By Jack Shakespeare, Director of Research, Policy and Communications, ukactive
On Wednesday (23 March 2022) the Office for Budget Responsibility (OBR) delivered an update on the country’s finances, followed by a statement from the Chancellor of the Exchequer.
With the Chancellor’s preference for a more extensive budget in the autumn, there was a reluctance for major fiscal interventions in the Spring Statement, especially so soon after the combined Budget and Comprehensive Spending Review in October last year (read ukactive’s response here).
However, against a backdrop of rising living costs, supply chain issues and escalating energy costs, the Chancellor was under pressure to address vital industry impact challenges. A challenge that the Government has failed to tackle in the Spring Statement (read ukactive’s response here).
The physical activity sector is in need of a true expression of support from the Government. As set out in a co-signed industry letter to the Chancellor on 17 March, ukactive CEO, Huw Edwards, warned that without support, many operators would be forced to increase prices, reduce services or, in the worst scenario, close facilities – emphasising that the Government should be ‘extremely concerned about both the health and economic impact of the energy crisis on fitness and leisure operators’.
This letter and position was based on evidence gathered by ukactive from our membership, ensuring that we understood the current financial situation for both public and private operator members over the coming financial year. This evidence is invaluable for ukactive’s lobbying of government – building our case and making sure our sector is part of the conversation (for example, within this Financial Times article and this ITV News story).
Rising energy costs add to recent events that have made the operating environment difficult for facilities. The devastating impact of the COVID-19 Omicron variant before Christmas, and government advice to work from home where possible, had a seismic impact on footfall particularly in city centres, a problem compounded by its impact on the critical January trading period and the sector’s omission from the Government’s ‘Hospitality & Leisure’ grant scheme.
While recognising that the fluctuation in energy prices remains difficult to address, ukactive has firmly and consistently called on the Government to provide two key areas of support that are in its control to help the sector:
- A VAT exemption – This would help ease some of the costs pressures the sector is facing, including a resolution to commercial rent arrears, that sees a fair ‘sharing of the burden’ between commercial tenants and landlords.
- Local and Central Government to work with public leisure operators to not only address the short-term financial pressures they face – exacerbated by running swimming pools – but come up with a long-term strategy to keep them open.
Despite the Chancellor failing to deal with the current economic pressures facing businesses, our work in this space continues. These are areas that ukactive will work with the Treasury; the Department for Levelling Up, Housing and Communities; and the Department for Business, Energy and Industrial Strategy, as a matter of urgency to find a solution for the pressures on our sector generated by rising energy costs.
The Chancellor did, however, point to a more positive long-term strategic plan for the reform of business taxes, and with this comes an opportunity for the Government to focus on the long-term public health of the nation.
In order for the Government to deliver on its levelling up priorities, as set out in its recent White Paper on the issue, a thriving physical activity sector is essential. There is an opportunity here for the Government to provide genuine support for the sector, to provide certainty in the operating environment for facilities to recover fully, and allow the sector to continue to grow and develop its essential service for the physical and mental health of the nation.
We will continue, tirelessly, to demonstrate to the Government that investing in our sector is a win-win – providing significant returns for both our nation’s economy and health.
Gyms, pools and leisure centres are the engine room of physical activity and health in the UK, and should be fundamental for fulfilling the Government’s ambitions across a number of major policy areas over the next decade, not least the forthcoming and imminent second edition of the Sporting Future strategy from the Department for Digital, Culture, Media and Sport. This is why we describe our sector strategy as a ‘shared ambition for growth’, which promises more than five million more people joining our members’ facilities by 2030 if the Government delivers the necessary measures.
While the Spring Statement may not have provided the immediate answers our sector is looking for, there is clear opportunity for ukactive and partners to continue to educate and inform key decision-makers, to represent and champion our members, and to further create the conditions for sector growth by working with government.
At the heart of our efforts, we want the Government to recognise our sector’s full potential and to use the levers in its control to provide meaningful support, enabling us to succeed in our shared ambitions for the nation’s health and prosperity.
More People More Active More Often