Executive Summary

This report reviews the market for contract cleaning services. In 1999, sales in this market reached an estimated £3.6bn, an increase of 3.4% over 1998, equivalent to a rise of 2.9% in real terms after taking account of sector price inflation. This represents 42.5% of the total UK cleaning market, including in-house activities, which is estimated to be worth around £8.5bn.

The range of cleaning services covered in the report corresponds to those defined as `industrial cleaning' under the UK Government's 1992 Standard Industrial Classification (SIC). These activities include the interior cleaning of buildings of all types, window cleaning and the cleaning of vehicles. However, the report does not cover laundry and dry cleaning or street cleaning activities. Cleaning is one of a number of business support services, ranging from security and portering to contract catering, that are increasingly being provided as a package in multi-service contracts.

Between 1995 and 1999, contract cleaning grew more slowly than activity in many other parts of the business services sector, increasing by 25% over the period in current price terms. Although quite healthy, this rate of increase was considerably lower than occurred in the early 1990s, a period when the sector benefited from the impact of Compulsory Competitive Tendering (CCT) legislation that introduced competition into the market for the provision of cleaning services to local and central government.

The contract cleaning sector is a fragmented one, and the impact of employment legislation and other regulatory action can be particularly burdensome. Since the end of 1998, many new rules have been introduced, including sections of the Employment Relations Act, covering trade union recognition, parental leave and related matters, regulations governing hours of work and leave entitlements, and the minimum wage provisions. However, the impact of legislation aimed at transferring activity from central and local government to the private sector is now less than it was. The CCT and market testing legislation of the former Conservative Government has now been overtaken by a `best value' approach, reducing the pressure on public bodies to outsource their cleaning and other support service activities.

Between 2000 and 2004, many of the issues of current concern to firms in the contract cleaning sector will continue to be relevant. These include the impact of legislation on the operations of the smaller cleaning firms and the extent to which potential clients will continue to be under pressure to contract out non-core activities. Training issues will also continue to be very relevant, whilst the role of the Internet as a marketing tool should become clearer. It is assumed that contract cleaning activity will continue to penetrate the in-house cleaning market, as the contracting-out of companies' non-core operations continues. Over the 5-year period, contract cleaning activities are expected to grow at a rate somewhat below the average for the business services sector in general, but still above that forecast for the economy as a whole, to reach a turnover value of £4.7bn by 2004.

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