Referral of proposed subsidy to LiveWire by Warrington Borough Council

The Subsidy Advice Unit (SAU) has accepted a request for a report from Warrington Borough Council concerning the proposed subsidy to LiveWire.

From:
Competition and Markets Authority
Published
26 July 2023
Case type:
SAU referral
Case state:
Closed
Market sector:
Recreation and leisure
Opened:
9 May 2023
Closed:
20 June 2023

The Subsidy Advice Unit (SAU) has accepted a request for a report from Warrington Borough Council concerning the proposed subsidy to LiveWire.

SAU referral type Mandatory referral
SAU referral state Closed
Sector Arts, entertainment and recreation
SAU referral opened 9 May 2023

Administrative timetable

Date Action
20 June 2023 SAU’s report to be published
23 May 2023 Deadline for receipt of any third party submissions (submissions after 5pm on this date cannot be taken into account)
9 May 2023 Beginning of reporting period

Final report

20 June 2023: The SAU has published its report providing advice to Warrington Borough Council concerning the proposed subsidy LiveWire. The report sets out our evaluation of Warrington Borough Council’s Assessment of Compliance of its proposed subsidy with the requirements set out in the Subsidy Control Act 2022.

Request from Warrington Borough Council

09 May 2023: The SAU has accepted a request for a report from Warrington Borough Council concerning the proposed subsidy to LiveWire. This request relates to a Subsidy of Particular Interest (SSoPI).

The SAU will prepare a report, which will provide an evaluation of Warrington Borough Council’s assessment of whether the subsidy complies with the subsidy control requirements (Assessment of Compliance). The SAU will complete its report within 30 working days.

Information about the subsidy provided by Warrington Borough Council

Warrington Borough Council (the Council) established LiveWire (Warrington) CIC (LiveWire) in May 2012. A Management Agreement (Contract) was put in place that contracted LiveWire to manage leisure services, Neighbourhood Hubs at Woolston and Orford Park, and now Great Sankey and Bewsey & Dallam, as well as library services and health and wellbeing services. LiveWire is presently not controlled by the Council and the Contract is due to expire in May 2027.

LiveWire has seen a significant loss of customer income due to enforced closures, COVID safety restrictions and changing customer choices. The long-term recovery trajectory has been slower than hoped, a trend seen nationally across the leisure and gym sector.

In addition there have been a number of significant increases in costs in a number of areas, including salaries (driven by increases to National Living Wage), goods and services through inflationary pressures in the UK economy. Of particular note is energy costs, with projected energy costs for the 2023/24 year appearing unaffordable to LiveWire, continuing to put the viability of the organisation at risk. The LiveWire Board cannot reasonably foresee that LiveWire will be able to generate sufficient income to meet its liabilities over the remainder of the Contract and without financial support deficits will increase. Current projections show LiveWire running out of sufficient liquidity in April 2024, however in order to mitigate the company’s position and not worsen the position of its current creditors, unless mitigation is taken the Board may look at what actions it can take to secure its position, such actions likely resulting in cuts to services delivered under the Contract.

To ensure continued delivery of leisure, library services (which are statutory) and wellbeing services , it is proposed the Council financially support LiveWire in a number of ways. Initial support will include a direct grant of up to £3.5m and an immediate increase in the annual management fee paid under the Contract, both are given in order to ensure the financial position of LiveWire in order that it continues to deliver all services under the Contract. As well as this LiveWire’s energy is now provided through the Council’s energy contract, whilst LiveWire will pay all invoices, the Council is now responsible for all costs incurred by LiveWire, in effect a guarantee is provided by the Council (a further potential subsidy).

Thereafter it is intended that LiveWire will be restructured into a company wholly controlled by the Council and a new contract put in place, such services under the contract being designated as services of public economic interest (SPEI) under s.29 Subsidy Control Act 2022, LiveWire will therefore be subsidised to run the services under the contract. It is also intended that LiveWire will not be charged a rent for any of the properties required to deliver the services, as such a further subsidy will also be present. The total amount of subsidy to LiveWire will be a minimum of £8,812,000.

Information for third parties

If you wish to comment on matters relevant to the SAU’s evaluation of the Assessment of Compliance concerning Warrington Borough Council’s proposed subsidy to LiveWire, please send your comments before 5pm on the date stipulated in the timetable above. For guidance on representations relevant to the Assessment of Compliance, see the section on reporting period and transparency in the Operation of the subsidy control functions of the Subsidy Advice Unit.

Please send your submissions to us at SAU-WarringtonLiveWire2023@cma.gov.uk, copying the public authority: asimpson@warrington.gov.uk

Please also provide a contact address and explain in what capacity you are making the submission (for example, as an individual or a representative of a business or organisation).

Notes to third parties wishing to make a submission

  1. The SAU will only take your submission into account if it can be shared with Warrington Borough Council. The SAU will send a copy of your submission to Warrington Borough Council together with its report. This is to allow the public authority to take account of the submission in its decision as to whether to grant or modify the subsidy or its assessment. We therefore ask that you provide express consent for your full and unredacted submission to be shared. We also encourage you to share your submission directly with Warrington Borough Council using the email address provided above.

  2. The SAU may use the information you provide in its published report. Therefore, you should indicate in your submission whether any specified parts of it are commercially confidential. If the SAU wishes to refer in its published report to material identified as confidential, it will contact you in advance.

  3. For further details on confidentiality of third party submissions, see identifying confidential information in the Operation of the subsidy control functions of the Subsidy Advice Unit.

Contacts

Published 26 July 2023
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