11 Jan 2023
UK Government reduces energy subsidies, says gas prices have fallen and sector is not an ETII
BY Frances Marcellin
The UK government has announced it will be scaling back financial support for businesses as part of the updated Energy Bill Relief Scheme (EBRS).
Treasury support has been capped at £5.5bn for the year from 1 April 2023, more than £10bn less than the scheme designed for the winter from 1 October 2022 to the end of March.
The government said that the EBRS was only intended to be a six-month emergency scheme and that “the latest data shows wholesale gas prices have now fallen to levels just before Putin’s invasion of Ukraine and have almost halved since the current scheme was announced”.
It said that the new scheme “strikes a balance” between “supporting businesses over the next 12 months and limiting taxpayer’s exposure to volatile energy markets”.
UK Active released survey data in November 2022 showing that even under the previous scheme 40 per cent of council areas were at risk of losing their leisure centres – including 100 swimming pools – or seeing reduced services before 31 March 2023. Around three quarters (74 per cent) were predicted to close or reduce services by 31 March 2024.
Freedom Leisure – which manages over 100 leisure centres and 60 pools – started shutting pools last October in Milton Keynes and Rye, after its annual energy bill increased from £8m to £20m. The closures came despite support from the EBRS.
“The pace of closures nationwide matches UK Active’s projections, with swimming pools most exposed due to their significant energy dependency,” said Huw Edwards, CEO of UK Active. “The government’s new Energy Bills Discount Scheme will fail to give thousands of pools, leisure centres, and gyms the support they need to avoid further service restrictions, closures, and job losses.
“Having experienced a rise in energy costs of up to 300 per cent compared to 2019, the new scheme will make little material difference to the greater energy cost pressures these facilities will now face from 1 April.
“The failure to categorise certain services, especially swimming pools, as ‘intensive’ energy users requiring more bespoke support is a significant oversight given the overwhelming evidence provided to the government on their energy use.”
It is unclear why business activities such as museums and historical sites have been classified as “particularly vulnerable to high energy prices” and “energy intensive” – referred to as Energy and Trade Intensive Industries or ETIIs – and therefore entitled to a higher level of financial support, while leisure centres and swimming pools have been excluded.
Liz Terry, editor of HCM said: "The physical activity sector has been placed towards the back of the queue again, which has echoes of the challenging time the sector had getting open after the COVID lockdowns.
"We now know that in addition to lobbying for essential status, we must also start to fight for relevant parts of the sector to be categorised as an Energy and Trade Intensive Industry (ETII) and we call on the sector to commit resources to making this happen as soon as possible.
"There is clearly still a huge lack of understanding within government of the vital role the sector plays in maintaining the economy and the health of the nation – reducing the strain on the NHS – and also the way the sector actually operates.
"It beggars belief that anyone would think a museum is more energy-intensive in terms of operations than a swimming pool.
"However, while this news is devastating for some operators, we must aim to mothball facilities that need to close, so they can be reopened as soon as finances allow.
"With better weather expected as we go into the spring, we also hope operators will seize the opportunity to invest in solar to take advantage of abundant free energy through the summer months, as has already been happening with great success in some locations."
Phil Rumbelow, chair of Community Leisure UK (CLUK), which represents charitable trusts delivering public leisure and culture services, said: “This news is a bitter blow for the community leisure sector, particularly public swimming pools, which puts their continued operation in question. Unless other steps are taken by the government, nationally and locally, this decision spells the end for community leisure as we know it. One thing is clear, inaction has consequences.
“Our members will continue to argue that the cause of publicly accessible leisure is an ideal worth fighting for. As just one example, we simply cannot accept a situation where the only route for a child to learn to swim is through a private pool, with all the costs and limitations to access that involves.
“We are actively seeking a change of mind on the part of the government, as well as direct crisis support for our sector. We will not accept the collapse of public leisure and the major impact on public health that will result.”
Edwards concurs and believes the implications of the new EBRS will be “severe” unless they are reviewed, with communities losing vital services, from swimming lessons for children, to mental health services and programmes for older citizens, ethnically diverse communities and disabled people. Millions of people on long-term health programmes for cancer rehabilitation, musculoskeletal conditions and Type 2 diabetes will also be impacted.
A report from the WHO in October 2022 showed that physical inactivity between 2020 and 2030 will result in almost 500m people developing a preventable, non-communicable disease (NCD), at a cost of US$300bn, if governments do not act urgently.
Speaking to BBC news following the announcement, Edwards said: “As more facilities close, the decision to deny greater support for these facilities will create even more challenges for the NHS, which is already under unimaginable pressure and impact economic productivity by hampering efforts to get people healthy for work. Tragically, the impact of the scheme and more facility closures will further damage our national health, our NHS, and our economic growth.”
Andy Haldane, former chief economist at the Bank of England, says declining health is hindering the UK's economic growth with the UK forecast to be the only developed economy to have a workforce smaller than before the pandemic by Q1 2023.
UK Active wants to work with the government to ensure the leisure sector is categorised as an ETII and to minimise the inevitable restrictions and closures.
“This should include placing these facilities at the heart of addressing the major challenges we face as a nation, including the mental health crisis in young people and adults, operational pressures on the NHS, and the growth of people of working age becoming economically inactive,” said Edwards.
“Following the Public Accounts Committee’s new report on grassroots participation in sport and physical activity, the government said it had ‘made the nation’s health and fitness a priority’ so we now need to see this sentiment matched with action,” he concluded.
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