A family member owns a building which is made up of ground floor units and a small first floor unit currently being used as a gym I would think that judging by the size of it there would be no more than twenty people using the gym at any one time there is a fire escape on the outside of the building which is in a poor state in view of the size of the gym could this fire escape be dismantled and the existing internal staircase used for escape

They need to carry out a fire risk assessment in order to comply with the Fire Safety Order. If you get a competent person to do it they will be able to advise.

It's not just about numbers of persons, but travel distances and the provision of the external stair in the first place may well have been due to this.

Travel distances, fire alarm systems, fire compartmentation & protection of escape routes, stair and door widths, etc are all relevant factors - if you have a suitable and sufficient FRA it will all be considered.