Arm's Length External Organisations Review (Strategic Alliance Terms of Reference)
Perth and Kinross Council · 25 February 2026
Back to Perth and Kinross Council — 25 February 2026 and its agenda
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DRAFT Our vision is a Perth and Kinross where everyone can live life well, free from poverty and inequality ___________________________________________________________________ Committee or Board: Perth & Kinross Council Date of Meeting: 25 February 2026 Report Title: ALEO’s Review (Strategic Alliance Terms of Reference) Report Number: 26/50 Report Author: Charlene Guild, Strategic Lead (Projects & Programmes) Organisational Lead: Thomas Glen, Chief Executive ___________________________________________________________________ 1. Purpose 1.1 This report seeks Council approval of the Strategic Alliance Terms of Reference (ToR) which has been developed in response to an action requested at full Council on 29 October 2025 (Report 25/279). Recommended by the ‘Option Appraisal for Arms’ Length External Organisations in Perth and Kinross September 2025’ Report, the Terms of Reference document (Appendix 1) establishes a formal partnership framework between Perth & Kinross Council (PKC) and its Arm’s Length External Organisations (ALEOs): Culture Perth & Kinross, Live Active Leisure, and Perth Theatre and Concert Hall. 1.2 It is intended for the Terms of Reference to provide a structured mechanism for strategic collaboration, evidence based decision making, and coordinated planning across ALEOs to support sustainable, high quality leisure, culture, and performing arts services for the people of Perth & Kinross based decision making, and coordinated planning across ALEOs to support sustainable, highquality leisure, culture, and performing arts services for the people of Perth & Kinross based decision making, and coordinated planning across ALEOs to support sustainable, high quality leisure, culture, and performing arts services for the people of Perth & Kinross-making, and coordinated planning across ALEOs to support sustainable, high 1.3 Approval of the Terms of Reference will allow the Strategic Alliance to commence joint planning from April 2026 and begin implementing the sustainability and efficiency recommendations identified in the Options Appraisal Report.
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DRAFT 1.4 Sections 1. Purpose 2. Recommendations 3. Background and Context 4. Review Recommendations 2025 5. Terms of the Strategic Alliance 6. Conclusion 7. Impact Value Assessment 8. Appendices 2. Recommendations It is recommended that Council: 2.1 Approve the Strategic Alliance Terms of Reference as set out in Appendix 1 to enable the implementation of the Strategic Alliance model. 2.2 Agree that the Terms of Reference be adopted by all participating parties and form the basis of collaborative joint working from 1 April 2026. 2.3 Note that the Terms of Reference document will be reviewed every three years or earlier if required in line with the provisions to be set out within the Memorandum of Understanding (MoU) document and that annual progress reports will come to full council in October each year. 3. Background and Context 3.1 ALEOs remain a well-established feature of public service delivery in Scotland, with over 130 different bodies operating nationally and collectively across thirty-two local authorities and managing more than £1.3 billion in annual expenditure. These organisations are often structured as companies, charities, or trusts and are commonly used to deliver services in areas such as leisure, culture, social care, and economic development. While ALEOs offer flexibility, potential cost savings, and access to tax reliefs, they can also present governance challenges, particularly around accountability, transparency, and conflicts of interest. 3.2 However, over the past decade, the operating environment for ALEO’s has become increasingly more challenging. With the introduction of many new low cost private and online providers, there is more competition locally and nationally. In addition, people’s needs and expectations are changing and investment is constantly required for our venues to remain competitive, attractive, and safe. Coupled with the impact of the pandemic, increased costs of living and inflationary costs as well as the challenging financial situation of local authorities, there were many drivers for a review that considered the future sustainability of current levels of services and models of ALEO’s across Perth and Kinross.
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DRAFT 3.3 To oversee this work, an ALEO Review Working Group of senior Officers from PKC and ALEO Chief Executives was established in September 2024. The group was set up with the aim of producing an options appraisal report for full Council which detailed the financial and governance implications of different structural models. The group met on a six weekly basis to agree the options to be reviewed, the wider scope for the exercise and a tender process was carried out in early 2025. 3.4 The review was undertaken by external consultants, EKOS, Integratis and Creative Services Scotland. Each organisation has specific experience in the leisure, culture and performing arts sectors as well as a history of carrying out similar reviews across Scotland. Work began in April 2025 carrying out background research, financial modelling as well as engagement with employees and Board Members. A final workshop was held with the ALEO Review Working Group and other relevant officers to agree the draft Options Appraisal Review report in August 2025. 3.5 In October 2025, a full and detailed Options Appraisal Review Report of ALEO’s across Perth and Kinross was presented to full Council. The report recommended that no structural change was pursued due to implications in terms of costs, investment and disruption. There were, however, some recommendations for future sustainability of the current model. 4. Review Recommendation 2025 4.1 The main recommendation within the report was the establishment of a Strategic Alliance between Perth and Kinross Council (PKC), Culture Perth and Kinross (CPK), Perth Theatre and Concert Hall (PTCH), and Live Active Leisure (LAL). With the aim of providing a formal framework for collaborative working to deliver ALEO services across the area, this would require buy-in from all of the organisations and their Boards. Full Council instructed officers to develop a Terms of Reference for the Strategic Alliance to be returned to full Council for approval in early 2026. 4.2 The Strategic Alliance will provide a structured way for PKC and its ALEO’s to plan together, share resources, improve financial sustainability and coordinate service delivery without altering the existing ALEO structures. 4.3 In addition there was a further recommendation for additional Operational Measures and workstreams including: Income Growth: Exploring potential for income growth in all three ALEOs, particularly in LAL and PTCH, through pricing models, prioritisation of revenue-generating services, and fundraising efforts. Property Rationalisation: Considering property rationalisation as part of the move towards more integrated community facilities, particularly for the library estate and parts of the leisure estate. Workforce Planning: Undertaking detailed workforce planning to identify efficiencies in staffing structures.
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DRAFT Other Efficiency Measures: Exploring greater collaboration across the three ALEOs for efficiencies in areas like procurement and purchasing, with a specific suggestion for establishing an agency agreement with PKC for utility payments to reduce irrecoverable VAT. 4.4 It is expected that the Strategic Alliance consider these additional recommendations once up and running. 4.5 In addition to Council’s request for the Strategic Alliance Terms of Reference, there was also a further action to be undertaken. This was to consider the financial and governance costs and implications of bringing the current library services within Culture PK back into the Council. This review is currently included within the ongoing Libraries Review which will report into full Council on 17 June 2026 with a range of options considered and recommendations for moving forward. 5. Terms of the Strategic Alliance 5.1 The Strategic Alliance aims to improve physical and mental wellbeing, contribute positively to the local economy and support communities to be more resilient, sustainable and socially connected. The Alliance will also support and contribute to the joint Community Partnership Plan and to our corporate vision of ‘a Perth and Kinross where everyone can live life well, free from poverty and inequality’. 5.2 The Terms of Reference sets out the key principles, aims and remit of the Alliance and is intended to create a formalised framework to support strategic alignment, collaborative planning and strengthened partnership between the four organisations. Initial key objectives have been set out as follows: Implement the October 2025 Options Appraisal Review recommendations. Align strategic priorities and commissioning intentions to maximise public value and community outcomes. Foster innovation across all organisations and create joint initiatives for efficiency savings, income growth, and improved service quality. Support robust and joint resource planning, management, and workforce development. Promote joint activities between ALEO’s as well as achievements locally and nationally to attract investment and enhance service delivery. Support and promote the long-term sustainability of ALEO’s across Perth and Kinross. 5.3 Realising these objectives will require commitment and ‘buy in’ from all of the organisations and their Boards. Further to the Terms of Reference, it is proposed that the Strategic Alliance develop a Memorandum of Understanding (MoU) signed by the Chief Executives and Chairs of each organisation and senior PKC officers, which sets out the practicalities of meetings, confirms shared intent, commitment and accountability for achievement of the objectives.
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DRAFT 5.4 Elected Members will continue to play an active and ongoing role in the work of the Strategic Alliance. Progress, key development and any requests for directions or decisions will be reported annually to Committee as part of the formal governance arrangement. In addition, an annual informal engagement session will be held to provide Members with the opportunity to explore the work of the Strategic Alliance in greater depth, including emerging challenges, achievements, areas where activity has not been taken forward and future priorities. Relevant updates on the Strategic Alliance’s progress will also be reflected within the routine reporting provided by individual ALEO’s, ensuring Members receive a comprehensive view of the outcomes and impacts delivered through collaborative working. 6. Conclusion 6.1 The Strategic Alliance Terms of Reference provides a clear, structured and sustainable framework for partnership working between PKC and its ALEOs. It sets out clear aims and principles and focussed objectives to be delivered. Formal approval will ensure collaborative, strategically aligned delivery of culture, leisure and theatre services, consistent with the findings of the Options Appraisal Review and the Council’s wider transformation agenda. 6.2 A Memorandum of Understanding will be agreed and monitored by all parties to set out practical arrangements for meetings, responsibilities and shared decision making. Reporting to Committee will be carried out on an annual basis with individual exceptions agreed by the Alliance. 7. Impact and Value Assessment Impact and Value Assessment 8. Appendices Appendix 1 - Strategic Alliance Terms of Reference