LIVE rues budget’s ‘missed opportunity’ on VAT cut
UK live music trade body LIVE has described Chancellor Jeremy Hunt’s latest budget as “another missed opportunity” after calls for a reduced VAT rate on ticket sales went unheeded once again.
Hunt did announce, however, that orchestra tax relief (OTR) would become permanent at a rate of 45%.
The current temporary 50% rate of OTR was due to taper down from April 2025 and drop eventually to its original rate of 25%. A theatre tax relief rate of 40% (and 45% for touring productions) will also remain.
“LIVE welcomes the Chancellor’s announcement that the tax reliefs for orchestras and theatres will be made permanent,” says LIVE CEO Jon Collins. “However, today’s Budget represents yet another missed opportunity to accelerate the growth of the live music sector and the wider economy while also providing urgently needed support for grassroots music through the reintroduction of a lower VAT rate.
“20% VAT on tickets in the UK is vastly out of step with our competitors in Europe and North America and has become a material factor limiting the number of gigs, tours and festivals our world class industry can put on.
“Fewer shows mean reduced economic activity in towns and cities across the country – an estimated £1m is spent in local businesses for every 10,000 people who attend a gig – and heaps further pressure onto grassroots music venues that are closing down at an alarming rate. We need urgent action to ensure the whole sector can prosper in the long term.”
Association of Independent Festivals (AIF) chief John Rostron also laments a lack of support for the sector, despite a spate of recent cancellations.
“We’re disappointed that our calls for support for the UK music festival sector have not been met”
“We’re disappointed that our calls for support for the UK music festival sector have not been met,” says Rostron. “Festivals need a temporary reduction in VAT on ticket sales from 20% to 5% in order to recover from the impact of Covid and Brexit, which has created a credit crunch that is seeing successful festivals having to postpone or cancel this year months before their events are due to take place.
“Yet another festival fell yesterday – the 15th event to fall already in 2024. Theatre has made the case for tax relief, which is being extended indefinitely. We urge the Chancellor and the Treasury to now turn to festivals and offer a fraction of that support to ensure more events do not make 2024 their last.”
UK Music interim CEO Tom Kiehl also welcomes the move to make OTR permanent.
“I welcome that the Chancellor has listened to industry calls to put in place extensions to the orchestras tax relief on a permanent basis,” he says.
“The government should use this opportunity to clarify our further calls as to whether touring choirs and other singing groups are also eligible for this important relief.
“We welcome the indirect benefit to music of the introduction other creative sector tax reliefs and seek further government consideration for the introduction of a tax credit to encourage new UK music production.”
Introduced in 2016, OTR is aimed at supporting live orchestral performances. The headline rate was rate uplifted to 50% in 2021 in the wake of Covid and was extended in 2023 for a further two years until April 2025.
The Musicians’ Union and the Association of British Orchestras were among the groups that had called to make the relief permanent.
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LIVE, MVT respond to chancellor’s Autumn Statement
UK live music organisations have welcomed the extension to business rates relief for grassroots venues announced by Chancellor Jeremy Hunt as part of his Autumn Statement.
Relief was extended from 50% to 75% from 1 April this year, and Hunt confirmed today that the scheme would run for a further 12 months.
Jon Collins, CEO of trade body LIVE, the voice of the UK’s live music and entertainment business, has spoken out in favour of the move, saying it is both “pivotal” for the grassroots circuit and addresses a “core ask” of the recently published LIVE Music Manifesto 2023.
“LIVE welcomes the extension of the Retail, Hospitality and Leisure relief scheme for another year in today’s Autumn Statement,” he says. The UK’s live music industry is an engine of growth, generating £5.2 billion in 2022 and employing over 228,000 people last year, with a gig held every four minutes. However, grassroots venues have been operating on a knife edge so it’s crucial that government continues to support this critical part of our sector with the right reliefs and funding mechanisms.
“The government is committed to supporting growth and innovation across the creative industries. The extension of business rates relief will be pivotal for those grassroots venues that are responsible for so much of the R&D in the live music sector.”
The Music Venue Trust (MVT), which works on behalf of over 900 venues across England, Scotland, Wales and Northern Ireland, also backed the development.
“It was essential to keep this relief in place and we are pleased that our presentations to Treasury were listened to and acknowledged by this outcome”
“The potential cancellation of this relief presented the possibility of an additional £15 million in pre-profit taxation falling onto a grassroots sector suffering a severe crisis; over 100 venues have already closed in the last 12 months,” says MVT CEO Mark Davyd. “It was essential to keep this relief in place and we are pleased that our presentations to Treasury were listened to and acknowledged by this outcome.
“We hope that this further extension into 2025 for this relief will provide the necessary window of opportunity for the government to complete the full review of Business Rates on Grassroots Music Venues, which it committed to in January 2019.”
Davyd notes that the Chancellor’s statement also included the announcement of a significant uplift to minimum wage.
“The grassroots sector is notoriously undervalued and underpaid, from the artists performing through all levels of roles and staffing, up to and including the venue operators themselves,” he says. “In 2022, the average grassroots music venue operator paid themselves £20,400 per annum, delivering 66 hours of work per week at a rate of £6.43 per hour. An uplift to fees and wages across the sector is long overdue.
“We look forward to working with the Chancellor, HM Treasury and DCMS to identify the necessary funding which can deliver this statutory increase to minimum wage and extend the scope and scale of it so that everyone in the grassroots sector can be adequately rewarded for their work.”
Association of Independent Festivals (AIF) CEO John Rostron adds: “We support measures announced in the chancellor’s Autumn Statement that will help businesses in the broader grassroots music sector, such as the freeze on business rates.
”But, as far as independent festivals are concerned, what is urgently needed is the lowering of VAT to 5% on ticket sales. We will continue conversations with the government towards that end.”
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MVT says venue closures ‘inevitable’ after budget
The Music Venue Trust (MVT) warns that 2023 will be the worst year for venue closures since the organisation was created after the government declined to intervene on energy costs for the sector.
Chancellor Jeremy Hunt announced further support for theatres, museums, art galleries and orchestras in today’s Spring Budget, but the measures did not extend to grassroots music venues (GMVs).
“Already in 2023 one GMV is closing every week,” says MVT chief Mark Davyd. “The budget was an opportunity to ensure that this number of closures did not explode from the 1 April when GMV’s will be hit by excessive and unaffordable energy bills. The Chancellor has failed to respond to the evidence we submitted. There is no additional support for music venues and the inevitable result will be mass closures of venues.”
The MVT had recently presented details to DCMS and HM Treasury of the impact that failing to extend the enhanced business energy relief scheme from 1 April would have on the industry. It previously reported that some venues were 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.
“Regrettably, the failure to act on energy bills must inevitably mean that 2023 will be the worst year for closures since the creation of MVT in 2014”
“Regrettably, the failure to act on energy bills must inevitably mean that 2023 will be the worst year for closures since the creation of MVT in 2014,” adds Davyd. “In the absence of any action to this challenge by the government we will once again be reaching out to the energy supply companies to try to avert closures.
“It is plainly in no one’s interest to allow buildings that house GMVs to become abandoned as the cost of energy needed to open those spaces to the public and performers cannot be met by any venue operator.”
Davyd adds that the organisation remains keen to work with the government “to unlock the opportunity that the GMV sector presents”.
“We hope that in the near future a budget statement will be made that recognises and acknowledges the economic, cultural and community opportunity these venues present,” he says.
Elsewhere, the Musicians’ Union (MU) welcomed the announcement in the Budget that the rates of theatre and orchestra tax relief will be maintained at their current levels for a further two years from April.
The MU had lobbied for the higher rates of 45% and 50% respectively to be extended to help the sector to recover from the dual impacts of Covid-19 and the cost of living crisis.
“We are grateful that the government has listened to the MU and others in the creative sectors and extended the higher rate of tax relief for theatres and orchestras for another two years,” says MU general secretary Naomi Pohl.
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Live groups blast government’s energy relief plan
Live music organisations have reacted with disappointment to details of the UK government’s new Energy Bills Discount Scheme (EBDS).
Chancellor Jeremy Hunt unveiled the scaled-back initiative, which will replace the existing Energy Bill Relief Scheme from 1 April and will run for 12 months, earlier this week.
Sky News reports the EBDS will cost taxpayers £12.5 billion less and will reduce rather than cap energy cost. Businesses will only able to benefit from the scheme when bills reach £302 and £107 per MWh for electricity and gas, respectively.
Previously, wholesale prices were 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 government has been clear that such levels of support were time-limited and intended as a bridge to allow businesses to adapt,” says a statement from HM Treasury. “The latest data shows wholesale gas prices have now fallen to levels just before Putin’s invasion of Ukraine and have almost halved since the current scheme was announced.
“The new scheme therefore strikes a balance between supporting businesses over the next 12 months and limiting taxpayer’s exposure to volatile energy markets.”
“The average energy bill for live music venues has gone up by nearly 300% which is leading to permanent venue closures as owners struggle to cover costs”
However, Jon Collins, CEO of trade body LIVE, says the latest measures have increased the level of uncertainty for venue operators.
“The average energy bill for live music venues has gone up by nearly 300% which is leading to permanent venue closures as owners struggle to cover costs,” he says. “This decision further jeopardises these well-loved establishments – restricting access to live music, inhibiting venues’ ability to turn a profit, and damaging town and city centres at a time when we desperately need growth.”
Mark Davyd, CEO of grassroots venues organisation Music Venue Trust, describes the latest measures as “bizarre” and is calling for further clarification from the chancellor.
“The challenges caused by energy bills to grassroots music venues is understood by Jeremy Hunt and the government to be so bad that he has been compelled to write to Ofgem asking that they take action and do something about it,” says Davyd. “That’s good – something does need to be done, because the charges and conditions being forced upon the sector are absurd. The average increase in the sector is 278%. Demands are being made for excessive deposits, suppliers don’t actually want to supply and frankly, there is no market. There is simply an expensive monopoly with extraordinary prices and conditions.
“However, apparently the same evidence that has caused Jeremy Hunt to send the letter to Ofgem laying out these issues was considered insufficient that it would cause him to include Grassroots Music Venues within the specific support he subsequently announced. Venues, alongside the whole of hospitality, have been dumped into a general category of support that is so insufficient that it must inevitably result in permanent closures of venues.
“We are therefore forced to conclude that whilst Jeremy Hunt fully accepts that these energy bills will close music venues, he is not prepared to do anything concrete about it… except send letters”
“We are therefore forced to conclude that whilst Jeremy Hunt fully accepts that these energy bills will close music venues, he is not prepared to do anything concrete about it… except send letters.”
He continues: “The package of supported industries includes libraries and museums, who have neither comparatively high energy bills nor a non-functioning energy market and the basis on which he seems to have made the decisions on what would and would not be included in a package of support from 1 April are, at best, highly unusual.
“Mr Hunt has told Ofgem he would like to see the results of the investigation he has asked for in time for the budget. We would strongly urge them to complete that work with sufficient expediency that the chancellor can revisit the support in that budget and recognise that grassroots music venues should have been included within the exceptional support he has offered to libraries and museums.”
Elsewhere, Night-Time Industries Association chief Michael Kill says the announcement highlights that the government is “out of touch” with businesses.
“The scaling back of the energy relief scheme by government at the end of April will without doubt mean thousands of businesses and jobs will be lost in the coming months,” he adds.
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Budget prompts call for UK live music commission
The UK’s Music Venue Trust (MVT) is calling on the government to set up a live music commission after criticising the “missed opportunities” of today’s budget presented by chancellor Jeremy Hunt.
The organisation welcomes Hunt’s announcement, delivered as part of his Autumn Statement, that business rates relief will be extended from 50% to 75% from 1 April 2023 and urges the chancellor and PM to bring forward a full review of the issue for grassroots venues “at the earliest opportunity”.
However there was further frustration for the industry, as pleas to reduce VAT on ticketing were ignored once more.
“A live music commission can provide the government with the tools it needs to be able to recognise the incredible asset the UK has in its grassroots music venues”
“Multiple opportunities to stabilise and grow the live music sector are being consistently missed,” says MVT CEO Mark Davyd. “Our grassroots music venue sector creates 29,000 jobs, delivering over 170,000 performances to more than 20 million people. It is a vital sector with real opportunities to deliver growth, but that is not recognised and acted upon in this Autumn Statement.
“In light of these missed opportunities, Music Venue Trust calls for the government to set up a live music commission. This body can be charged with considering the significant opportunities to stabilise and grow the live music sector, with the aim of informing future government policy so that these opportunities are not consistently missed.
“A live music commission can provide the government with the tools it needs to be able to recognise the incredible asset the UK has in its grassroots music venues and ensure that future policy protects, secures and improves them.”
“Unprecedented operating conditions are pushing our sector to the brink”
Jon Collins, CEO of trade body LIVE, acknowledges the government’s desire to bring stability to the UK economy, but says the budget offers “little help” to secure the future of the UK’s live industry.
“Unprecedented operating conditions are pushing our sector to the brink, as much-loved venues close their doors, tours are cancelled and artists drop out of the industry,” he says.
“The pandemic hangover combined with the increased cost of living has led to 54% of people stating they are less disposed to attending live entertainment, putting incredible pressure on the live music sector. Today, we renew our call for a reintroduction of a lower VAT rate on ticket sales to inject cash into the bottom line of struggling businesses, bring us in line with many other European countries, and secure the future of live music for all.”
“When businesses should be preparing for the busiest period of the year, they are now having to consider their future”
The Night Time Industries Association (NTIA), which has more than 1,400 members, including nightclubs, bars, casinos, festivals, and supply chain businesses ,also criticises the budget for a perceived lack of clarity and suggests the measures outlined do not gone far enough.
“This government is guilty of neglecting thousands of businesses and millions of employees and freelancers across the night time economy, this budget has not gone far enough and still lacks clarity, and will without doubt see a huge swathe of SMEs [small and medium enterprises] and independent businesses disappear in the coming months,” says NTIA chief Michael Kill.
“When businesses should be preparing for the busiest period of the year, they are now having to consider their future, and will remember the fourth failed attempt to deliver a budget to safeguard businesses at the sharpest end of the crisis. There is no consideration for the human impact, this will have a devastating effect on not only business owners, but the individuals and families who have committed their lives and livelihoods to this sector.”
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