Energy Crisis Re-Framed
Posted: Tue, 29 Nov 2022 12:39
The sport and physical activity sector has once more popped up on a major news piece. BBC Breakfast and the late evening news ran an item of some depth which highlighted the potential for a substantial proportion of public facilities, notably swimming pools, at risk of closure due to the significant increases in energy costs.
There is yet again, a call from the sector, for government intervention in the form of financial support. The challenge once more is how effectively the sector can garner a collective voice that is credible and heard.
There is no doubt that much effort goes into lobbying the relevant government departments. However, there has to be some fear that to peddle the same threat of facility closure so soon after the pandemic, which resulted in nothing like the calamity that was suggested, may sound a little like 'crying wolf' again.
That said, what must be made clear, is that this crisis is very different. The claim previously was both plain to see and equitable in its effect; trading ceased and it applied to everyone. And of course, that calamity was averted due to a range of government support measures.
This time, facilities remain open and those organisations affected are at different points on the curve; that is, some are experiencing the effects more acutely than others, or that the pain is not necessarily immediate but forecast.
Whilst this makes articulating the 'crisis' more challenging, let us be in no doubt, most of us across the sector believe that the implications this time are considerably more catastrophic; I use the word advisedly.
Let's be clear, if organisations have got energy supply arrangements commissioned post the Russo-Ukraine war (March '22), then even with the benefit of the business cap, they will be facing energy costs this winter at least three times those incurred previously.
The maths is simple; if energy costs were 8% of expenditure, in a business that had £10M of expenditure, energy is now likely to be 25% of total costs. Remember, those businesses were probably, at the very best operating with no profit margin, and reserves had been exhausted during the pandemic. Very quickly, those businesses with liability for energy costs of that order will run out of cash and be insolvent. Those in contractual arrangements with Local Authorities will be unable to trade and fulfil the terms of those contracts. Quite simply there is no liquidity in the sector. If organisations are going to be in a position to continue to provide those services, then that financial hole has to be plugged. Irrespective of the entity - contracting organisation, local authority owned trading company or in-house operation - the cost of supplying these services across the UK is in the 100's of millions of pounds more expensive than it was six months ago. Just take that figure in!
By the way, the vast majority of those organisations responsible for the operating costs of swimming pools across the UK are NOT commercial entities in business for shareholder return, they are charitable organisations and social enterprises whose surpluses are relied upon to re-invest in community assets and services for the benefit of those local communities.
Now, whilst those are the simple commercial facts, those are NOT the reason intervention is sought. Why? Because the impact will be so much deeper than that which I've articulated so far.
We must firstly face up to the fact that public sector expenditure is under considerable pressure and public services that need funding must have WORTH or VALUE.
There should NOT be an indiscriminate clamour to retain swimming pools and sports facilities just for the sake of retaining them. No!
There must be a value-led rationale that is expressed that illustrates unequivocally, the contribution that sport and physical activity makes to the physical, social and mental well-being of communities. That those services fundamentally provide a preventative health service, serve to contribute to reducing the incidence of major chronic disease and help to reduce the prevalence of health inequality.
This must be expressed in monetary and social value terms. We must articulate our argument using irrefutable insight and be able to communicate with clarity and conviction.
There is no room for emotional argument. Albeit, that the loss of facilities will have a profound emotional impact upon the communities which benefit from them. It is very easy to articulate the cost of services, and of course cost has merely a transactional connotation; if we can't afford it then we won't provide it.
Shifting the proposition to one that is Value-led must be more comprehensible and likely to be more meaningful. Our purpose is NOT to operate swimming pools! Our purpose is to provide a preventative health benefit for 100% of the communities with whom we work.
Our public swimming pools enable 6.5M children aged 5-12 to learn to swim and meet the competence criteria established at Key Stage 2.
Our physical activity professionals deliver two thirds of the cardiac rehabilitation services provided in the UK.
Our sport and physical activity services deliver £4 of social value for every £1 invested - imagine the reduction in well-being, increase in anti-social behaviour and the increased stress on the health, criminal justice, education and social care services if that VALUE was lost.
The cost of physical inactivity is estimated to be £7.4 Billion per year, much of which places a direct additional cost on the NHS, and 1 in 6 deaths in the UK are attributed to physical inactivity.
When pressed for intervention, Governments will look for the gaps that are created; where else can these services be delivered in the market or what will be irreplaceably lost if this supply no longer exists? It is for this reason that the Value-led argument must be expressed and why we must articulate the unique position of public services.
These services are simply disproportionately affected when compared to others (energy requirement is greatest in these built assets) and the people for whom we provide simply have little other accessible alternative if community facility and service provisions are lost; those who are most disadvantaged and benefit the most from these services, are the most vulnerable should the services be affected.
We must not aimlessly believe that all our services are essential, some rationalisation would be sensible, BUT, public sport and physical activity services are necessary for a healthy, happy and productive society to thrive and health inequality to be addressed.
I commend us to articulate with value-driven not cost-led perspective.
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