ALEO's Review (Options Appraisal 2025)
Perth and Kinross Council · 29 October 2025
Back to Perth and Kinross Council — 29 October 2025 and its agenda
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Our vision is a Perth and Kinross where everyone can live life well, free from poverty and inequality ___________________________________________________________________ Committee or Board: Perth and Kinross Council Date of Meeting: 29 October 2025 Report Title: ALEO’s Review (Options Appraisal 2025) Report Number: 25/279 Report Author: Charlene Guild, Strategic Lead (Projects & Programmes) Organisational Lead: Thomas Glen, Chief Executive 1. Purpose 1.1 The purpose of this report is to set out the key findings, conclusions and recommendations of a detailed options appraisal review undertaken to determine the best structural model in future for our arm’s length external organisations (ALEO’s). 1.2 In addition, the paper gives an update on actions approved by full Council in December 2023 (Report No. 23/347 refers) completed and underway to contribute towards the future sustainability of ALEO’s. 1.3 Sections 1. Purpose 2. Recommendations 3. Background and Context 4. Options appraisal review 5. Findings 6. Conclusion 7. Impact Value Assessment 8. Appendices 2. Recommendations It is recommended that Council: 2.1 Note the findings of the full ALEO Options Appraisal Review report from EKOS Consultancy, set out in Appendix 2
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2.2 Approve the establishment of a Strategic Alliance between Perth & Kinross Council, Culture Perth & Kinross, Live Active Leisure and Perth Theatre and Concert Hall as detailed in section 5.2 of this report. 2.3 Approve the progress of operational measures as set out in further work being carried out in relation to efficiency savings and future sustainability of ALEO’s through the Strategic Alliance model including income growth, shared services, and workforce planning. 2.4 Agree that feedback on progress, achievements and actions from the Strategic Alliance be reported back to full Council on an annual basis from October 2026. 2.5 Note the progress made in approved actions in relation to ALEO’s through g and concluding workstreams in relation to previous actions relating to ALEO’s reported to full Council on 6 December 2023 as set out in Appendix 1. 3. Background and Context 3.1 This report presents the findings of an appraisal of options to change the current structure of Arm’s Length Organisations (ALEOs) providing leisure, culture, and performing arts services across Perth and Kinross. The ALEOs in question are Live Active Leisure (LAL), Culture Perth and Kinross (CPK), and Perth Theatre and Concert Hall (PTCH). 3.2 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. 3.3 While the Scottish Government continues to support ALEOs for delivering these vital community services, it has been indicated that charity relief from non-domestic rates will not be extended to newly created ALEOs. This has meant local authorities are having to consider creative ways of operating and taking a more cautious approach when considering future expansion and changes to structure of existing ALEO’s. A robust benchmarking exercise (LINK) has been undertaken, and it is clear from this research that our challenges are shared nationally, and a number of local authorities are currently undergoing similar work in relation to their own ALEO structures and governance.
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3.4 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 are a number of drivers to consider the future sustainability of current levels of services and models of ALEO’s across Perth and Kinross. 4 Options Appraisal Review 4.1 As part of our wider Transformation & Change Programme (phase one to July 2024), an external review of operational activity was conducted by Glasgow Audit with the resulting action plan presented to full Council on 6 December 2023. A detailed summary of progress on each action is attached as Appendix 1 with most workstreams complete or concluded. Any remaining actions have been picked up as phase two of the Transformation & Change Programme ALEO Review project. 4.2 Following on from phase one project work, an ALEO Review Working Group with Senior Officers from PKC and ALEO Chief Executives, was set up with the aim of producing an options appraisal exercise 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 scope for the exercise and a tender process was carried out in early 2025. EKOS Consultancy in partnership with Integratis and Creative Services Scotland – all with in depth knowledge and experience of the leisure, culture and performing arts landscape - were awarded the contract. 4.3 Work began in April 2025 on background research, financial modelling as well as engagement with employees and Board Members with a final workshop held with the ALEO Review Working Group and other relevant officers to agree the draft Options Appraisal Review report (Appendix 2) on 20 August 2025. 4.4 The expected outcomes agreed for the Options Appraisal exercise are referenced clearly throughout the final report and reflect the need to make changes to allow for future sustainability, more joined up / partnership approaches and consolidation: • Ensure a more sustainable model of delivery of leisure and culture services in future. • Create a more streamlined and consistent approach across all ALEO organisations in terms of systems and corporate support.
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4.5 A number of different structural models were considered for appraisal in relation to structure, legal status, governance, and consolidation. There are limitless options that could be explored, however for the purpose of this exercise, it was agreed that all options were to be considered in line with the current legal status of sole member organisations, with the exception of Option 4 considering PTCH as an independent charity. The ALEO Review Working Group agreed the following options to be included in the appraisal exercise: • Option 1: Bring all ALEOs in house to PKC. • Option 2a: Bring some ALEO services in house (e.g. consolidation of corporate services from ALEOs delivered by PKC) • Option 2b: as 2a but with library services brought back into PKC. • Option 3a: Create one new ALEO. • Option 3b: two new ALEOs – streamlining corporate and back-office services. • Option 4: Create one ALEO for culture and sport and consider possible change of status for Perth Theatre and Concert Hall. 4.6 Full costings, financial breakdown and analysis of each option are detailed within the Options Appraisal report along with one off and recurring costs in relation to implementation of a new structural model. There is also a wider appraisal against set criteria such as management focus, impact on staff, opportunities for income generation, set up costs and risk. 5. Findings 5.1 As a result of the evidence gathered and presented on each of the options, the report recommends that at this time, we do not pursue disruptive structural change with no financial benefit and indeed, implications in terms of costs and further investment. However, there are other actions that can be progressed to achieve future financial sustainability of ALEO’s, more consistent and streamlined approaches to service delivery and improved outcomes for people across Perth & Kinross. The recommendations are set out below: 5.2 Establishment of a Strategic Alliance 5.2.1 The report recommends 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. The alliance would be formalised through a Memorandum of Understanding (MoU) signed by the Chief Executives and Chairs of each organisation and senior PKC officers.
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5.2.2 It is proposed that a Strategic Alliance Board, comprising senior representatives from each partner, be convened with quarterly meetings to act as a lever for change, innovative thinking and alignment of priorities and resource planning. Operating as a coordinating forum, not a delivery body, enabling alignment without undermining the autonomy or governance of member organisations. 5.2.3 Key operational mechanisms would include shared working groups, coordinated planning cycles, data and evaluation collaboration, joint staff development opportunities, and resource-sharing arrangements. Shared objectives of the Strategic Alliance would include enhancing community health and wellbeing, strengthening inclusion and access for underserved groups, growing the local economy and visitor economy, coordinating capital planning to maximise public benefit, advocating for national recognition, and funding, and seeking efficiencies in service delivery. 5.3 Additional Operational Measures and workstreams In addition to the formation of a Strategic Alliance, the report suggests several practical measures to grow income, manage costs, and achieve efficiencies. These include: • 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. • 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. 6 Conclusion 6.1 The report has provided evidence to suggest that none of the options considered have the ability make savings or give a cost-effective sustainable model for the future. The option with most potential would be the shared services model although in its current format, this option would only achieve modest savings with significant implications for systems, staffing, and one-off implementation costs. 6.2 However, as detailed above, there are a number of actions that can be taken to allow for a more joined up approach, streamlining of interdependencies and shared services where appropriate.
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The main recommendation, to create the Strategic Alliance between all four organisations would help the consistency of approach as well as regular formalised meetings to consider joint project and workstreams. 7. Impact Value Assessment (Link here) 8. Appendices Appendix 1 - ALEO’s Review – Progress Update September 2025 Appendix 2 – PKC ALEO Options Appraisal Review September 2025