A panel of council leaders has agreed to continue to fund tourism agency Welcome to Yorkshire, despite recent troubles.
It comes after a report revealed the agency has struggled with its finances following the resignation of Sir Gary Verity, and subsequent investigations into the company.
But, in a meeting this morning, regional decision-makers agreed to make £1m of public funding available to Welcome to Yorkshire (WtY), after a report which suggested the organisation was “reliant” on receiving the money.
It was also revealed that a “managed closedown” of WtY was looked into, but that this would have been even more expensive, and that a replacement company would have to have been set up instead.
Jacqui Gedman, chief executive of Kirklees Council, told the North and West Yorkshire business rates joint committee: “WtY has gone through a series of difficulties over the past few months.
“The report comes back to talk about a number of issues regarding the financial position of WtY.
“As a not-for-profit organisation, WtY has had a bit of a financial challenge regarding the one-of cost as a result of some of the investigations.
“Progress has been made in a few key areas, but the lack of ability to provide a chief executive has meant that things have gone a bit slower than we would have wanted.”
She added a report was done to look into the financial position of WtY, and that is showed the organisation could recover from its financial situation, but needed certainty over its immediate funding.
“WtY is a small organisation,” she said. “It has had to focus on delivering events over the summer period, dealing with the immediate improvements it needed to make and to think about the future.”
Ms Gedman then brought forward updated recommendations around funding for WtY.
These included recruitment of a brand new WtY board, with a public sector appointee as chair for up to the next 12 months.
Members also agreed that a new chief executive be recruited “as soon as possible”, and that Jacqui Gedman be asked to provide support to WtY until this happens.
Ms Gedman added: “In effect, we are asking for today is that the £1m business rates funding, which it has budgeted for this year, be released with [these] conditions around it.
“It’s required in three tranches, with each tranche there would be a report back to the business rates board, so we can consider progress that has been made.
“The recruitment of a WtY board be carried out immediately. The interim chair arrangements should be ceased, so we can be in a position where the public sector can take over leadership in this difficult time.”
The updated recommendations would also mean previously confidential reports into WtY be made public, but with commercially sensitive detail removed.
York City Councillor Keith Aspden said: “I am pleased to see, on the revised recommendations, that the £1m would be given in smaller amounts, but subject to appropriate reports coming back to this body.
“The report talks about the £1m funding but, presumably, there would be an equal risk if the organisation were to cease. I have read the private reports, but what could be said about how much it would cost if the organisation were to close today, versus working through with a new board and looking towards the future?”
Ms Gedman responded: “The confidential report does talk about the options to be explored, and one of the options that was explored was the managed closedown of WtY.
“It’s fair to say that it would be more cost-effective to release the £1m and to try to size the organisation appropriately going forward than it would be to close it down.
“It is important to know that it would have to have been a managed closedown and it would not have taken place until April next year.”
When pushed about estimated costings, she said: “The figures that were presented to me by WtY board in terms of the costs, it would be over £3m to close it down.”
Coun Steve Siddons, leader of Scarborough Borough Council, added: “I think this is a prudent way to move forward.
“Closing down an organisation like WtY would have significant costs attached to it.
“Changes have been made, we are asking for further changes to be made, which would see, effectively a new board and chair in place pretty quickly.
“We have to give the organisation a chance to reinvent itself. We would have to replace it with something if we didn’t have WtY in place.
“It’s really important that this group gets regular updates. We set challenging targets before further tranches of that £1m are released.”
Leeds City Council leader Judith Blake added: “I welcome the move to making sure that everything is done in the most open and transparent way possible.
“Obviously there are issues of commercial sensitivity that everyone recognises.”
Bradford Council leader Susan Hinchcliffe said: “It is the right time to accelerate progress to the body that we want to see.
“If [WtY] wasn’t there, we’d have to invent it. Tourism in Yorkshire is really taking off and the Yorkshire brand is very important for a lot of us.”
A public report which had gone before members read: “The financial position of WtY is challenging and there are cash flow issues due to a number of factors, including the one-off costs associated with the investigations and the pause of and/or reprofiling of public sector funding.
It added that, due to the issues around funding, the organisation had to make use of a loan facility that it had with North Yorkshire County Council.
It added: “As WtY is a not for profit company and does not have large cash reserves in place it was necessary for WtY to draw down from the loan facility it has had in place with North Yorkshire County Council for the past four years. The loan is repayable at a commercial market rate of interest and is secured on a property owned by WtY.”
Another report was published into the financial state of WtY, which as not available for the public to view. Despite this, the report to councillors claims the organisation “can recover” from its current financial situation, but was “reliant” on funding from the regional business rates pool (BRP).
It stated: “Indications are that WtY can recover from the current financial situation. The contribution from the BRP is a commitment made before the resignation of the previous Chief Executive and as such has been built in to the WtY budget; consequently the organisation is reliant on this funding. Continued funding from the BRP would bring stability to the organisation and enable WtY to continue to deliver events and the boost to the local economy they bring.”
The updated and agreed recommendations:
“A public report on progress of implementation of the recommendations is brought back to Business Rates Pool in advance of future funding tranches being released.
Recruitment to the WtY Board is carried out immediately and the interim chair arrangements cease with immediate effect. For up to 12 months a public sector appointee becomed interim chair and the new board is in place no later than the end of the financial year.
A chief executive is appointed as soon as possible through a clear and transparent process.
Until the recruitment of a chief executive is complete Jacqui Gedman, Chief Executive, Kirklees Council is asked to provide strategic support to WtY, including authority to draw down the approved BRP funding as required.
Confidential reports supporting this item are to be made public, with commercially confidential information removed.
A four month consultation process, led by the public sector, about the future of regional tourism, is carried out.”