Contact: Caroline Dudley, ext 327 6704; Julia Simpson ext 200 6425

How the Objective of this report fits with the Corporate Strategy

This scheme will primarily support the delivery of Corporate Aim 5 - improving services - by releasing more funding for the operation of Milestones, but will also improve the operation of the partnership between Basingstoke and Deane Borough Council and Hampshire County Council in the management of Milestones.

1. Introduction

1.1 This report provides an up-date on the quest for a form of governance for Milestones which is stable and sustainable in the long term. It sets out the most recent developments following a meeting of the Executive Board of Milestones on 20^th October 2005.

1.2 The Milestones Executive Board includes elected representatives and officers from Basingstoke and Deane Borough Council (BDBC) and Hampshire County Council, including the relevant Executive Members of both authorities. The building is owned by Hampshire County Council and the staff are employees of Hampshire County Council. BDBC owns the land on which the building stands.

2. Background

2.1 In 2004, the County Treasurer's Consultancy Team undertook an evaluation of the financial and legal implications of Milestones becoming a charitable trust, on the grounds that charitable trust status might provide opportunities for an improved financial position through the potential for a significant reduction in business rates, a more entrepreneurial culture and greater attraction of support in terms of funding and community volunteers.

2.2 The scope of the review covered the following tangible and quantifiable aspects of trust status:

· business rates

· insurance

· VAT

· legal aspects

· governance

2.3 The report concluded that the likely scale of the financial benefits did not warrant a move to trust status since a) any savings in business rates would be substantially offset by additional VAT and insurance liabilities, coupled with b) uncertainty regarding the cost of support services, many of which are currently provided in kind by the two authorities.

2.4 In 2005, in the light of Government's proposals for the reform of charity law and latest practice in the cultural sector, the Executive Board decided to explore a more comprehensive range of factors, and set themselves the goal of arriving at a definitive decision prior to the 2007/08 budget planning cycle in September 2006. A timetable was agreed which would have delivered a final consultancy report for consideration by the two authorities by September 2006. The Board agreed to commission the County Treasurer's Consultancy Team to work with a Project Working Group consisting of officers from both authorities to complete the new evaluation , including obtaining expert legal and VAT advice from appropriate firms or agencies, which would cover

· advising on the most appropriate legal form for the governance of Milestones, explaining the rationale

· advising on the legal implications of becoming a trust - the advantages, disadvantages and risks, explaining the impact on Milestones, the authorities, management, staff, trustees and other stakeholders

· identifying legal work required at the initial set up stage of a new trust and ongoing legal support work which would be likely along with estimated costs

· advising the impact of the new Charities Bill

· determining whether a separate trading subsidiary is necessary/beneficial

· exploring any TUPE implications

· advice on potential changes in the law which could impact on trust status

· advice on the VAT implications of becoming a trust

· advice on how VAT liabilities can be minimised

· advice on potential changes in VAT rules which would impact on a charitable trust

2.5 A draft project brief for the evaluation was presented to the Executive Board at their meeting in July 2005 and agreed on 20^th October 2005.

2.6 However, at the October meeting the Executive Board also received a report on a meeting between representatives of Hampshire County Council, including the Executive Member for Recreation and Heritage and the Director of Recreation and Heritage, and the Chief Executive and Leader of BDBC. At this meeting it was made clear that BDBC intends to reduce its contribution to the running costs of Milestones from 1^st April 2006. The BDBC representatives did, however, support the principle that, if Milestones moved to trust status, it should retain the savings on the rate relief available to charities (currently worth £199,000 p.a.) and also offered to share the costs of creating a trust.

2.7 Under the circumstances, the Executive Board agreed an accelerated timetable for the production of the new evaluation of trust status for Milestones to be ready by April 2006, with the aim of achieving trust status by September 2006 if the business case is acceptable to both authorities. The revised direction of the work is shaped by:-

- the presumption that the desirable outcome is for Milestones to become an independent charitable trust

- savings on business rates is an essential outcome

- BDBC officers and members commitment to provide practical and legal advice, with the benefit of their experiences of creating trusts for arts and sports venues

- any risks and disadvantages of trust status will be fully explored and strategies to manage them will be included in the business case

- the practicalities of implementation will be thought through and an outline plan developed

3. Legal Implications

3.1 Expert advice will be sought.

4. Financial Implications

4.1 Potential implications for Hampshire County Council are dependent on the terms of the eventual recommendation.

5. Personnel Implications

5.1 There are potential obligations under TUPE.

6. Impact assessment/Crime prevention

6.1 There are no implications for crime prevention in this project nor any likelihood of illegal discrimination. However, there is the potential for adverse impact on staff in making alterations to governance arrangements, and every effort will be made to avoid or minimise that impact.

7. Views of Local Councillors

7.1 The views of local Members have been made known to the Executive Board, but before any final decision is taken further consultation will take place.

Recommendations

i. That the Policy Review Committee note the progress on the review of governance for Milestones and that the Executive Member for Recreation and Heritage is asked to approve the accelerated timetable for producing a business case for consideration by the appropriate representatives of both Hampshire County Council and Basingstoke and Deane Borough Council by April 2006.

ii. That the existence of the Executive Board is confirmed on the terms of reference stated in the Appendix to provide clarity as to the role of the Executive Board in the forthcoming governance review project.

Section 100 D - Local Government Act 1972 - background papers

The following documents disclose facts or matters on which this report, or an important part of it, is based and has been relied upon to a material extent in the preparation of this report.

NB the list excludes:

1 Published works.

2 Documents which disclose exempt or confidential information as defined in the Act.

TITLE FILE

Appendix : Terms of Reference of the Executive Board

Purpose:

The arrangements are intended to provide decisive, authoritative and united direction from both partners (Hampshire County Council and Basingstoke and Deane Borough Council). The Executive Board will also consider executive issues relating to the joint provision of museums services in Basingstoke and Deane as a whole.

Responsibility and powers in relation to Milestones:

· The Executive Board is responsible for providing strategic development to the management of Milestones, especially in respect of the business plan, governance and consequential revenue support and capital investment, harmonizing the needs of the partners and ensuring Milestones supports their respective aims.

· The respective Executive Members will report to their cabinets as necessary.

· To be effective, decisions of the Board must have the agreement of the representatives of the executive of each authority.

Membership:

· Executive Member for Recreation and Heritage - Hampshire County Council

· Cabinet Member for Recreation and Culture - Basingstoke & Deane Borough Council

Supported by:

· One Elected Member - HCC & B&DBC

· Officers