UK live sector frustrated by mini-budget

The UK’s live music industry has reacted with disappointment to chancellor Rishi Sunak’s spring statement, which was delivered today in the House of Commons.

Calls to extend the VAT break on live event tickets sales past the end of this month again went unheeded, with the temporary 12.5% rate now set to revert to 20% from 1 April. There were also no improvements announced to the government’s £800m insurance scheme for live events

Trade body LIVE (Live music Industry Venues and Entertainment) has appealed for the government to work with the industry to consider a cultural VAT rate of 5% on ticket sales.

“Live music is facing new and unprecedented challenges that threaten to wreck one of the UK’s cultural crown jewels – a 7.5% increase in VAT on tickets, wholesale cost increases and major ticket cancellations due to spiking covid cases,” says a spokesperson for the organisation. “At the same time, the last remaining help from government is being withdrawn.”

However, better news for the sector arrived in the form of the previously announced 50% discount on business rates, which was confirmed by the chancellor.

“While we welcome the business rates discount, we need further measures that can provide a cash injection to all areas of the sector, such as action on VAT,” adds the LIVE spokesperson. “We are calling on the chancellor to look again at these measures, which would help secure the sector’s recovery and allow our £4.5 billion industry to continue boosting the UK economy.”

Association of Independent Festivals (AIF) CEO Paul Reed suggests the mini-budget has done little or nothing to assist the recovery of the festival circuit.

“We are disappointed that the chancellor has not responded to our repeated calls to grant an extension to the 12.5% VAT rate on festival tickets beyond the end of March”

“We are disappointed that the chancellor has not responded to our repeated calls to grant an extension to the 12.5% VAT rate on festival tickets beyond the end of March,” he says. “Festival organisers are experiencing cost increases of between 20-30%, which is way beyond rapidly rising inflation, with extreme pressure along the entire supply chain. We urge the government to look at this again and maintain the reduced rate on VAT.

“We also ask the government to urgently reconsider the removal of tax incentives to use certain biofuels. These should be maintained at the current rate as a transitional measure to encourage use of greener fuels at festivals. To do otherwise is completely contrary to the government’s objectives of incentivising energy efficiency and reducing emissions.”

Despite giving the thumbs-up to the business rates discount for grassroots music venues, Music Venue Trust chief Mark Davyd is keen to highlight other concerns.

“With no action for businesses on energy bills, or NI liability, and the missed opportunity of action on VAT that would support the sector to recover from the Covid crisis, the outcome of the budget is that none of the extraordinary financial pressures being placed on venues have been mitigated or alleviated,” he says. “This budget has failed to respond to inflationary increases from rent, supplies, and services running in excess of 20% across the sector.

“We note that the government has recommitted itself to supporting business investment, especially research and development. We again ask that the secretary of state for culture should enter into meaningful discussions with the live music industry to create R&D tax incentives and direct financial support to achieve that outcome.”

The Night Time Industries Association (NTIA), meanwhile, went further still in its criticism, declaring itself “extremely disappointed”, warning the sector faces a “perfect storm” of challenges over the next 12 months, particularly in light of the cost of living crisis.

“We called on the chancellor before the spring statement to produce a package that included an extension of VAT and business rates reliefs, a cancellation of the proposed NI hike, and action on businesses energy bills and fuel duty, to allow the sector financial headroom to survive in something resembling its pre-pandemic form,” says NTIA chief Michael Kill. “It is very disappointing that today he took none of these steps.”

 

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Friday round-up: World news in brief 24/12/21

Welcome to IQ‘s weekly round-up of news from around the world. Here, in bite-sized chunks, we present a selection of international stories you may have missed from the last few days…

UNITED KINGDOM:

The UK government has doubled the emergency funding for arts, culture and heritage organisations made available through the Culture Recovery Fund to £60 million. The initial £30m top-up, unveiled earlier this week by chancellor Rishi Sunak as part of a £1 billion support package for hospitality and leisure businesses in response to the impact of the omicron variant, was criticised as “woefully inadequate” by live music trade bodies. The government is also extending the application window by a week until 18 January. “This new funding, alongside the new grants of up to £6,000 we announced earlier this week, will support the sector as we together face this difficult time,” says Sunak. The Music Venue Trust described the development as “very positive news”. “This second measure makes a real difference, providing grassroots music venues with time to submit,” it tweeted.

NETHERLANDS:

European Commission EVP Frans Timmermans will give the opening keynote speech at ESNS 2022. Timmermans, who is responsible for the Green Deal, will dive deeper into taking green steps going forward for the music industry. Other newly announced speakers include Mark Mulligan (MIDiA Research), Colin Benders (Kyteman), Pepijn Lanen (Faberyayo of De Jeugd van Tegenwoordig) Helen Smith (IMPALA), Marta Pallares (Primavera), Codruta Vulcu (ARTmania), Paul Reed (AIF), Christof Huber (Yourope) and Stephan Thanscheidt (FKP Scorpio). The event has moved entirely online from 19–22 January 2022 due to Covid-19. Due to the continued uncertainty, some of the panels and keynotes have been moved to ESNS 2023, including interviews with Sub Pop’s Pavitt & Poneman, Peter Weening (Vera), Matt Schwarz (DreamHaus) and André de Raaff, as well as the country focus on Spain.

UNITED STATES:

ASM Global has appointed Nate Whitman as chief strategy officer. In his new role, Whitman will be tasked with developing new business opportunities, investments and strategic partnerships, as well as new initiatives to deliver revenue growth for the company’s clients. Whitman most recently served as head of strategy and finance for Pac-12’s media division.

UNITED KINGDOM:

Paloma Faith will headline the Glastonbury Abbey Extravaganza concert on Saturday, 6 August, 2022. Also performing will be the Black Dyke Brass Band, with a further special guest still to be announced.

UNITED STATES:

Madison Square Garden Entertainment MSG Entertainment has named seasoned executive David F Byrnes as EVP and CFO, effective January 24. Byrnes will work closely with MSG Entertainment’s executive management team to support the long-term direction of the company. He will provide strategic financial insight on all facets of the business and oversee the firm’s financial matters. MSG Entertainment’s current EVP and CFO, Mark H FitzPatrick, will remain with the company through April 1 to assist with the transition.

AUSTRALIA:
The Lunar Electric music festival, due to be held in Newcastle on 18 December, was cancelled under a public health order. NSW Health said the record number of Covid-19 cases in the region presented too great a risk for the festival to take place.

MEXICO:

House of Vans Mexico City officially opened its doors with performances by Japanese Breakfast, Noa Sainz and Girl Ultra. Molotov and Hot Chip also played headline shows during its opening weekend. Located in Col. San Juan, House of Vans Mexico City is billed as “part skatepark, part music venue, part theatre, part art gallery”, and adds to the brand’s existing hubs in London, UK and Chicago in the US.

 

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Latest UK support measures branded ‘inadequate’

New financial support announced for businesses by the UK government in response to the spread of the omicron variant has been criticised as inadequate by live music trade bodies.

The additional measures – including a £30 million top-up to the Culture Recovery Fund (CRF) – were unveiled by chancellor Rishi Sunak today (21 December) as part of a £1 billion support package for hospitality and leisure. Grants of up to £6,000 are available per premise.

The news comes as new restrictions have been announced in Scotland, with more looking likely in Wales. However, music organisations say the extra funding, which adds to the £1.87bn previously made available through the CRF, falls short of requirements.

“We welcome the news that the government has started to deliver much-needed financial support, but with the live music sector teetering on the brink, the package falls short of the urgent cash injection businesses need to keep them afloat,” says a statement from LIVE.

“The amount of money pales in comparison to the mounting losses faced by the sector and the process will add layers of complexity at a time when businesses are already struggling with skeleton staff rotas and huge losses. We have been down this path earlier in the pandemic, with extensive form filling and application processes, by which point it will likely be too late.

“What we really need is an urgent boost that can help today by leaving money in businesses, such as an emergency reduction in VAT and deferral of loan repayments.”

Music Venue Trust CEO Mark Davyd says the amount of funding made available for live music organisations appeared “detached from the reality”.

Business has not just fallen, it has completely collapsed

“Regrettably, today’s announcement appears to be a woefully inadequate response to the reality of the position,” he says.  “Through a local authority distribution process, the treasury appears to be offering grassroots music venues up to £6,000, if they meet certain criteria. This sum is intended to mitigate losses for an as yet unknown period in which business has not just fallen, it has completely collapsed.

“The minimum length of that period, regardless of any restrictions or limitations to business yet to be announced, is six weeks – you can’t simply turn the live music industry on and off like a desk lamp, and tours and events are already cancelled. Not just today, or tomorrow, but for the next three months.

“Additionally, the Treasury has announced £30 million will be added to the Cultural Recovery Fund. Our initial response is that this funding seems bizarrely detached from reality. It is certainly completely inadequate to deal with the scale of the problem.”

The organisation reported last week that small venues had been hit by a catastrophic drop in attendance, advance ticket sales and spend per head since the government’s announcement of Plan B measures earlier this month.

Davyd points out that, despite being “singled out” for restrictions since the onset of the Covid crisis, grassroots music venues were not even mentioned in the statement, which instead focused on “theatres, orchestras and museums’, which will be supported “through until March 2022”.

Losses in the grassroots music venue sector alone will run to £22 million by the end of January

“This is despite DCMS having all the evidence they need that losses in the grassroots music venue sector alone will run to £22 million by the end of January, let alone the end of March 2022,” adds Davyd.

“The damage is already done and there is no point pretending otherwise. At least £22 million in losses by the end of next month will hit already beleaguered and exhausted grassroots music venue operators. This level of new debt fundamentally undermines the entire ecosystem that is the bedrock of a £5 billion world leading music industry.”

He continues: “We are constantly being told that the Culture Recovery Fund will save the day. For this to be true, it needs to be adequately funded to match the challenges the government is trying to deal with. Today’s statement by the treasury is not the answer that is needed.

“The secretary of state for culture must meet with the sector, properly understand the scale of the damage being inflicted, and return to the treasury with a financial ask that reflects what is required.”

Michael Kill, chief executive of the Night Time Industries Association, is similarly scathing in his response.

“Businesses are failing, people are losing their livelihoods and the industry is crippled,” he says. “Every pound of help is much needed. But this package is far too little and borders on the insulting.”

This lockdown of stealth is putting their already fragile businesses in real jeopardy

Annabella Coldrick, chief executive of the Music Managers Forum, and David Martin, CEO of the Featured Artists Coalition, stress that artists and industry professionals had been overlooked in the latest package.

“Artists currently find themselves stuck between a rock and a hard place – encouraged by the government to carry on performing, while their audiences are advised to stay at home,” they said in a statement. “With months of uncertainty ahead, this lockdown by stealth is putting their already fragile businesses in real jeopardy. All compounded by the lack of a safety net and insurance schemes that the industry has universally derided as unfit for purpose.

“While the package announced today may help some venues and institutions, it is essential this is also made available to those appearing on the stage or working behind it. Without that concrete support, such as compensation for Covid-related cancellations and viable insurance solutions, we risk artists and tens of thousands of support workers becoming collateral damage to what feels like an unfurling catastrophe.”

Meanwhile, in Scotland, first minister Nicola Sturgeon has announced new restrictions from 26 December, including the cancellation of large-scale events such as Hogmanay celebrations.

Indoor gatherings will be limited to 100 people standing and 200 seated, while outdoor events will be restricted to 500-capacity, with 1m physical distancing at all events.

Sturgeon also announced that support for businesses affected by Covid-19 will be increased by a further £275 million.

Yesterday, Wales also announced that spectators would be banned from all indoor, outdoor, professional and community sports events in the country from Boxing Day. There has not yet been any announcement about the closure of indoor or outdoor music venues, although economy minister Vaughan Gething said new restrictions will need to be introduced.

 

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UK live sector gives mixed reaction to 2021 budget

UK live industry cautiously welcomes 2021 budget

The UK’s live music industry has welcomed many of the provisions contained in the 2021 government budget, presented this afternoon by chancellor of the exchequer Rishi Sunak, but expressed its disappointment at the continued lack of a European-style insurance scheme for festival organisers.

Among the measures unveiled by Sunak in the Commons today (3 March) are an extra £300 million for the Culture Recovery Fund (CRF), ‘restart grants’ for hospitality/leisure businesses, the extension of the coronavirus job retention scheme (furlough) and self-employed income support (SEISS) schemes, and business rate relief.

The budget also confirmed an extension of the 5% rate of VAT on ticket sales – a key campaign focus for pan-industry group LIVE (Live music Industry Venues and Entertainment) and the whole UK concert industry – for a further six months, with an interim rate of 12.5% until April 2022.

Paul Reed, CEO of the Association of Independent Festivals, says: “We warmly welcome the extension to the reduced VAT rate on tickets, which will really help festivals during the 2021 sales cycle. For many AIF members, this is the first period in which they are selling tickets since the outset of the pandemic. We do, however, reiterate the recommendation of the DCMS select committee for VAT on ticket sales to remain at a reduced rate for three years so that the UK festival sector can fully recover.

“The Culture Recovery Fund has been a lifeline for many of our members so it’s greatly encouraging to see a further £300m invested into this, though we would appreciate some further detail on this additional round and the time period it will cover.

“Independent festival organisers would much rather mobilise their staff to plan a full and successful festival season this summer”

“We also welcome the extension to the government’s furlough scheme and continued support for the self-employed. However, independent festival organisers would much rather mobilise their staff to plan a full and successful festival season this summer. As we have repeatedly stressed, the only way they can do this is with a government-backed insurance scheme that covers Covid-19-related cancellation. The chancellor today confirmed the extension of the government backed restart scheme for film and TV productions – a similar safety net needs to be put in place before the end of March to avoid mass cancellations throughout the UK’s festival market.”

Lucy Noble, chair of the National Arenas Association, comments: “For the live music industry, today’s budget, and specifically the extension of furlough to September, is enormously welcome. The whole sector has been grateful for a 21 June ‘not before’ date for operating at full capacity, and the extension of the 5% VAT rate on tickets is something we had been hoping to see.

“Uncertainty remains, and the lack of insurance for Covid-related cancellation is a huge concern – what the entire live sector wants is to be allowed to trade safely out of this situation and once more welcome people to come together for extraordinary shared experiences.”

“Music Venue Trust welcomes the extensions to furlough, SEISS and the VAT cut on ticket sales,” says MVT CEO Mark Davyd. These measures are supportive of the next steps in the campaign to reopen every venue safely. On business rates, we note that the Chancellor has provided a 100% cut for the initial three-month period in which venues will not be trading. This period does not resolve the long running debate on business rates, and we look forward to a full discussion of this outdated and anachronistic taxation in the business rates review in Autumn 2021.

“The chancellor announced additional funding to be distributed by Arts Council England [ACE], but the purpose of this funding is unclear; we hope to work with ACE and DCMS to ensure it is effectively distributed, and includes sensible and structured capital investment that enables our music venues to become more Covid-secure.”

“The needs of those in mixed employment, and those individuals operating as limited companies, were not met”

Annabella Coldrick, chief executive of Music Managers Forum, says: “The MMF welcomes the extension of eligibility for support to the self-employed. This is a really important measure that should have an impact on our community and their clients, many of whom faced real hardship during the pandemic, although unfortunately directors of limited companies are still excluded. We also welcome the £300m Cultural Recovery Fund for reopening, although it was disappointing not to hear any developments on government-backed insurance for live music events which is urgently needed to get us back up and running in July.

For a full longer-term music recovery, to a place where artists can perform to full capacity crowds and tour internationally, we will need this kind of targeted and continued support reaching into 2022.”

“We welcome the continuation of support for employers and self-employed workers, as well as the addition of those newly self employed sole traders; this is tempered by the disappointment that the needs of those in mixed employment and those individuals operating as limited companies were not met,” adds Dave Keighley, chair of the Production Services Association.

“Support for companies is also broadly welcomed, although doubt over whether business rate relief applies to our members that support hospitality and leisure remains. Any discounts given to venues should be clearly extended to those companies that work in those venues, recognising that live events are an ecosystem that needs complete support. Although the extension of the 5% VAT rate helps, it needs to be extended to assist our sector’s recovery.

“The extension to the Culture Recovery Fund is encouraging, we hope that the current and subsequent rounds will support event more of our member companies that support cultural activity.”

 

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Keep VAT at 5%, pleads UK live sector

Leading UK live entertainment industry organisations and associations have written to the chancellor of the exchequer urging him to maintain the temporary 5% rate of value-added tax on ticket sales.

While lower rate of VAT was brought in last year, the business has yet to feel the benefit due to its near-total closure since March 2020. In the letter, addressed to Rishi Sunak, the signatories say that if the government raises VAT back to 20% in the March budget, the policy will have been pointless and will pull millions of pounds’ worth of support when the industry most needs it.

“The whole sector has been brought to its knees by the pandemic,” says Lucy Noble, chair of the National Arenas Association (NAA). “Increasing VAT on tickets by 300% at this time could be the final nail in the coffin for many in the music industry. And at precisely the moment when people urgently need the joy of music in their lives.”

The Department of Digital, Culture, Media and Sport (DCMS) select committee recommended a three-year extension to the 5% VAT policy in their Impacts of COVID-19 on DCMS Sectors inquiry in July last year. The committee’s chair, Julian Knight MP, says: “Pulling the plug on the reduced VAT rate for ticket sales now would be short-sighted. The DCMS Committee recommended in its July 2020 report that the 5% VAT rate should be kept for three years.

“With live events still unable to operate, this is needed more than ever. I fully support LIVE [Live music Industry, Venues & Entertainment]’s campaign. Now is the time to extend support for our vibrant creative sector, which could be a cornerstone of our economic recovery from this crisis.”

“Increasing VAT on tickets by 300% at this time could be the final nail in the coffin for many in the music industry”

In addition to the NAA and umbrella organisation LIVE, signatories to the letter include the Concert Promoters Association, Music Managers Forum, Music Venue Trust, UK Theatre, the Association of Independent Festivals, the Entertainment Agents Association and the Musicians’ Union.

Julian Bird, chief executive of UK Theatre and SOLT (Society of London Theatre), comments: ‘The theatre industry, alongside others in the performing arts and live events sector, was first into lockdown last March, and will almost definitely be one of the last out. With a usual annual audience of over 34m, generating around £1bn for the Treasury every year, the UK’s theatres contribute hugely to the economic and cultural life of this country, and will be key for local recovery.

“It is vital that the government helps ensure the industry’s survival by continuing the reduced VAT rates.’

Prior to the outbreak of the pandemic, the UK’s creative industries were growing at five times the rate of the wider economy, generating £11.25 billion in gross value added each year and supporting over 600,000 jobs. Without urgent and targeted government intervention, the companies, producers, performers and infrastructure that support these industry’s complex ecosystem will not be able to recover once the pandemic is over, warns LIVE.

 

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UK biz reacts as furlough scheme extended until 2021

Furloughed Britons will continue to receive up to 80% of their salaries until the end of March 2021 under an extension of coronavirus job retention scheme (CJRS).

The extension, announced today (5 November) by the chancellor of the exchequer, Rishi Sunak, comes the day England is locked down for another four weeks to slow the second wave of Covid-19.

The furlough scheme was initially set to run until October, and was previously extended until 2 December.

Also extended today is the self-employment income support scheme (SEISS) for freelancers, with a third grant (covering November to January) calculated at 80% of average trading profits, up to a maximum of £7,500.

The move – which comes just two weeks after the At a cliff edge report warned more than 26,000 full-time jobs will be lost before the end of 2020 without an extension to existing support measures – will save thousands of live music jobs.

“I’ve always said I would do whatever it takes to protect jobs and livelihoods across the UK, and that has meant adapting our support as the path of the virus has changed,” comments Sunak (pictured). “It’s clear the economic effects are much longer lasting for businesses than the duration of any restrictions, which is why we have decided to go further with our support.

“Extending furlough … will give people and businesses the certainty they need over what will be a difficult winter”

“Extending furlough and increasing our support for the self-employed will protect millions of jobs and give people and businesses the certainty they need over what will be a difficult winter.”

The furlough extension follows other support measures previously announced by the chancellor, including cash grants of up to £3,000 per month for businesses which are closed, £1.1 billion for local authorities, an extension to government-backed loan scheme, and an extension to the mortgage payment holiday for homeowners.

Stuart Galbraith, CEO of Kilimanjaro Live and vice-chair of the Concert Promoters Association, comments: “We are very pleased with the extension of the furlough scheme to the end of March 2020. This will give businesses a very valuable opportunity to keep hold of skilled staff despite not being able to trade under current restrictions.

“While it is also encouraging to see a better deal for the self-employed, we know more needs to be done to support the wide range of freelancers in the music industry and we will continue to push government to make more help available to them.”

Michael Kill, CEO of the Night-Time Industries Association, adds: “While the crisis deepens and we move into a national lockdown for 28 days, we welcome the somewhat belated furlough update until March next year.

“The furlough scheme will absolutely help preserve jobs within the sector, but the challenge still remains: where there is still a considerable void in financial support for night time economy businesses, will there be jobs to go back to?”

“This will give businesses a very valuable opportunity to keep hold of skilled staff despite not being able to trade under current restrictions”

He adds: “We appreciate that safety is paramount, but at some point we’ve got to consider the human element here and the immense pressure that individuals, venues owners, staff and freelancers are under at the moment, given the current financial, economic, cultural and social wellbeing environments that are being presented by government, particularly around our sector.”

Deborah Annetts, of the Incorporate Society of Musicians (ISM), particularly highlights the benefits of extending SEISS to many, though not all, of its members. “We are delighted that the government has extended the coronavirus job retention scheme until the end of March and is increasing support for the self-employed to 80% of trading profits across the November to January period. These measures represent a positive step towards the government fulfilling its commitment to deliver parity between employed and the self-employed,” she comments.

“Today’s announcement is the third change to the SEISS in a short period, following the ISM’s tireless campaigning on this issue. We told the government that their initial approach was insufficient and they have listened, benefitting thousands of musicians who cannot work while performance venues remain closed.

“However, as we have said each time the government changes the level of SEISS, the grant only benefits those able to receive it. An estimated three million self-employed workers continue to be excluded from receiving it at all, so expanding the eligibility criteria remains essential for preventing an exodus of highly skilled talent from our world-leading arts sector.”

 

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Live absent from UK gov’s latest support scheme

The UK’s live music industry has found little comfort in the government’s latest support scheme, revealed today by chancellor Rishi Sunak.

The chancellor announced that the six-month Jobs Support Scheme, which is due to launch on 1 November and replace the furlough scheme, will be expanded to support businesses whose premises are legally required to shut for some period over winter as part of local or national restrictions.

Eligible businesses will receive cash grants up to £3,000 per month depending on rateable value and employees will receive two-thirds of their salary (or 67%), up to a maximum of £2,100 a month, from the government.

Under the scheme, employers will not be required to contribute to wages and will be asked to cover NICS and pension contributions only.

However, the live music industry – the vast majority of which remains shuttered due to restrictions, ranging from the six-month 10 pm curfew, to capacity restrictions with social distancing, to festivals simply not allowed to go ahead – has found no solace in the news

“The new scheme risks overlooking businesses who can technically open their doors but cannot trade economically”

Phil Bowdery, chair of Concert Promoters Association, says: “It seems like the chancellor has overlooked the plight of the tens of thousands of people in the live music industry who are currently unable to work due to Covid-related government restrictions. By focussing his criteria so narrowly on buildings which are allowed to open, the new scheme risks overlooking businesses who can technically open their doors but cannot trade economically due to the restrictions on gatherings in clubs, concert halls and arenas.

“Revenue in the live music industry will be down a catastrophic 80% in 2019 and over 70% of the employees in the industry are currently utilising the furlough scheme. If the government fails to ensure that all sectors that can’t work can access the new scheme, there will be tens of thousands of additional job losses coming before the end of the year.”

Greg Parmley, chair of the UK Live Music Group says: “The UK’s live music business remains one of the most viable industries in the UK, but is still unable to operate. Our entire workforce remains in jeopardy while venues, events and festivals are forced to remain shuttered. The chancellor’s most recent announcement gives no comfort to the skilled and talented workforce who face a desperate and bitter winter.”

“This is in no way reflective of the costs that are being incurred by businesses in our sector”

Michael Kill, CEO at Night Time Industries Association, says he tentatively welcomes the extension but believes the government’s financial support has not gone far enough to safeguard the sector.

“We will need further clarity on the details of the scheme and which businesses are eligible, given thousands of night-time economy businesses have been unable to open or operate for seven months now due to government restrictions. Most businesses and workers in the sector remain in desperation and despair, with no sector-specific or government understanding of the underlying issues the industry is facing or the financial implications of closures.”

“The introduction of the £3,000 monthly grant for businesses under local lockdown is insufficient and, for many, too little too late. This is in no way reflective of the costs that are being incurred by businesses in our sector and will do nothing to alleviate the significant financial burdens they are under.”

“Festivals, concerts and clubs, along with their support crews, cannot survive another winter with no income and no government scheme”

Annabella Coldrick, chief executive of Music Managers Forum says: “The plight of the UK’s live music business has been the focus of two parliamentary debates this week. With furlough ending in a few weeks time, our entire industry has desperately sought reassurance from the government that they understand how critical this situation is becoming, and what our country stands to lose if thousands upon thousands of viable jobs are not sufficiently supported and safeguarded.

“The chancellor has already had to backpedal once this week in a discussion about retraining, and following today’s announcement we need urgent clarification as to whether anyone in our sector will benefit from expansion to the Job Support Scheme. If there is no Plan B, then the impact will be catastrophic on the artists, freelance workers and small businesses on who British music depends.”

“We need urgent clarification as to whether anyone in our sector will benefit from expansion to the Job Support Scheme”

Andy Lenthall, GM of the Production Services Associations, says: “Once again, the technicians and technical suppliers to live events have been ignored. Thousands of individuals and businesses that rely on live events, still unable to work due to government restrictions and suffering catastrophic drops in revenues as a result will receive no support from the chancellor’s recent adjustments in support. All the pain, none of the gain.”

Steve Heap, general secretary of the Association of Festival Organisers says: “The chancellor’s new scheme appears to have failed the viable live music industry that was the first to close down. What is, effectively a furlough scheme extension aimed at businesses that have opened and now have to close again, completely misses out the businesses in the live music industry that have been closed for over six months. Festivals, concerts and clubs, along with their support crews, cannot survive another winter with no income and no government scheme to see them through until next spring.”

Businesses will only be eligible to claim the grant while they are subject to restrictions and employees must be off work for a minimum of seven consecutive days. The scheme will begin on 1 November and will be available for six months, with a review in January.

 

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Support for UK freelancers: Close, but no cigar

Following the introduction of the job retention scheme (JRS) to provide support for employers and employees during the pandemic-induced downturn, the UK’s chancellor of the exchequer, Rishi Sunak, faced mounting pressure to introduce similar measures for the UK’s self-employed. Voila, on 26 March, the chancellor announced the self-employed income support scheme (SEISS), purportedly covering at least 95% of the UK’s 5 million self-employed workers.

While this is a massive handout from the government which will likely serve as a lifeline for thousands of freelancers in the coming weeks, the scheme’s limitations has raised concerns. The government will effectively be withholding substantive support from significant sections of the freelance population in the live music industry, many of whose livelihoods have effectively dried up overnight, including any freelancer who runs a loan-out company (ie a personal service company, whereby they are both the owner-director and sole employee) and takes their profits out by way of both dividend and salary.

The lack of government support could potentially have a significant negative impact on the UK’s creative industry, given the prevalence of this model in the sector.

The level of state support provided under both the JRS and SEISS is unprecedented. Those freelancers who meet the qualifying criteria for the SEISS will be able to claim a grant of 80% of their monthly profits based on a calculation of their average monthly earnings over their last three years’ of tax returns, up to a cap of £2,500 per month.

The scheme is initially set to run from 1 March for three months (although may well be extended depending on the length of the lockdown), with a lump payment scheduled to be made to qualifying freelancers in June. However, the qualifying conditions are quite stringent, including that the freelancer’s annual trading profits must be less than £50,000; the individual must have been self-employed prior to 6 April 2019; have suffered a trading loss as a result of Covid-19; and that over half their earnings must have been from self-employed work.

The government will effectively be withholding support from significant sections of the live industry whose livelihoods have dried up overnight

The policy rationale for some of these criteria seems logical. For example, the profits criterion will mean that many successful freelancers, such as senior camera operators, lighting directors and talent on TV and film productions, may not qualify. Arguably, this is a reasonable outcome for a scheme intended to provide a safety net for those freelancers who need it most. Indeed, the chancellor has suggested that the individuals excluded on this basis have an average income of £200,000.

On the other hand, a few of the remaining criteria appear to mean that there is no safety net available to certain classes of freelancers, which may also include those who need it most: First, those freelancers who move regularly between pay-as-you-earn (PAYE) and self-employed engagements have been omitted from the scheme and may not qualify for the JRS if they were not under an employment contract as of 28 February. Second, any new business, ie any freelancer who was not self-employed as of 6 April 2019 will not receive any benefits under SEISS.

Finally, those freelancers running loan-out companies which operate PAYE systems have also been excluded: The government has tried to offer reassurance by stating that these individuals could ‘furlough’ up to 80% of their PAYE income via the JRS (which provides up to £2,500 of ‘wages’ per month to employees).

While this may be genuinely helpful to some, it is unlikely to be a silver bullet in the majority of cases. Most freelancers with loan-outs pay themselves a low salary and take the majority of their income out as dividends. This is the most tax-efficient way of taking their money out of the company and is permitted under the UK’s tax system.

In the context of the UK government’s Covid-19 measures, however, this means that these individuals will not qualify for SEISS and will only receive government support under the JRS calculated by reference to their low salary, not their loan-out’s overall profits. This simply may not be enough for some.

Clearly, both the JRS and SEISS are schemes designed in days that would usually have taken months to develop and launch. Equally evident in the detailed provisions of the scheme is the government’s concern that the benefits available will be abused by some. Nonetheless, neither of these factors should result in schemes that unnecessarily penalise individuals acting within the existing tax rules, as the impact on British industries could be long-lasting.

The scheme unnecessarily penalises individuals acting within the existing tax rules

The short-term and time-bound nature of the live music industry means it is particularly dependent on freelancers. It is therefore important on an individual and sector level that those using loan-out companies are given the financial support they need over the next few months to survive. Some industry commentators believe there will not be a full return to normal in respect of live music events until early 2021, and so this sector may be more impacted than others. It is hoped that the government would continue to provide support for those who need it for so long as there is a business case for it.

When announcing the SEISS, the chancellor made it clear that it had been challenging to provide equivalent protection for employees and self-employed workers given the differences in tax contributions currently. He also indicated that the efforts to compensate both self-employed individuals and employees equally during the Covid-19 pandemic might lead to a renewed focus on tax standardisation in the UK – meaning there are likely to be changes made to the UK’s tax system following the current crisis to even out the tax treatment between the employed and self-employed.

This would certainly be a better time to take considered measures to align the effective tax rates of employees and freelancers; however, any measures that involve increasing the effective tax rate for the self-employed should be designed with care and with their potential impact across all industries, including the media sector, taken into account.

It seems that a post-Covid-19 world will see many changes in working practices and, potentially, how parties contract. For now, however, the enormous efforts made by the British government to provide support for both employed and self-employed individuals during an unparalleled time should be recognised.

At Wiggin we are doing our part to support both the policy initiatives and the industry, collating responses to the scheme from stakeholders across the creative sector and submitting a series of questions and suggestions directly to HMRC’s Covid-19 team. It is to be hoped that, with further consideration and clarification, both the SEISS and JRS can fully achieve their aims.

 

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Ceri Stoner is a partner at media, technology and IP law firm Wiggin LLP.

UK govt unveils plan for self-employed workers

UK chancellor Rishi Sunak today (26 March) announced a support package aimed at helping the country’s five million self-employed workers, in news that will likely be met with relief from the 72% of the UK music industry workforce who are self-employed.

The announcement comes after extensive lobbying from industry bodies representing touring crew, production staff and other live events freelancers facing financial difficulties as a result of coronavirus pandemic.

The chancellor said he knew self-employed people were “deeply concerned” by the risk of losing their livelihoods, making specific mention to musicians and sound engineers.

Sunak announced that self-employed people will have access to a taxable grant of 80% of their average monthly profit over the past three years, up to £2,500 a month for at least three months. The chancellor says the measures will cover 95% of the country’s self-employed workers.

“This is the same as the measures made available to furloughed employees,” said Sunak, making the scheme “one of the most generous in the world”.

“This provides an unprecedented level of support for self-employed people”

In order to ensure targeted support, the scheme is open to those with trading profits of up to £50,000 and only to those who make the majority of their earnings through self-employment. Access to the scheme will be available no later than the beginning of June.

As of today, self-employed people can also begin to access universal credit in full and the business interruption loan scheme, which was opened up for businesses last week.

A further measure allows those who missed the tax return deadline at the end of January four weeks from today to submit their returns.

“This provides an unprecedented level of support for self-employed people,” said Sunak.

The support package follows previous measures that have seen the government back £330 billion in guaranteed loans for businesses – although many companies that do not meet the lending criteria currently remain without access to these loans –, business rates exemption, cash grants and wage subsidies.

“The chancellor should outline interim financial help for the self-employed to help them survive until the support scheme kicks in”

UK Music acting CEO Tom Kiehl says the help will be “a vital lifeline to thousands in the music industry”.

“It is important the chancellor recognised in his remarks that musicians and sound engineers are among the many in our sector who have seen their work dry up and need support fast.

“We need immediate and urgent help for the self-employed. People need financial support now and cannot wait until June for the scheme to kick in or wait weeks for payments under universal credit.

“The chancellor should outline interim financial help for the self-employed to help them survive until the support scheme kicks in. He should make clear whether the support will be backdated.

“There remains a need for support for those in the music industry that have not been self-employed for very long, including recent graduates, who will not qualify for this grant.”

 

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