UK: 90,000 cultural jobs lost due to pandemic
Around 86,000 jobs in the UK’s cultural nighttime economy sector have been lost due to the Covid-19 pandemic, according to a new report.
The Night Time Industries Association (NTIA), which commissioned the report, says it has found that the sector has been “ravaged” by the pandemic.
The report shows for the first time the value of the UK’s nighttime cultural economy, which was 1.6% of GDP – or £36.4 billion – in 2019. This contribution accounted for 425,000 jobs across the UK.
The NTIA says there are fears that many of the jobs lost to the pandemic in the nighttime economy sector will be lost for good, with businesses closing and persistently lower demand for services.
The association has warned that it is “the worst possible time to introduce vaccine passports, which will further damage a sector essential to the economic recovery”.
“We are calling for [the chancellor] to extend the 12.5% rate of VAT on hospitality until 2024, including door sales”
“[This report is] timely because at this moment, governments in Scotland and Wales are pressing ahead with chaotic vaccine passport plans, and the UK government refuses to rule out their use in England,” says Michael Kill, CEO at NTIA.
“It is crucial the chancellor uses the upcoming Budget to support this beleaguered sector. We are calling for him to extend the 12.5% rate of VAT on hospitality until 2024, include door sales in that reduced rate of VAT, because the present system punishes nightclubs that rely on door sales rather than selling tickets, and for him to ensure there are no increases in alcohol duties – our sector really cannot afford any additional burdens.”
The last Budget took place on 3 March 2021 and included 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 for a further six months, with an interim rate of 12.5% until April 2022.
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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.
VAT cut ‘could save Hungarian live sector’
The Hungarian live music business is calling on the government to support the industry by slashing the sky-high VAT levied on concert and festival tickets.
Currently, value-added tax is charged at 27% on concert and 18% on festival tickets in Hungary. According to a new report by PricewaterhouseCoopers (PwC), the Hungarian government could give the industry – whose revenues are 10% what they were in 2019 – a shot in the arm, and make it more “crisis resistant” in future, by cutting VAT to a uniform 5%.
The report – funded by Music Hungary, Sziget festival, promoter InConcert, the Hungarian Festival Association (Magyar Fesztivál Szövetség) and the Association of Music Managers (Zenei Managerek Szövetsége), among others – was presented at Music Hungary’s annual conference, held on 9 and 10 November, days before Hungary went into a second lockdown.
In 2019, the Hungarian live industry was worth an estimated 45 billion Ft (€125 million) by net ticket sales. PwC’s analysis shows that a reduction in VAT to to 5% would provide the Hungarian music industry with an additional 6.7bn Ft annually, the tax cut more than paying for itself by stimulating increased ticket sales.
“A reduction in the VAT rate would have a positive impact on all players in the sector”
According to Dávid Szilágyi, chief analyst of PwC Hungary, the current rate of VAT also makes it difficult for promoters to afford foreign performers.
According to Music Hungary, the Hungarian music industry has received next to no aid throughout the coronavirus crisis, with just €23.5 million finding its way to the sector since March. Of that, €14m went to poorly received government-sponsored ‘warehouse concerts’ (raktár koncertek) held behind closed doors since August.
“Our research highlights the economic and cultural significance of concerts and festivals, and also emphasises that a reduction in the VAT rate would have a positive impact on all players in the sector,” concludes the PwC report.
In October, IQ partnered with Hungarian Oncoming Tunes (Hots), the Hungarian music export office, to showcase the best of Hungary’s resilient live music scene.
Tax break for German nightclubs
Live performances by house and techno DJs have been officially recognised as ‘concerts’ by Germany’s Federal Fiscal Court, slashing the tax paid on live electronic music events to 7%.
Tickets for club nights were formerly levied at 19%, but are now eligible for the lower rate of sales tax after being redefined as “concert-like” events by the Bundesfinanzhof (BFH).
In a judgment dated 23 July, but published in late October, the BFH affirms that “the performance of techno and house music by various DJs give[s] an event the character of a concert, or a concert-like, event even if the music performances take place regularly (weekly),” according to Berlin-based legal firm Härting.
The majority of dance music shows were formerly recognised as ‘party’, rather than cultural, events.
“Most clubs should be able to benefit from the application of the lower tax rate”
The reclassification for clubs throughout Germany follows a similar move specifically for Berlin’s Berghain in 2016, which was recognised as organising culture events and so eligible for the 7% rate of tax.
For nightclubs to benefit from the new tax rules, DJ performances must be the main purpose of the event (as opposed to dancing, partying and drinks sales), according to Härting.
“Even if these requirements have to be checked on a case-by-case basis, most clubs should be able to benefit from the application of the lower tax rate,” the firm says.
All venues and bars in Germany are currently closed under a nationwide lockdown set to run until the end of November.
Scottish govt dedicates £2.2m to grassroots venues
Scottish grassroots music venues have received a £2.2 million boost from the government, following concerns that a previously announced £10m fund for performing arts venues neglected the commercial sector.
The fund, announced by Scotland’s culture secretary Fiona Hyslop last week, aims to provide “immediate support” and “much-needed stability” to grassroots venues in the coming weeks.
The Scottish government had been involved in ongoing discussions with the Music Venue Trust (MVT), who had stressed the need for sector-specific funding for grassroots music venues in Scotland.
“We are delighted to have agreed this funding with the Scottish Government, and we thank them very much for their commitment to grassroots music venues,” comments Nick Stewart, MVT’s Scottish co-ordinator and manager of Edinburgh venue Sneaky Pete’s.
“This funding will stabilise venues in the short term and prevent permanent closures, and we can begin to plan towards reopening every venue safely.”
“This funding will stabilise venues in the short term and prevent permanent closures, and we can begin to plan towards reopening every venue safely”
MVT, along with other members of the Scottish live industry, had previously raised concerns that a £10m relief fund for performing arts venues in the country did not benefit the for-profit sector.
An open letter sent to the culture sector by a newly formed Scottish commercial music industry taskforce, which includes representatives from promoters DF Concerts, Regular Music, ATC Live, Fly Events, Active Events, Craft Management, A Modern Way Management, Ironworks Venue, Asgard and Sneaky Petes, asked the the government to “fulfill the Music Venue Trust and the Scottish members of the Music Venues Alliance’s request for specific funding for grassroots music venues”, noting “a lack of consultation with the commercial music sector”.
In the letter, which was also signed by artists including Biffy Clyro, KT Tunstall, Simple Minds, the Proclaimers and Primal Scream, the task force urged the government to provide a “clear, conditional timeline” for reopening venues without social distancing and to establish a culture and creative industries infrastructure fund with the £97m earmarked for Scotland from the UK government’s £1.57 billion arts and culture rescue package.
The taskforce was also among those to call for a value-added tax (VAT) exemption on ticket sales, days before the UK government’s reduction in VAT on concert tickets from 20% to 5%.
This article forms part of IQ’s Covid-19 resource centre – a knowledge hub of essential guidance and updating resources for uncertain times.
UK government slashes VAT on concerts
The British government has announced that value-added tax (VAT) levied on concert and event tickets will be reduced to 5% from next week.
A cut in VAT was one of three main demands of last week’s #LetTheMusicPlay campaign, along with a financial support package and a timeline with reopening music venues without social distancing. Following the announcement of on Sunday of a £1.57 billion aid package for the cultural sector, only the call for a confirmed date for reopening remains unfulfilled.
The VAT cut was announced late yesterday (8 July) by culture minister Oliver Dowden, following a ‘mini-budget’ that afternoon by chancellor of the exchequer Rishi Sunak. According to Dowden, the reduction in VAT from 20% to 5% will apply to concerts, theatre shows, exhibitions, circuses and other “attractions”.
Pleased to confirm VAT cut from 20% to 5% for “attractions” announced by @RishiSunak includes
Shows, Theatres, Circuses, Fairs, Amusement Parks, Concerts, Museums, Zoos, Cinemas & Exhibitions
— Oliver Dowden (@OliverDowden) July 8, 2020
The reduction will last for six months from 15 July, said Sunak.
As for a timetable on reopening, Dowden says the government will “announce further steps on [the] path to reopening shortly”.
In a statement, the Entertainment Agents’ Association welcomed the VAT reduction but said clarification is needed on where the cut-off point will be. “[A]s we can’t open any [venues] at the moment, we need to know if this applies to tickets bought before the end of Jan for events in 2021,” the association says.
Concert Promoters’ Association chair Phil Bowdery comments: “Yesterday’s announcement on the VAT reduction for ticket sales is a significant show of support for our industry from the government and is a sign that they are willing to work with us to find targeted measures to support this vital part of the UK economy. We want to thank the government, and in particular Oliver Dowden and Rishi Sunak, for their support and the confidence they have shown in the iconic UK live music industry.”
“To unlock the potential value this creates, we urgently need some firm commitments to reopening dates”
“We also know there is lots more to do and our industry is not out of the woods yet, and we will continue to work hard with the government to get the support the industry needs over the coming months.”
National Arenas Association chair Lucy Noble adds: “The measures the chancellor announced yesterday include a hugely welcome reduction in VAT from 20% to 5% for various sectors, including tickets for concerts. We are extremely grateful to the chancellor, treasury ministers and DCMS [department for digital, culture, media and sport] for listening to us and for their willingness to consider and implement measures to support the music industry at this critical time.”
“We warmly welcome this sensible intervention into the live music sector, which responds directly to the asks we made of the government for the support we need,” says Mark Davyd, CEO of Music Venue Trust. “To unlock the potential value this creates, we urgently need some firm commitments to reopening dates and some guidelines that would allow us to get tickets on sale and benefit from this tax cut.”
Ticket prices rise in the Netherlands following VAT increase
Dutch concertgoers will spend more on their event tickets this year, as the country’s reduced VAT rate has risen from six to nine percent. The increase applies to many goods and services, including “admission to cultural events”.
In effect from January 1 2019, the new scheme will see average ticket prices rise by 3%, from €54 to €55.52, reports Entertainment Business.
Following the announcement last year, several Dutch venues advertised early-bird tickets for the last weeks of December, as those who bought tickets in 2018 for events occurring the following year could benefit from the previously lower VAT rates.
The tax increase goes against the grain, as several other European countries have celebrated a cut in concert VAT in recent years.
“We always try to keep ticket prices as healthy as possible, but a certain increase in costs for the customer is unfortunately unavoidable”
In 2017, cultural-sector VAT in Spain saw a reduction of over 50%, in a decision lauded by live music industry officials. The Portuguese live music industry welcomed a similar move some months later and, most recently, concert professionals in Italy benefitted from a reduced VAT rate.
However, major Dutch live music industry figures seem unconcerned by the increase and expect no detriment to sales or to the wider industry.
“Except for a single event, we have not had to raise our prices,” says Mojo Concerts CEO Ruben Brouwer (pictured).
“We always try to keep ticket prices as healthy as possible, but a certain increase in costs for the customer, whether due to increased artist fees, staff costs or drinks prices, is unfortunately unavoidable.”
Following an excellent start to the year in terms of January ticket sales, Eventim Nederland’s managing director Henk Schuit is similarly positive: “The 3% increase will have little or no impact on ticket sales. The favourable economic climate has much more influence on sales at the moment.”
Portugal to slash concert VAT to 6%
The Portuguese parliament has approved a new state budget that cuts the value-added tax (VAT) on tickets for live shows from 13% to 6%.
The Orçamento Geral do Estado, or General State Budget, for 2019, which was approved by Portugal’s Assembly of the Republic yesterday (29 November), provides for a reduction in the VAT paid by promoters to 6% in the Portuguese mainland, 5% in Madeira and 4% in the Azores.
Promoters’ association APEFE (Associação de Promotores de Espetáculos, Festivais e Eventos, Association of Promoters of Shows, Festivals and Events) says in a statement the VAT cut is not only a victory for APEFE, but for the entire cultural sector “and all Portuguese”.
The reduction has also been welcomed by APEFE’s counterpart in Spain, APM, whose president Albert Salmerón says Portuguese lawmakers have recognised culture as an “engine of economic growth and social progress.”
Italian promoters welcome concert VAT cut
Italian promoters’ association Assomusica has welcomed a reduction in VAT on concert professionals to 10%, saying the move, enshrined in Italy’s 2018 budget law, recognises the “new reality” of the modern, production-heavy live music business.
“We welcome this measure, which we have expected since 2007, absolutely,” comments Assomusica president Vincenzo Spera. “We worked with parliamentarians and ministers to come to this conclusion [and] thank the government for adopting this law, and all those who have worked for us.”
The budget law extends the favourable reduced rate of value-added tax (VAT) currently enjoyed by concerts and other live entertainment to “related services provided by intermediaries”, such as production and suppliers.
“Many years ago, live entertainment was different to what we have today”
“Many years ago, live entertainment was different to what we have today,” continues Spera (pictured). “In the past there was a singer in a theatre, where there was already an artistic director and stage design. Today is different: today, concerts are performances that travel all over, with lighting, production designers, directors, sound engineers, everything that comes with the artist.
“It was necessary to bring the discourse up to date and to align VAT with live performance as a whole.”
VAT in Italy is currently charged at 22%.
The tax cut in Italy follows a similar developments in Spain, where VAT on live entertainment has recently been reduced to 10%, down from 21%.