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.”
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.
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.”
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.
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.
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.”