State of the UK leisure industry: a driver for growth

a research report by Oliver Wyman (management consulting firm) for BISL (Business in Sport and Leisure) published June 2012

Executive summary

The UK’s leisure industry is a key contributor to the nation and its economy. It provides more than one in twelve of all jobs, and more than one in five jobs for 16-25 year olds; it accounts for around 7% of total tax receipts; and it includes some of the world’s leading leisure businesses. But until now, the leisure industry has not been clearly defined, and its true importance has rarely been acknowledged.

This report, commissioned by BISL and based on research by Oliver Wyman, paints the first comprehensive picture of the economic size, scale and importance of the leisure industry. BISL believes it demonstrates that the industry is too important to remain undefined, under-represented, and misunderstood by government.

The report shows that the UK leisure industry:

• Employs 2.6m people, representing 9% of total UK employment. This is more than manufacturing, transport, construction or financial services
• Generates over £200 billion of revenue when accounting for direct contributions (£117 billion) and indirect contributions (£102 billion)
• Provides jobs for 730,000 16-25 year olds, representing 21% of 16-25 year olds in employment, more than manufacturing, construction and financial services combined
• Has a strong female workforce with 44% of management positions in the leisure industry held by women and the majority of the leisure workforce being female
• Attracts a large proportion of part-time and flexible workers – 46% of employees in the leisure industry are on part-time contracts
• Offers attractive career options for both skilled and unskilled workers, with few barriers to career progression and advancement
• Has been an incubator for entrepreneurship: 66% of leisure industry businesses are small- and medium-sized enterprises (SMEs), and the business start-up rate is 20% higher than the UK average
• Is a world leader in leisure: UK businesses have been at the forefront of innovation and growth, and the UK accounts for a disproportionate share of leaders in the global leisure market
• Provides a wide range of leisure activities for millions of consumers across the country in a safe, secure, and responsible environment
• Generates almost twice as much tax revenue for the Treasury as its share of the economy might suggest – the industry contributes 7% of UK tax while representing 4% of the nation’s GVA
• a thriving leisure industry is also essential for capturing the full economic benefit from major sporting events hosted in the UK, starting with the 2012 Olympic and paralympic Games. Offering a broad range of attractive leisure activities encourages discretionary spending both by UK residents and by visitors

However, BISL believes that the leisure industry has now reached a crucial juncture. Combined with tough macroeconomic conditions, government policies are constraining growth, and limiting opportunities to create jobs at a time when the economy most needs them:

• Government policy since 2010 has exacerbated economic headwinds by imposing an additional £3.2bn of tax and regulatory costs per year on the industry and its customers – a figure estimated to rise to £3.9bn per year by 2014
• Whereas the leisure industry had been generating 41,000 new jobs every year between 1998 and 2007 – nearly double the rate of growth of retail, construction and transport – employment has been declining since the onset of the financial crisis. 11,000 jobs were lost between 2008 and 2010
• The leisure industry employs a high proportion of young, female, and part-time workers, and provides a livelihood for many small business owners – these groups have been hard hit in recent years

BISL believes the leisure industry can play a major role in creating new jobs and delivering economic growth. BISL recognises the industry has its role to play in reigniting growth – focusing on innovation, mastering brand management and fully exploiting international opportunities – in an ever safer, more responsible and sustainable environment. With this aim in mind, and based on a series of workshops and interviews with CEOs and other industry leaders, BISL is calling for a new strategy for government designed to help the leisure industry develop, improve its skill base, and encourage entrepreneurship, employment and innovation.

In Section 4, BISL sets out a number of recommendations by which government could better support the leisure industry and enable the leisure industry to make an even greater contribution to the economy in future:

• Incentivising businesses to employ more 16-to-25-year-olds from the ‘NEET’ (Not in Education, Employment or Training) category through a controlled exemption from NIC (National Insurance Contribution). In return, the leisure industry will provide transferable training or apprenticeships, and benefit from NIC exemption if they subsequently employ the individual
• Making a Cabinet minister responsible for championing the growth of the leisure industry. BISL proposes that, as the government is currently configured, this should be the Secretary of State for Culture, Media and Sport
• Bringing VAT rates closer to European benchmarks to increase the industry’s ability to compete in the tourism market, starting with the sub-sectors of the leisure industry able to generate the fastest payback
• Reducing the licensing and regulatory red tape that is currently hindering growth of the industry, in particular restaurants, pubs, night clubs, and betting and gaming businesses
• Building simpler, cheaper and more transparent local procurement processes to enable more sports and leisure facilities to be provided, and to attract greater investment

BISL supports the general direction of government policy changes to planning guidelines and employment legislation – we outline specific suggestions in these areas in Section 4 of the report.

BISL believes these proposals can help both the leisure industry and the economy of the UK as a whole. Specifically, BISL believes they will:

• Reignite job growth in the Industry
• Provide up to 440,000 new jobs by 2020, particularly focused on young people, female, part-time and low skilled workers
• Drive an additional 30,000 new high quality training positions over the next three years for young people currently not in education, employment or training
• Save UK businesses and the government up to £600m per year through more efficient planning and procurement processes

We look forward to an open dialogue with government about taking forward these recommendations – and ensuring that the UK leisure industry fulfils its potential to drive economic growth, and to provide new jobs.

Full text (PDF 86pp)
Printed copy £250

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