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event industry general

SIC codes: time for the government to make changes

Martin Fullard revisits the thorny issue of SIC codes, and says that the government must act to change them, or the events industry will never recover.

In 2020, I wrote a piece called ‘Why has the events industry been left behind’, and it seemed to resonate. Checking back, 43,841 of you read it. The thrust of it was that the events industry is not correctly administrated by Companies House and, as a result, many businesses that operate in the UK’s world of events are ‘assigned’ elsewhere. The net result being that, in black and white on the paper before them, in the eyes of HM Treasury and Office for National Statistics (ONS), the events industry does not exist…in the way we say it does.

Before the pandemic, conferences and meetings were worth £18.3m to the UK economy in direct spend annually and forms the single largest element of the total £84bn events ecosystem. But this figure is the result of manual research, and not a figure awarded to us by central Government. While the Department for Digital, Culture, Media and Sport accepts this, HM Treasury does not – and I understand that. That’s a big word to take.

During the pandemic, social media was awash with comments lamenting the Government’s failure to fully recognise the industry and its value, but this won’t change unless meaningful data can be provided. Indeed, ‘our’ minster, tourism minister Nigel Huddleston, said this recently (read on p27).

While the short-term objective of our sector is to simply survive the pandemic, and this Autumn window has probably helped that, we must work towards developing a formal structure in the SIC code system in the medium-term. However, this presents a challenge.

First of all, we must have a full set of SIC codes. At present, of the 752 codes that exist, only four directly link to the events industry. They are: Section L: 68202, Letting and operating of conference and exhibition centre; Section N, 82301 assigned to ‘activities of exhibition organisers’, 82302 ‘activities of conference organisers’, and Section I notes 56210 is assigned to ‘event catering activities’. So, not much to go on for an industry as diverse as ours.

Poor take-up

Last year, I took myself to Companies House where, armed with a sample list of 200 venues, organisers, agencies, and suppliers, I investigated who is registered as what. The results were illuminating and prove the point I am trying to make. Of the 200 businesses I selected off the top of my head, only 30 were assigned to one of the three available SIC codes.

About half of them are registered as ‘96090 - Other service activities not elsewhere classified’. Many venues are registered as ‘55100 - Hotels and similar accommodation’. Agencies were the biggest “offenders”, with SIC code assignments including ‘59112 - Video production activities’, ‘73110 - Advertising agencies’, ‘70210 - Public relations an communications activities’, ‘79120 - Tour operator activities’ and ‘70229 - Management consultancy activities other than financial management’.

Only four of the agencies (including some of the largest) were using one of the event-assigned codes.

At this juncture you will correctly remind me that this is expected, as there are insufficient codes, but all of the agencies I selected do involve themselves with conferences, so why not select that code, which is available? Businesses can select multiple codes, not just one.

That, though, is beside the point. The real issue here is that every events business that has not registered as one of the three events-assigned SIC codes (regardless of their accuracy), is essentially contributing to other sectors. SIC codes are the tools in which a sector is measured.

When the Chancellor of the Exchequer, Rishi Sunak, was going through his list of which sectors he saves and which he doesn’t see as worthy of saving (in terms of their financial weight), he was unwittingly looking at other sectors which have been inflated by events business. This is no truer than with hotels in the hospitality sector. I do not have any official statistics, but we all know many events take place in hotels, either for the day or over multiple days.

As you would expect, most of the hotels I checked out on Companies House are registered as ‘55100 - Hotels and similar accommodation’, although weirdly not all. Some are also registered as ‘68209 - Other letting and operating of own or leased real estate’. I don’t know why.

So, every time you pay your hotel venue for the events space, that money is not being viewed as event revenue in the eyes of the Treasury, but rather just making it look as if lots of people are staying at hotels. The same is true of sporting venues such as stadiums, which use event revenue as a secondary stream.

Venues which exist solely to service events are a mixed bag with how they are registered, only two on my list are related to the events industry. Some I couldn’t even find.

Then there are those on the supply side of the industry, such as those providing event technology, exhibition stand building, signage and so on. Catering, mercifully, does have its very own SIC code, although one of the country’s largest contractors doesn’t actually use it.

Dedicated organisers, albeit more on the exhibitions side than conferences, are the group which consistently uses the assigned SIC codes, perhaps unsurprisingly. There are a few weird ones, such as one organsier of note registering themselves as ‘64209 - Activities of other holding companies not elsewhere classified’.

Ideally, what we want is for every business operating in the event supply chain to register themselves as an events business on the available codes in the short term, but it is understandable that some may want to do the opposite.

What the Government must do

God forbid anything like this were to happen again, but people are going to look back at what businesses the Government decided to save during Covid-19. Why would they willingly assign themselves to a sector that was essentially ignored? Unless we all re-register using the available codes to show the strength of our sector, I can’t see that changing.

It is now critical that the Government works with the events industry to rework these codes. I have given it extensive thought and I calculate that we need 35 codes to adequately administrate the industry. If the Government can help facilitate that, we will take the onus of a PR campaign and ensure that businesses can change codes.

The Government will not pay attention to us when we tell them the events industry as a whole is (or was) worth £84bn to the UK economy each year. They are only interested in what the audited accounts on Companies House tells them and, right now, we are telling them we don’t exist.

To read the feature, click here.