Could cleaning costs rise by 40% in the next five years?

The recent Building Cost Information Service (BCIS) forecast predicts cleaning costs will rise by 23.6 per cent over the next five years, driven by increasing labour costs, but the industry could face a much steeper increase, writes Stuart Conroy, commercial director at Peartree Cleaning.

The BCIS forecast is at the lower end of what the industry should be preparing for. From our perspective, an increase closer to 40 per cent is entirely possible, particularly when you consider the full range of employment costs facing cleaning contractors.

Their forecast seems to recognise only the impact of increases in the National Living Wage, with an average of 7.4 per cent over the past five years, but there are other pressures to consider. 

Many cleaning contractors pay the voluntary Real Living Wage, which is higher than the statutory minimum, while changes under the Employment Rights Act could add further costs through enhanced employment protections and associated obligations.

And whilst I don’t expect any major increases in the Budget Statement next week, the increase in employers’ National Insurance last year added 4 per cent to employer costs and directly contributed to the ongoing downfall of the retail sector.

Cleaning is a labour-intensive industry, so even relatively small changes to employment costs can have a significant impact on contract pricing. The concern is that clients may be budgeting against forecasts that don’t fully reflect the costs contractors will face. 

Over the next five years, both suppliers and facilities managers will need to be realistic about what it costs to deliver a properly staffed, compliant and sustainable cleaning service.

For facilities managers, the priority should be to examine how contracts account for employment costs. An annual uplift based on general inflation will not necessarily reflect changes in statutory wage rates, the Real Living Wage or employment obligations.