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Calls to further extend the VAT break on tickets sales went unanswered, while no improvements to the live events insurance scheme were forthcoming
By James Hanley on 27 Oct 2021
The UK’s live music industry has given a mixed response to chancellor Rishi Sunak’s budget, unveiled today (27 October) in the House of Commons.
The chancellor, who upgraded this year’s economic growth forecast from 4% to 6.5%, pledged an additional £850 million in culture sector funding, the majority of which is ring-fenced (including £2m earmarked for a new Beatles attraction on Liverpool Waterfront), alongside temporary business rates relief in England for eligible retail, hospitality, and leisure properties for 2022-23, worth almost £1.7 billion.
The government is also freezing the business rates multiplier in 2022-23 – a tax cut worth £4.6bn over the next five years, and has increased the headline rate of orchestra tax relief.
However, calls to extend the VAT break on tickets sales beyond next March fell on deaf ears, and no improvements to the government’s £800m insurance scheme for live events were forthcoming. In addition, no cash was allocated to help the sector deal with Brexit’s impact on touring, while the absence of the word ‘music’ from the budget document left a sour taste.
“We’re glad to see that live music will receive some benefit from today’s spending review – including tax relief, business rates, and some extension in terms of funding,” says a spokesperson for trade body LIVE (Live music Industry Venues and Entertainment).
We need government to give us the tools to make progress, which were, unfortunately, missing from today’s news
“However, with the word ‘music’ completely absent from today’s announcement, we remain steadfast in our drive to see government pay attention to the key issues we are facing: the impacts of Brexit, the recovery from Covid and the long-term growth of the sector. We need government to give us the tools to make progress, which were, unfortunately, missing from today’s news.”
It remains to be seen whether music will be eligible for the £52m of government funding set aside for museums and “cultural and sporting bodies” next year to support recovery from Covid-19, with an additional £49m allocated for 2024-25.
“We look forward to hearing more detail about some of the measures announced by the chancellor today, in particular the allocation of further Covid-19 recovery funding for the cultural sector,” says Association of Independent Festivals (AIF) CEO Paul Reed. “On the surface, however, it doesn’t go far enough in supporting our truly world-leading festival industry.
“It is clear that the most effective way for the government to support the industry’s recovery into 2022 and beyond would be to extend the VAT reduction on tickets, look closely at a permanent cultural VAT rate, and completely remove festivals based on agricultural land from the business rates system. Unfortunately, none of this was forthcoming today.”
Referencing UK Music’s latest This Is Music report, which revealed the impact of Covid-19 wiped out 69,000 music industry jobs – one in three of the total workforce – the organisation’s CEO, Jamie Njoku-Goodwin, says further action is needed to support the music sector’s post-pandemic recovery.
“It is crucial that we get government support to help us continue to rebuilding and hiring people who went so long without work due to the pandemic,” he says.
“Covid halved music’s economic contribution to the UK economy from almost £6 billion a year to £3.1 billion in 2020. If the government strikes the right note by delivering the support we need, our music industry will come back stronger and bigger than ever.”
The government has missed an opportunity
Setting out a three-point plan to boost the business, Njoku-Goodwin adds: “We are pleased to see the extension of the orchestras tax relief yet the government has missed an opportunity to not take forward further music tax incentives to help boost jobs and economic growth. Similarly, business rate relief for venues is very welcome yet we remain concerned about next April’s VAT hike for live events.
“Ministers must put turbo-chargers under the efforts to clear away the barriers that are still making it so hard and expensive for musicians and crew to tour easily in the EU. As the domestic music market recovers, the government should also build on recent trade deals by giving more funding and support for music exports.
“As well as music’s huge economic and cultural importance, we also need to see the government fully recognise its huge value to our wellbeing by properly funding music education to help nurture our talent pipeline and provide the stars of the future.”
AIM CEO Paul Pacifico welcomes new measures for venues and hospitality, but stresses the importance of a tax relief scheme for music.
“It’s encouraging to see the government recognise the serious blow Covid dealt to the UK’s music industry in today’s budget, discounting business rates for music and other hospitality venues and for premises improvements and green tech use as well as increasing tax reliefs for orchestras,” he says.
“However, more must be done to support the globally significant independent music sector to ensure a viable future for diverse music, creators and entrepreneurs. One key proposal is a tax relief scheme for music, like those successfully implemented in other creative industries such as film and games. This cost-effective measure could provide our sector with the boost it needs, attracting inward investment and creating a ripple effect across the wider music ecosystem. We urge government to include music in such schemes at the next opportunity.”
There were also contrasting emotions from Night Time Industries Association (NTIA) chief Michael Kill.
“The improved forecasts for growth announced by the chancellor today are good news, and the reopening of the night time economy has been a key part of this better-than-expected bounce back,” says Kill. “We were disappointed that the chancellor chose not to extend the 12.5% rate of VAT on hospitality – this is a missed opportunity, and it will prevent those forecasts from improving further still.”
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