fbpx

PROFILE

MY SUBSCRIPTION

LOGOUT

x

The latest industry news to your inbox.

    

I'd like to hear about marketing opportunities

    

I accept IQ Magazine's Terms and Conditions and Privacy Policy

Mini-budget ‘delivers little’ for UK live sector

UK live music trade bodies have expressed disappointment over chancellor Kwasi Kwarteng’s mini-budget.

Measures outlined by Kwarteng in the House of Commons today in a bid to boost growth included a 1p cut to the basic rate of income tax from April 2023, along with the abolition of the 45p tax rate for top earners over £150,000, while a planned rise on corporation tax from 19% to 25% has been scrapped and a 1.25% rise in National Insurance to be reversed.

But LIVE CEO Jon Collins, who wrote an open letter to the chancellor earlier this week calling for a reduction in VAT and business rates, says the announcement does little to help the live sector.

“Today’s announcement delivers little for the UK’s world leading live music industry”

“While we are pleased to see the government taking steps to alleviate the cost-of-living crisis, today’s announcement delivers little for the UK’s world leading live music industry,” he says. “Jobs are already on a knife edge, and we agree with the chancellor that there are too many barriers in sectors like ours where the UK leads the world. Combined with the impact of reduced public spending power and rising costs across the supply chain, businesses that are already struggling to turn a profit will face bankruptcy and closure.

“Only the emergency measures that we have suggested to government will prevent this – injecting cash into the bottom line of struggling businesses through a reduction in VAT on ticket sales, as well as major reform of business rates.”

Association of Independent Festivals (AIF) CEO Paul Reed adds his voice to the chorus of disapproval.

“Today’s announcement from the chancellor means very little for our £1.76bn UK festival industry,” he says. “We’ve faced unprecedented challenges on increased costs, supply chain and low consumer confidence, with audiences facing a social emergency. This shows no sign of relenting as we look to 2023.

“What we need is an urgent reduction of VAT on tickets to 5%, and an assurance that festival businesses will be classed as vulnerable and eligible for support with the energy crisis beyond March 2023.”

Night-Time Industries Association (NTIA) chief Michael Kill also shares his frustration at the mini-budget, which he says has left the night time economy in the cold.

“I would urge the chancellor and government to reconsider these measures, given the limited impacts of the current tax cuts on the immediate crisis for many businesses across the sector”

“We are extremely disappointed with the chancellor’s announcement this morning,” he says. “It will be seen as a missed opportunity to support businesses that have been hardest hit during this crisis, causing considerable anxiety, anger and frustration across the sector as once again they feel that many will have been left out in the cold.”

Earlier this week, the government revealed its Energy Bill Relief Scheme, which will see energy bills for UK businesses cut by around half of their expected level this winter. The news followed the revelation that some UK live music venues are seeing their energy bills increase by an average of 300% –in some cases as much as 740% – adding tens of thousands of pounds to their running costs.

Under the scheme, wholesale prices are expected to be fixed for all non-domestic energy customers at £211 per MWh for electricity and £75 per MWh for gas for six months between 1 October and 31 March 2023. Kwarteng says the subsidising of both domestic and business energy bills will cost £60 billion for the next six months.

But Kill stresses that the intervention is “unlikely to be enough to ensure businesses have the financial headroom to survive the winter”.

“I would urge the chancellor and government to reconsider these measures, given the limited impacts of the current tax cuts on the immediate crisis for many businesses across the sector, the extremely vulnerable position the night time economy and hospitality sectors remain in, and re-evaluate the inclusion of general business rates relief and the reduction of VAT within these measures,” he says.

 


Get more stories like this in your inbox by signing up for IQ Index, IQ’s free email digest of essential live music industry news.

Our industry is facing unprecedented challenges

To the Chancellor of the Exchequer Kwasi Kwarteng MP,

Following two hugely disrupted years of closures, cancellations and government restrictions, live music is once again bringing joy to communities across the UK.

This summer saw one of the biggest weekends of live music in the country’s history with an estimated one million fans flocking to world-famous festivals, classical concerts and grassroots gigs over the space of 48 hours.

The UK is world-leading when it comes to live music, its creation and delivery. But our industry is facing unprecedented challenges.

Sky-rocketing operating costs combined with energy bill increases of up to 1,700% and pressure on disposable income are closing the doors on live music spaces at an alarming rate. Gigs, festivals and tours are being postponed while, according to the Music Venue Trust, at least 300 grassroots venues risk permanent closure.

The energy crisis is just the latest in a range of impacts on our vibrant sector

These domestic pressures come at a time when live music touring is proving both costly and complex, which is especially harmful to artists who are at the start of their careers. In 2019, UK music exports were valued at £2.9bn with UK artists headlining four of the top ten grossing tours. Unfortunately, the costs and complexity of touring post-Brexit put this at risk.

And this does not just affect our venues and events. Every lost gig, festival or venue jeopardises a highly specialised supply chain, puts skilled jobs at risk and leaves our talented artists without opportunities to profit from their creativity. We cannot afford to lose our live music sector, which generates an estimated £4.5 billion every year for the UK economy and whose talented artists and crews are the envy of the world.

While today’s energy announcement goes some way to alleviate that risk, as soon as this support is removed, we will again face the threat of widespread closure. The energy crisis is just the latest in a range of impacts on our vibrant sector.

We need your help.

With our industry still hurting from the aftereffects of Covid and rising costs across the supply chain, we continue to make the case that our sector needs additional support from government – if we are to keep all concert halls, arenas, festivals, and grassroots music venues open, we need movement on VAT and business rates.

If we are to keep all venues open, we need movement on VAT and business rates

An emergency reintroduction of the 5% VAT rate on live music ticket sales would keep people employed, venues and festivals open, and money flowing back into local economies as fans flock to gigs.

Based on 2021 figures, the reintroduction of 5% VAT on tickets sales would cost just £150 million in the first year. Funds used by industry to expand the event roster and mitigate cost pressures on ticket prices. This additional activity would generate a further £12om spend at venues – safeguarding thousands of jobs, keeping hundreds of venues open, generating incremental tax revenues and getting millions of pounds flowing into local economies. It would also build on other sectoral interventions such as Theatre Tax Relief and Orchestra Tax Relief, which are helping the sector bounce back post-pandemic.

Running this intervention for just three short years would mitigate some of the huge overhanging pressures the industry faces post-Brexit and Covid, while making live music events more accessible at a time when the country needs it most.

It’s over to you to ensure the UK’s live music sector has a vibrant future, helping us all to reap the cultural, economic, and social value music brings to the country – and to the world at large.

 


Get more stories like this in your inbox by signing up for IQ Index, IQ’s free email digest of essential live music industry news.

European trade bodies rally governments for energy aid

European live music trade bodies are lobbying for government-backed support packages to mitigate rocketing energy bills and prevent the sector from collapsing.

Last month, IQ heard from a number of European arenas who say that skyrocketing energy costs are emerging as the sector’s biggest challenge since the Covid-19 pandemic. ASM Global’s Marie Lindqvist said the prices for electricity and gas at the company’s venues have quadrupled since the beginning of the year, with the UK being hit the hardest.

UK live music trade bodies today (21 September) welcomed the government’s Energy Bill Relief Scheme for businesses but have called for further clarification of the details.

The scheme, revealed by the Department for Business, Energy and Industry, will see energy bills for UK businesses cut by around half of their expected level this winter.

The news comes after it was revealed that some UK live music venues are seeing their energy bills increase by an average of 300% –in some cases as much as 740% – adding tens of thousands of pounds to their running costs.

Under the new scheme, wholesale prices are expected to be fixed for all non-domestic energy customers at £211 per MWh for electricity and £75 per MWh for gas for six months between 1 October and 31 March 2023.

The support is equivalent to the Energy Price Guarantee put in place for households and applies to fixed contracts agreed on or after 1 April 2022, as well as to deemed, variable and flexible tariffs and contracts.

UK live music trade bodies today welcomed the government’s Energy Bill Relief Scheme for businesses

This scheme will apply to England, Scotland, and Wales, with a parallel scheme will be established in Northern Ireland, and will be reviewed after three months with an option to extend support for “vulnerable businesses”. However, it is not yet clear whether the live music sector falls into this category.

LIVE CEO Jon Collins welcomes the support but says the government must sustain it past the next six months. “Spiralling energy prices have already forced music venues up and down the country to close or curtail their programming and this will begin again as soon as this support is removed – it is plainly obvious that live music must be on the list of sectors considered ‘vulnerable’ by government.

“With our industry still hurting from the aftereffects of Covid and rising costs across the supply chain, we continue to make the case that our sector needs action on VAT and business rates if we are to keep all concert halls, arenas, festivals, and grassroots music venues open, bringing joy to millions and showcasing the best UK and international talent.”

Music Venue Trust (MVT) CEO and founder Mark Davyd has also warmly welcomed the package, saying the scheme “appears at face value to comprehensively tackle the immediate short-term energy crisis for grassroots music venues”.

“We await full details of the scheme and the method of implementation by the energy retailers and suppliers, but the base unit rate of 21.1p per kW/h laid out by these plans is sufficient to avert the collapse of the sector if it is fully delivered,” says Davyd.

“We understand that the government plans to bring forward controls to ensure that this target price is delivered and we look forward to reading their plans to implement this rate as a maximum for all music venues in the UK.”

The scheme “appears at face value to comprehensively tackle the immediate short-term energy crisis for GMVs”

However, MVT is also urging the government to clarify which sectors fall into the “vulnerable businesses” category: “The government has indicated that ‘pubs’ will attract support for longer than the six-month initial period based on the special circumstances of the energy crisis in relation to the operation of their business.

“We have asked for urgent clarification that the broad term ‘pub’ includes music venues and other licensed premises essential to the grassroots music ecosystem, and anticipate that this will be the case.”

The trade bodies have pointed out that further support is needed, in addition to the scheme, in order to stabilise the sector after the Covid-19 pandemic. The sector is calling on the Chancellor to reduce VAT on ticket sales to 5% and reform business rates in the mini-budget expected this Friday (23 September).

Elsewhere in Europe, markets including the Netherlands and Germany are still lobbying for critical support to curb “disastrous” energy costs for live music businesses.

In the Netherlands, the Association of Theatre and Concert Hall Directors (VSCD) says a large proportion of its 151 members are in danger of getting into financial trouble due to rising energy costs and inflation.

“For many venues, the rise in energy costs is disastrous. The expectation for next year is that we will be seven times more expensive. Even if we sell out every performance, this cost increase is impossible to absorb,” says Mirjam Radstake, director of Theater Hanzehof and Buitensociëteit in Zutphen.

VSCD is calling on the Dutch government to help local authorities subsidise venues’ energy bills

With only 7% of its members receiving some form of compensation to cover the costs, VSCD is calling on the Dutch government to make an extra contribution to the municipal fund so that local authorities can subsidise venues’ energy bills.

The association argues that, currently, subsidies do not reflect venues’ rising costs, which also include a 9.7% rise in rent and a 10% increase in the minimum wage, and that passing these costs onto the public is not an option.

“If we increase the ticket price, the public will drop out,” says Charles Droste, director of Cultuurbedrijf Amphion in Doetinchem.

“At the moment, 25% fewer tickets have been sold with us in September than in September 2019. The public seems to be waiting for rising energy costs and inflation.”

Earlier this week, the Taskforce Creative Culture and Media also sent a letter to the cabinet, containing a general plea to protect the sector against the current inflation and increased energy costs.

Meanwhile, Germany’s live association, the Federal Association of the Concert and Event Industry (BDKV), is calling on the federal government to design a special relief programme for the events industry to put forward to the EU Commission.

Germany’s live association is calling on the federal government to design a special relief programme for the events industry

Earlier this year, the EU Commission adopted a Temporary Crisis Framework which enabled member states to be more flexible with State aid rules in order to support the economy during Russia’s invasion of Ukraine.

Under the framework, member states could grant a limited amount of aid to companies affected by the crisis, or by the subsequent sanctions and countersanctions, up to the increased amount of €62,000 and €75,000 in the agriculture and fisheries and aquaculture sectors respectively, and up to €500,000 in all other sectors.

However, in the plan, the EU Commission does not count the events industry among the “systemically important” sectors eligible for aid. BDKV is now asking for a revision to the framework, to allow businesses in the events industry to receive up to €500,000.

“Without state support, there is a risk of the industry collapsing with bankruptcies, operational closures and further migration of skilled workers and the self-employed,” reads a statement from BDKV. “This special programme is needed now and not in the near future when such help is already too late.”

Timo Feuerbach, MD of the European Association of Event Centers (EVVC), says: “The events industry has not yet recovered from the corona-related restrictions of the past few years. The consequences of the war in Ukraine, high inflation and impending bottlenecks in the energy supply are also hitting us hard. Together with the disastrous communication from the federal government on the subject of Corona, which is unsettling customers and is already costing orders, our industry is in danger of being left behind in international competition.”

 


Get more stories like this in your inbox by signing up for IQ Index, IQ’s free email digest of essential live music industry news.

Energy crisis ‘existential challenge’ for live biz

UK live music trade bodies have warned the sector faces an “existential challenge” from the energy crisis after prime minister Liz Truss announced a temporary price cap for businesses.

The new PM unveiled an estimated £150 billion package today, which will see energy bills capped at £2,500 for households for next two years while the government gets the energy market “back on track”.

An equivalent price cap guarantee will be offered to all businesses, charities and public sector organisations for six months, after which a review will take place. Hospitality and other vulnerable sectors will be guaranteed additional support after the six-month period.

“We welcome the government’s energy announcement today and the measures outlined by the prime minister, but we urgently need more detail on how the government plans to support struggling businesses facing energy costs increasing by as much as 1,700%,” says LIVE CEO Jon Collins. “To support the live music industry, we also call on the government to introduce targeted action by reducing VAT on ticket sales to 5% and reforming business rates.”

“The triple threat of a cost-of-living crisis, the post-pandemic hangover, and skyrocketing energy prices could spell the end of the UK’s live music scene as we know it”

A recent industry survey revealed that music businesses across the country are currently facing enormous energy cost increases, forcing many to consider closing their doors and leading Collins to warn last week that the “triple threat of a cost-of-living crisis, the post-pandemic hangover, and skyrocketing energy prices could spell the end of the UK’s live music scene as we know it”.

“Millions of people have just enjoyed a spectacular summer of live music, but this is now under threat,” he said. “We face cuts to programming, venue closures and an unbearable strain on an already fragile industry. Government must act to protect this world-leading and uniquely British endeavour before it is too late.”

Responding to today’s intervention, Music Venue Trust venue support manager Clara Cullen stresses that a longer-term solution is required.

“The policy announced today only goes some way in alleviating the challenge”

“The financial impact of the energy price rises on the grassroots music venue sector presents an existential challenge,” she says. “For a sector with a total gross turnover of £399 million, the current rise equates to an additional £90m in costs.

“The policy announced today only goes some way in alleviating the challenge, in the very short-term, by creating an energy price cap for businesses that will be in place for an initial six months. The government has committed to reviewing this policy in conjunction with the hospitality sector. Music Venue Trust will contribute to this review to ensure the perspective of grassroots music venues is included in this decision-making process.

“As the policy announced today is only a temporary short-term measure, Music Venue Trust urges the government to take further action to ensure a long-term solution for energy provision for grassroots music venues providing an energy supply which is affordable, reliable and sustainable. We need this action to take place as soon as possible to protect, secure and improve our grassroots music venues.”

“This half measure package is tantamount to support experienced during the pandemic, but lacks considerable detail to alleviate current business concerns”

Michael Kill, CEO of the Night-Time Industries Association, believes the support package falls short of requirements.

“We are extremely disappointed at the announcement by the prime minister today,” he says. “This half measure package is tantamount to support experienced during the pandemic, but lacks considerable detail to alleviate current business concerns.”

“We have no time for drip fed support, or to await the impact assessment of incremental measures, this needs to be a concise and immediately accessible package, which is proportionate and scalable.

“As the first major announcement of the prime minister and chancellor’s tenure, the government has failed businesses today, and with mounting debt across the sector we will see many have no choice but to consider the future, placing thousands of jobs at risk in the coming weeks, without additional support.”

Last month, IQ heard from a number of European arenas who also say that skyrocketing energy costs are emerging as the sector’s biggest challenge since the Covid-19 pandemic. ASM Global’s Marie Lindqvist said the prices for electricity and gas at the company’s venues have quadrupled since the beginning of the year, with the UK being hit the hardest.

 


Get more stories like this in your inbox by signing up for IQ Index, IQ’s free email digest of essential live music industry news.

UK businesses face closure over energy crisis

Grassroots music venues are among the small and medium-sized businesses in the UK that are facing closure without immediate action to curb rocketing fuel bills.

With businesses excluded from the energy cap, some venues are seeing their energy bills increase by an average of 300% –in some cases as much as 740% – adding tens of thousands of pounds to their running costs.

Based on a survey of its 941 venue members, Music Venue Trust (MVT) revealed that venues face an average 316% rise in fuel bills, taking the average cost to £5,179 per month per venue, up from the current average of £1,245.

One venue has been quoted £42,000 a year for fuel – more than treble its previous bill of £13,200 – with the supplier saying they will only accept full payment in advance.

MVT is now warning that the surge in energy bills means that around 30% of the entire network of venues face the threat of permanent closure.

Around 30% of MVT’s entire network of venues face the threat of permanent closure

Pubs are also seeing energy costs soar by as much as 300%, with brewery bosses telling the BBC that the crisis would cause “real and serious irreversible” damage to the industry without support.

Both the hospitality and entertainment sectors are now urging the government to introduce a cap on the price of energy for businesses. The live music sector is also calling for VAT to be decreased from the current 20% to 12.5% and for business rates relief to be extended.

“Alongside the simply unaffordable increases to costs, the government must urgently address the fact that the market for energy supply has collapsed,” says Music Venue Trust CEO Mark Davyd.

“We have multiple examples where venues do not have any option other than to accept whatever price increases and tariffs are proposed by the sole supplier prepared to offer them power at all. The situation has rapidly deteriorated into a monopoly.”

“The new prime minister must ensure that music businesses are included in the support measures”

UK Music chief executive Jamie Njoku-Goodwin adds: “Spiralling energy costs have created an existential threat for venues and music studios. It’s urgent that government takes action to support businesses with the costs they are facing.

“We all saw just how miserable life was without live music during the pandemic, when venues were closed for months – the high cost of energy bills could now close them forever.

“The new prime minister must ensure that music businesses are included in the support measures that are brought forward to deal with soaring energy costs.

“The government should look at cutting VAT and extending business rate support to help music businesses that are fighting for their survival.”

Last week, IQ heard from a number of European arenas who also say that skyrocketing energy costs are emerging as the sector’s biggest challenge since the Covid-19 pandemic.

ASM Global’s Marie Lindqvist said the prices for electricity and gas at the company’s venues have quadrupled since the beginning of the year, with the UK being hit the hardest. Read the full story here.

 


Get more stories like this in your inbox by signing up for IQ Index, IQ’s free email digest of essential live music industry news.