Growing pressure on local government finances brought about by higher energy prices, increased staff, fuel and maintenance costs, coupled with significant additional costs identified for refurbishing the centre, means the Council must review spending proposals in order to balance its budget.
Refurbishment of the leisure centre, at an estimated cost of £10.55 million, was given the go-ahead by the Cabinet in April 2022 but the scheme will be re-considered at a Full Council meeting on November 24th 2022, in light of financial challenges.
The centre has been closed since July 27th 2021, due to serious health and safety concerns. Rapid deterioration of the building was highlighted after heavy rainfall caused significant damage to the roof and there was widespread water ingress throughout the building.
A spokesperson for SKDC said: "Along with other public authorities, the current financial outlook remains very challenging for South Kesteven District Council.
"While the advantages of providing publicly accessible leisure facilities are well known, many Councils across the country are having to make the difficult decision to either temporarily or permanently close their leisure facilities.
"The Council does not underestimate the hugely significant impact a permanent closure of Deepings Leisure Centre would have on the local community.
"The building is 48 years old and requires significant investment to bring it back into use. Regrettably, the reality of the situation is that it may no longer be viable to continue managing a leisure centre at the site."
UKactive, a national organisation that promotes the interests of commercial and community leisure centres, reports that up to March 2022 one in six swimming pools in the country either temporarily or permanently closed, and predicts as many as 79% could close in the face of rising utility costs, the cost and availability of staff, and a post-pandemic change in the behaviour of customers.
The existing leisure centre building and associated land are owned by Lincolnshire County Council, along with the nearby Linchfield playing fields. Since the centre was built in 1974, SKDC has been responsible for managing the centre and playing fields.
The Anthem Trust, which runs The Deepings School, had exclusive use of the sports hall, swimming pool and playing fields during the day in term-time, although no formal agreement for this was in place.
Since the refurbishment approval in April 2022, design consultants have been appointed and a first-phase construction contract awarded.
The impact on construction costs of the Covid-19 pandemic has been exacerbated by the effects of the war in Ukraine on energy prices and rising inflation, as a result of which the cost of raw materials in the UK is also rising. In addition, shortage of labour alongside inflationary pressures could increase the total project cost by around 40%.
SKDC faces across-the-board budget pressures as a result of significant utility price increases. In 2023/24 electricity costs to the Council are expected to increase by £1.1 million compared to budget, and gas costs by £149k.
Fuel is expected to cost £200,000 more compared to budget, and a national pay award will mean an increase of £900,000 compared to budget.
Loan repayments to finance the refurbishment were originally estimated at £641,000 a year over 25 years, but since then significant national and international events have had a major impact on interest rates.
The spokesperson said: "We have an over-riding duty to ensure the Council is on a secure financial footing for the future. The changing financial climate over the last 12 months means that the level of expenditure required for a major refurbishment of the leisure centre has increased considerably.
"The updated borrowing rate for the same period at the same level of borrowing is now 5.81%, increasing the annual cost to £1.048m a year over 25 years - a 48% increase."
SKDC operates three other leisure facilities in the District, in Bourne, Stamford and Grantham, which all need investment following condition surveys that have identified repair and maintenance issues.
Members of SKDC are also being asked, should a decision be made not to proceed with the refurbishment project, to consider handing the Deepings Leisure Centre buildings over to Lincolnshire County Council, and provide direction on the future management and leasing arrangements for the Linchfield Road Playing Fields.