Analysis: Leisure trusts – should they really have charitable status?

Analysis: Leisure trusts – should they really have charitable status?

Ben Cook, Third Sector
04.07.11

 

Critics, including the Directory of Social Change, have argued that such trusts lack independence and fail to conform to the public’s ideas about charity

 

The 2004 decision to grant charitable status to the Wigan and Trafford leisure trusts prompted the publishing and training charity the Directory of Social Change to object on the grounds that they lacked independence. It pointed out that they were created, funded and, in effect, governed by local authorities. This, it said, would "damage the understanding of charity in the public mind".

 

Jay Kennedy, head of policy at the DSC, says the independence of leisure trusts is still an issue seven years later, despite the fact that the Charity Commission gave the WLCT the all-clear this year, because councils retain a presence on their boards.

 

"There is no barrier in law to charities being set up by the state, but they must be governed independently and have exclusively charitable purposes," Kennedy says. "We think that, in terms of governance especially, it is doubtful that these trusts are sufficiently independent in practice from local authorities."

 

Leisure trusts also came under fire in 2008 from the European Services Strategy Unit, an organisation that says it is "committed to social justice through provision of good-quality public services by democratically accountable public bodies". The Case Against Leisure Trusts, by Dexter Whitfield, argued that trusts were not performing well, had limited access to capital, did not integrate services with those provided by the local authority, adopted private sector employment practices and lacked democratic accountability.

 

Nick Seddon, deputy director at the think tank Reform, is even more forthright. "A lot of people think it’s a farce," he says. "Many people think it (the hiving off of culture and leisure facilities by councils) is just changing the name plate above the door, rather than changing the constitution of the organisation."

 

Brian Leonard, chief executive of the leisure trusts umbrella body Sporta, argues that trusts are independent from their local authorities. "Though there are different arrangements in Scotland, in England there can’t be more than 20 per cent of trustees from the local authority."

 

This is a consequence of the Local Government and Housing Act 2009, which says that, with regard to "companies controlled by local authorities and arm’s length companies", not more than one-fifth of the directors of the company can have been "members or officers of the authority".

 

A spokeswoman for the Charity Commission says councillors or council staff who become charity trustees do so in an individual capacity and must consider the best interests of the charity and not those of the local authority.

 

"There must be a clear separation of this dual role and procedures must be in place to manage any possible conflicts of interest," she says. "Generally speaking, provided this is the case, we would not be concerned that a charity had council representatives on its trustee board."