings were taken by Norma Kay.

The Working Party has taken advice from a number of other Village Halls and similar Community Facilities in Cambridgeshire and at one of their meetings was assisted by Phillip Peacock, the Community Facilities Manager from Cambridgeshire ACRE who has wide experience of current practice and legislation.

The Working Party has produced two reports for the Parish Council and in the February report they essentially set out their views on the Governance and Management of the building together with their reasoning. To save repetition, that report is attached as Appendix 1 to this report and should be read in conjunction with the recommendations below.

We feel it is extremely important to emphasise the availability of the Hall to the community as a whole. At the meetings of the Working Party it was reported that there seems to be perception in the village that it will be an almost exclusively youth facility.

In order to do this and to start things going, a Trust should be established as soon as possible. This Trust should have Trustees appointed by the Parish Council, Trustees from WAY and in addition should have the power to co-opt additional Trustees.

Although it will assumed that this Trust will be granted a lease to run the building, and the Parish Council should state that, in principle, it is in favour of this approach, if for some unexpected reason this proves to be impossible, then the charitable status of the Trust will mean that any funds it raises or is given must be used for furtherance of the Tillage Hall project.

Although it is important to note that anyone appointed to the Trust must act in the interests of the Trust and not of the appointing body, it is also crucial to note that communication between the Trust and these bodies is just as important. Thus the Trust should be tasked with producing regular reports for the Parish Council.

The Working Party recommends that the Parish Council should at its meeting on May 4^th, 2010 agree in principle the way forward proposed in this document and should authorise the current Management Working Party to start some preliminary background work.

At the meeting following the elections (the Annual meeting of the Parish Council), membership of the Management Working Party should be re-affirmed, possibly including new members, and receive a report from the Working Party as to progress to date.

Waterbeach Parish Council at its meeting in December 2009 agreed to form a working party to look into the management of the Tillage Hall once it is built and to produce recommendations for consideration by the Parish Council at its meeting in February 2010.

The working party comprised Peter Johnson, Norma Kay, Michael Williamson and Adrian Wright (Gabrielle Smith having dropped out due to pressure of other commitments). They were given the power to invite other members and have been joined by Katy Astley and Quentin Harmer representing WAY and Mark Clack and Jacqui Rabbett representing the Waterbeach Community Association. The working party has met three times and this report summarises its conclusions.

Members of the working party visited four village halls to discuss their experiences and seek guidance. We were very hospitably received by all those we met and we gained a great deal of information. Specifically we met with

Cambourne	“The Hub”. Managed by the Parish Council. A very well-used facility in a new community.
Bluntisham	Village Hall. Run by the Parish Council who borrowed £800,000 to construct the building. Loan repayments of £60,000 per year. Accommodates the local GP surgery. Not heavily used by the community but gains significant income from commercial lets. Also used as the sports pavilion
Swavesey	Memorial Hall. Until 1/4/09 run by the Parish Council but now transferred to a charitable trust on the insistence of the Charity Commission. Used extensively by the community.
Milton	Community Centre and Recreation Grounds. Managed by a Charitable Trust who not only look after the Community Centre but also all the recreation facilities.

Each Council has its own reasons for adopting the governance structure it currently has. Cambourne was a new community when The Hub was built and attempts to find trustees for a charitable trust failed. Bluntisham retained their hall under Parish Council control because of the huge loan repayments and the Parish Council felt they should retain control at least until the loan is repaid.

Swavesey is interesting because they have just changed from Parish Council management to a Charitable Trust. This was because their hall was originally built using charitable funds and the previous system where the Parish Council managed the Hall was ruled unlawful by the Charity Commission. Talking to the Clerk to the Parish Council and the Hall Administrator (who used to run the Hall when she was assistant Clerk), the transition has gone well. Indeed, the Hall Administrator felt that it was easier to run the Hall now it was separate from the Parish Council.

Milton run all their community facilities through the Community Centre and Recreation Grounds Charity. This seems to be working well and, although there have been some hiccoughs, the same arrangements have been going on for a number of years.

The Working Party are of the view that the Tillage Hall should be seen as a Community asset. It has a very significant use by WAY representing the young people, and this is reflected in the fact that over half of the funding is linked in some way to its use as a youth building. However, it is also important that the community aspects are covered and emphasised. To that end, the Working Party has suggested the following as the Mission statement of the Tillage Hall:

Some of the advantages and disadvantages of the two models have previously been circulated among Parish Councillors. However it is worth noting that there are strong financial reasons for adopting the Charitable Trust model. In particular:

· In order to ensure that the Parish Council can reclaim all the VAT on the building costs, if the Council is to retain management of the building, it will have to register for VAT and charge VAT on all its lettings income. This will mean that 17.5/117.5=14.9% of all lettings income will have to be paid over to HMRC. To compensate for this, VAT will be reclaimable on certain running costs at the same rate (e.g. cleaning materials, maintenance, electricity bills) but the financial modelling carried out (see below) shows that there will be a net loss of income from the VAT effect if the Parish Council manages the building, particularly as income from lettings increases.

· The Parish Council will have to pay business rates on the building whereas a Charitable Trust will pay none (80% mandatory relief + 20% discretionary relief). In addition, if the Parish Council retains the management of the building, it will lose the small business relief it currently receives on the New Pavilion (about £700). It has been suggested that, because WAY, a registered charity, will occupy part of the building, some relief can be obtained by exploiting their status. Following a conversation with a member of the Business Rates department at South Cambridgeshire District Council, this seems very unlikely

· There are a number of sources of finance that are only available to organisations that are Charitable Trusts. One obvious one is that donations from individuals can be made under the Gift Aid scheme so increasing their value by 25%, but also there are some trusts that will only give money to charities and not to Parish Councils

The other factor in favour of the Charitable Trust model is that a management committee that is focussed on one issue, and can carry forward the aims and objectives of the Hall in an environment that is at arms length from the day-to-day work of the Parish Council, has a greater chance of success.

The Working Party is strongly of the view that the Tillage Hall should be seen as a real community asset. For the reasons given above, they are also of the view that this would be best achieved by ensuring that it is looked after by a committee that is wider than the Parish Council and they are agreed that this would be best achieved by forming a Charitable Trust to which the building is leased at a peppercorn (model 2 above). This is a very common arrangement and is adopted by a number of local villages. I have been given specimen documentation for this by a member of Hildersham Parish Council if anyone is interested in seeing it.

Details of the proposed structure of the Trustee body have not been discussed by the Working Party, but it would seem logical for it to include representatives of WAY and of the Parish Council as well as representatives of user groups.

The Working Party has discussed the finances of the building once it is finished. They recommend that local interest is stimulated as soon as possible by raising the profile of the building and making its availability known to community groups. This should help the generation of income as soon as the building is open.

They would propose that the way to do this is for a committee to be formed as soon as possible from the Parish Council, WAY and other interested parties, and that this committee starts the process of formulating a more detailed management plan for the building.

One matter which the working party recommends is that a paid administrator be recruited as soon as possible whose role would initially be to run the marketing operation. This person should have this as their sole responsibility and should not be diverted from the task in hand by other responsibilities. The financial plans that have been put together for the Hall envisage a paid administrator for 5 hours per week; in the early stages this number of hours may not be needed. This administrator could be employed by the committee and transferred to the Trust if and when it is set up.

A set of comparative figures has been included in Appendix 2. The purpose of these is partly to form a basis of a sustainable business plan for the building and also to show the different financial results of choosing the Parish Council versus Charity run models. What is clear from the figures is that the effects of Business Rates and VAT make the Parish Council run model significantly less attractive from a financial point of view, especially as income increases. At lower levels of income the VAT effect is marginal, but as income increases, the VAT effect becomes significant so that at a high income level of £12,500 per year, there is a net loss of over £1,400 in VAT. This, together with the business rates issue, makes it impossible for the Hall to break even in the Parish Council run model while in the Charitable Trust model the hall makes a small surplus at higher income levels.

The issues presented in this report need to be considered objectively by the Parish Council so that a decision can be reached that is in the best interests of the community going forward. The Working Party are strongly of the view that the Charitable Trust model will provide the best chance of the Hall being a success. There are, of course, disadvantages with this model, one of which being the loss of direct control by the Parish Council, but it is worth noting that virtually all the funds for the construction of this building have come from sources outside the Parish Council. This is in clear contrast to Bluntisham where the continuing financial commitment means that the Parish Council rightly feels it has to retain control.

These budgets model three levels of income which can be referred to as low, medium and high. No assumptions have been made as to how these income levels will be achieved and detailed consideration needs to be given to such matters as hiring rates, etc.

Parish Council run model	low	medium	high
Total income	2,500	7,500	12,500
Less VAT payable to HMRC	372	1,117	1,862
NET INCOME RECEIVABLE	2,128	6,383	10,638
Costs
Rates	2,364	2,364	2,364	Assuming RV of £3,250 & loss of SB relief
Insurance	2,000	2,000	2,000	Note that this has already been included in the Parish Council budget for 2010-11
Electricity / gas*	2,200	2,400	2,600	Landbeach VH utilities bill is £2,700
Maintenance	1,500	1,500	1,500
Cleaning materials	200	200	200
Water / sewerage	350	350	350
Cleaning / caretaking*	1,200	1,400	1,600
Administration	2,600	2,600	2,600	5hrs per week @ £10
Other costs (PRS, advertising, etc.)	250	250	250
TOTAL COSTS	12,664	13,064	13,464
Overall surplus / deficit [P]	-10,536	-6,681	-2,826

Charity run model	low	medium	high
Total income	2,500	7,500	12,500
NET INCOME RECEIVABLE	2,500	7,500	12,500
Costs
Rates	-	-	-	Assuming 80% + 20% relief
Insurance	2,000	2,000	2,000	See notes above
Electricity / gas*	2,200	2,400	2,600	See notes above
Maintenance	1,500	1,500	1,500
Cleaning materials	200	200	200
Unrecoverable VAT**	408	418	428
Water / sewerage	350	350	350
Cleaning / caretaking *	1,200	1,400	1,600
Administration	2,600	2,600	2,600	5hrs per week @ £10
Other costs (PRS, advertising, etc.)	250	250	250
TOTAL COSTS	10,708	11,118	11,528
Overall surplus / deficit [C]	-8,208	-3,618	973

Difference [C]-[P]	2,329	3,064	3,798
Analysis of difference
VAT on lettings payable to HMRC	372	1,117	1,862
VAT not recoverable	-408	-418	-428
Rates	2,364	2,364	2,364
	2,329	3,064	3,798

* These costs have been increased as usage increases. Other costs have been kept fixed
** VAT on electricity of 5%, on other costs at 17.5%