Decision Maker: Cabinet
Decision status: For Determination
Is Key decision?: Yes
Is subject to call in?: Yes
Approval sought for the re-modelling and reconfiguration of South Lakeland House to ensure effective and efficient use of the space and full utilisation of Kendal Town Hall.
The Deputy Leader and Housing, People and Innovation Portfolio Holder reported that South Lakeland District Council was currently undertaking a major programme of change and transformation through the Customer Connect Programme, recognising the need to adopt different ways of working to engage with its many customers and residents. Underpinning the transformation would be the adoption of changes in technology, allowing both staff and customers the ability to engage in ways not currently possible. The Customer Connect Programme would result in changes to the way the Council engaged with its customers, with more activities being moved to self-help and online channels. It was felt that a new refurbished, agile and flexible working space would benefit the Council and support the Customer Connect Programme.
In 2016-2018, South Lakeland District Council (SLDC) had undertaken a joint feasibility with Cumbria County Council and the Lake District National Park Authority to investigate the potential of a new Public Sector Hub on the County Hall site in Kendal. As part of this work, SLDC had reviewed its anticipated floor space requirements following the implementation of Customer Connect and considered the introduction of agile working policies and of new digital technology to support service delivery in line with the new Customer Connect Programme.
Alongside this feasibility, SLDC had undertaken a high level assessment of the potential to invest in the renovation of South Lakeland House (SLH) and Kendal Town Hall (KTH). With a smaller floor space requirement for SLDC than currently used, the assessment included the potential to create renovated office space which could be attractive to the market and which could generate an income for the Council. The assessment had also been based on the idea of creating a new customer service reception area in the Town Hall, with the Town Hall being a major asset for the Town and more readily accessible for the public. The findings of this study had indicated that there was scope to improve the space utilisation at both SLH and KTH, with subsequent opportunities to lease out vacated space to third party tenants, or increase the range of function rooms for events within the Town Hall. This study had determined that, with appropriate design, it would be possible to accommodate the full SLDC requirements for workstations on the first floor of SLH, which would be more directly linked to the main KTH ground floor, which would provide the new main reception and customer meeting space.
After having received detailed financial information (including possible costs associated for occupation) for, and completing the initial feasibility of the Public Sector Hub, and taking into account the residual liabilities associated with the South Lakeland House site, the Council had withdrawn from further feasibility work on the Public Sector Hub to concentrate on a detailed feasibility study for SLH and KTH, building on the high level assessment undertaken.
In April 2018, SLDC had commissioned Lambert Smith Hampton and Blue-sky Interior Designers Ltd to produce concept and developed design options, up to RIBA Stage 3 (Concept design), for SLH and KTH, with the aim of creating a scheme which was fit for purpose and maximised the use of the available space. In addition, they had been commissioned to undertake an assessment of potential demand for the refurbished surplus space which was likely to arise from the investment in SLH and KTH and to carry out a market review of all office space within Kendal to determine existing supply and potential future demand. The outputs of this work had informed the Business Case required to support the proposed refurbishment works and to design accommodation for third party tenants to suit the identified demand. It was felt that the current space was unlettable at present.
The brief for the concept design had been to provide office accommodation fit for purpose, fit for the future and to use the space effectively and efficiently, and to ensure that accessibility issues from KTH through to SLH were resolved. This included looking at a new reception for SLDC in the Town Hall, to create an office environment which encouraged a more agile and interconnected workforce and which created an exciting, vibrant workspace where people wanted to spend time and create an interface between users and their environment. Various case studied show that improved working environment increased productivity and so it was considered important to create an environment where people enjoyed working that offers colleagues a chance to work in a manner and setting which suited them. The design was also to be based on a desk ratio of 7:10 (7 desks for every 10 employees) and the number of desks based on the perceived staff numbers post-Customer Connect implementation. The desk ratio was felt to be a fairly conservative ratio with the Council currently operating informally at staffing numbers similar to that of 7:10 without a flexible and agile working policy in place.
As a result, it was expected that the accommodation requirements would not just be reduced in terms of the number of workspaces, but the type of workspace would change, with the new accommodation supporting the ways of working to move away from silo working and towards one of flexible working, where boundaries between persons doing different tasks were removed, as multi-skilled working predominated. Automated business processes had also enabled larger organisations to become more streamlined, improving productivity while simultaneously reducing headcount. The project was needed for the Customer Connect Transformation Programme to be a success; consolidation on a single floor would help to support the culture change from a silo approach to a broader collaborative working environment.
The Portfolio Holder explained that the project was also needed to undertake much needed refurbishment of KTH, improve use of this asset and secure its future. KTH was considerably under-utilised with the lack of flexibility in the meeting rooms being sub optimal. SLDC day to day functions currently used SLH and only occasionally KTH. The investment would enable more operational activities to take place in the Town Hall, releasing space in SLH for alternative income generation. The additional space created following the investment would increase the range of events that could be accommodated. The refurbishment of the Town Hall will be sympathetic to its listing and would enable the building to be used more widely by the public through having the Council’s reception within the Town Hall. All existing user groups could be accommodated within the new scheme and the Council would explore the use of the space by other users groups. Events income within the financial forecasting had been kept to moderate increases to avoid the charge of ‘over pricing’ from the regular user groups.
The Portfolio Holder referred to third party office accommodation. Whilst businesses of a certain size would always require larger footprints, SMEs were a critical component of the future success and vibrancy of the Northern Powerhouse economy and were likely to have a transformative effect on the UK’s commercial property market in the years ahead. Landlords, therefore, had a vital role to play in nurturing South Lakeland’s thriving SME sector by providing high-quality, flexible office space which was capable of responding to the ever-changing needs of modern businesses. The study had taken a conservative approach to setting expectations of income by applying the lower figures of current market rent to future assumptions. Therefore, the risks in terms of speculation regarding potential rental charges had been mitigated. Consideration had been given to bias throughout the above with reference to rental charges, and basing these on rents currently being achieved for similar spaces in the Kendal area. The opportunity that this scheme had for the Council’s economic development agenda had not to be underestimated with the creation of small offices for start–ups similar to the Mintworks project and investigation to date having shown an evident need for a Mintworks Phase 2.
The Portfolio Holder informed Members that if the project was approved and included within the Capital Programme, work would commence on the scheme from 1 April 2019. The proposed works would require planning permission, listed building consent and building regulation approval. Following all statutory approvals being obtained, the tender would be issued in September 2019, with a likely start date of January 2020. The works would be phased to reduce disruption to the employees, public and members. Details of the programme of works were provided within the report, the contract to be approximately 15 months, and estimated to commence on 6 February 2020.
Based on the proposed programme of works, the Council would be committing to the finances of the project in October 2019, which gave further time to assess any external factors that might affect the scheme and to continue to monitor the Kendal office market.
The Portfolio Holder stressed that this innovative way of developing proposals to deliver contemporary office accommodation, securing the future of the iconic building of KTH and providing modern facilities for businesses, would be cost-neutral over 25 years. He also believed that the implementation of the proposals would place the Council in a good position to retain services in Kendal should any unitary arrangements come forward in the future. The Portfolio Holder asked Members to consider the recommendations in the report to enable the scheme to progress to the next stage. He thanked officers and all involved for the huge amount of work carried out in relation to the proposals.
The Leader and Promoting South Lakeland Portfolio Holder thanked both the Housing, People and Innovation and the Finance Portfolio Holders for their work.
A lengthy discussion ensued during which comments were addressed and questions answered.
The Economy and Assets Portfolio Holder referred the success of Mintworks which had been consistently full from the outset. Enabling Mintworks 2 would provide further general workspace for rent. There would be some flexibility in design allowing adjustment of space, if necessary. The proposals would also deliver some commercial office space which Kendal currently lacked, and the Council had not been able to meet demand. He was pleased to report that the Cumbria Chamber of Commerce and the University of Cumbria had already expressed interests in the accommodation.
In response to a suggestion for the inclusion of some form of health and wellbeing aspect within the Town Hall, taking advantage of the plans in order to offer wellness drop in services, the Health and Wellbeing Portfolio Holder acknowledged that this could relieve pressure on GP surgeries. He referred to the fact that the Credit Union currently operated within the Town Hall and was happy to take the comments on board. The Leader and Promoting South Lakeland Portfolio Holder added that the proposals would provide much improved disabled access.
In response to queries relating to the planning process, the Director of Policy and Resources (Monitoring Officer) explained that all applications were considered on their merit and that the application would be considered in the same manner as any other application submitted by the Council. The Deputy Leader and Housing, People and Innovation Portfolio Holder advised that the District Council Chamber would be refurbished in a sympathetic manner, without the need to strip out all material. The fixed panelling in the Chamber would remain, but the furnishings removed. He referred to the wood staining and was unsure whether lightening the colour would be acceptable. The Corporate Asset Manager advised that the Heritage Architect and Conservation Officer were both comfortable with the proposals at this stage.
A comment was raised that although the proposals looked exciting, it would be inappropriate to pursue them, bearing in mind that this was the largest capital expenditure seen by the Authority and that it was being spent on the Council itself. In response, the Leader and Promoting South Lakeland Portfolio Holder suggested that, had all Members attended the Customer Connect Member Update event held on the previous evening and the briefing on the reconfiguration proposals in the previous week, they would have been able to better understand the reasoning for spending in order to save. He further pointed out that this was not the Council’s largest capital expenditure and that £6m was to be spent on the Leisure Centre in Ulverston. In response to a query, the Deputy Leader and Housing, People and Innovation Portfolio Holder explained that the drawings presented the design concept and that not all detail was shown, also suggesting that a better picture of the Queen might be sourced. In addition, he indicated that the heralds would remain as part of the historic structure of the building. Responding to a comment, he stressed that there had been misunderstanding or misinterpretation with regard to his comments on the potential for use of the accommodation by any future unitary authority. The purpose of the proposals was to improve the efficiency and effectiveness of this Council in the way it provided services and to reduce the cost base. Any Unitary in future would need to demonstrate that they could operate as efficiently and effectively as SLDC.
It was pointed out that some Members who would have wished to be involved had been unable to attend recent Member briefing sessions due to other commitments. The Leader and Promoting South Lakeland Portfolio Holder undertook to see if the Member event providing an update on Customer Connect could be re-run for those who had been unable to attend, which, he believed, may assist Members to understand how locality working could assist local ward councillors.
With regard to a comment that the Council had lost some of its assets in other areas of the District, the Deputy Leader and Housing, People and Innovation Portfolio Holder pointed out that Cabinet Members had recently been to Ulverston for discussions with the Town Council. He emphasised that locality working formed a large part of the Customer Connect Programme and again pointed out that £6m was being spent on Ulverston Leisure Centre. He further stressed the fact that he would be happy to engage further with any Member, as well as town and parish councils, who felt disenfranchised.
The Finance Portfolio Holder felt that this was an ambitious and imaginative scheme, investment in which would deliver year on year savings. The changes were possible due to the Council having taken action on Customer Connect which would result in more efficient use of assets. In response to an early question, he reported that, at the end of the last financial year, the Council’s borrowing was £13m and the value of its assets £73m. As a business, the Council’s assets were well in excess of its borrowing. This was a prudent plan where savings more than covered the cost of borrowing.
The Leader and Promoting South Lakeland Portfolio Holder closed, saying that he was pleased that officers would be providing another opportunity for Members to attend a Customer Connect Member Update event which, he felt, would result in cross party support for the proposals.
RESOLVED – That
(1) the proposed investment in South Lakeland House and Kendal Town Hall be approved in principle and Council be recommended to include it within the Capital Programme and Revenue budget;
(2) approval be given to the addition of the project to the Procurement Schedule and for the scheme to be awarded to Bloom Procurement Services Limited with Lambert Smith Hampton as the sub-consultant to manage the scheme from RIBA Stage 4 (Technical Design) to RIBA Stage 6 (Handover and Completion);
(3) the scheme be endorsed and officers be authorised to progress to RIBA Stage 4 (Technical Design) and to proceed to tender prior to returning to Cabinet to seek approval to implement the full scheme; and
(4) the Director for People and Places be delegated authority to agree any changes to the proposed programme and/or design, in consultation with the Housing, People and Innovation and Finance portfolio holders, and the Chief Finance Officer.
Reasons for Decision
The decision links to the following Council Plan priorities:-
- Engagement with the private sector and public sector partners will be central to the Council’s approach to helping grow and develop the economy.
- We will when opportunities present themselves make best use of our property portfolio to support economic growth, through the use of our current and future asset base.
- Through our economic development strategy we will continue to build on our traditional strengths, and pioneer new industries that make the most of our place. We will promote new ways of working so that businesses can compete and reach their potential whilst enjoying everything that is special about living in South Lakeland.
- We will reduce the Council’s carbon emissions by reducing our energy use through the efficient management of our land and buildings and be an exemplar to others
- We will support Cumbria County Council and local partners with their strategies for active travel.
SLDC need to ensure we are adequately equipped to provide the best, most cost-effective service for the communities we serve. This will be met through a skilled workforce, ensuring that the staff have the ability to work efficiently working with more digital skill and a more flexible co-ordinated approach. The places project will help the Council equip its staff to put the Customer at the heart of everything we do.
The proposed investment will:-
· provide office space to support the Council’s Customer Connect Programme;
· create new modern town centre offices for other businesses;
· provide a MintWorks2 for new SMEs;
· deliver much needed refurbishment of Kendal Town Hall;
· provide much improved working facilities for all employees, both SLDC and KTC;
· provide disabled access to all areas of SLDC offices;
· enable a joint reception area in the front of the Town Hall;
· open up more meeting room space for community groups; and
· reduce ongoing maintenance costs for the Council.
Alternative Options Considered and Rejected
Continue with the current position and do nothing – this is not recommended when considering the significant cost to maintain the building, the inefficient use of space, the loss of opportunity to refurbish the Town Hall and the economic benefits to the area. This would still require significant additional expenditure to be added to a future Capital Programme to maintain South Lakeland House and Kendal Town Hall in an acceptable condition.
Explored and fully costed, a shared public sector hub option, co-locating with the County Council and Lake District National Park Authority on the County Hall site, but this was ruled out on cost grounds. Concern was also raised at the time with potential use of the South Lakeland House site with no obvious or viable use found for the site.
Undertake the work over a longer phased approach. This has been dismissed due to the project likely to be higher in cost, difficult to manage contractually, and cause greater disruption for the organisation, and SLDC would be unable to benefit from the proposed income which would, therefore, make the scheme unviable.
Report author: Sion Thomas
Publication date: 08/02/2019
Date of decision: 06/02/2019
Decided at meeting: 06/02/2019 - Cabinet
Effective from: 18/02/2019