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Live music industry “disappointed” by lack of support in new UK budget

By | Published on Thursday 24 March 2022

Live Music

The UK’s Chancellor Of The Exchequer Rishi Sunak delivered his spring budget statement yesterday, with some provisions to help the live music industry continue its recovery following the pandemic shutdown. However, say industry reps, a hike in VAT, no action on rising energy bills, no further financial support and more will all have a negative effect.

For the retail, hospitality and leisure sectors, the key benefit announced was a 50% discount on business rates up to £110,000. This discount is already in effect, but it is now set to continue.

While that has been welcomed by the live sector, there was another important tax break introduced during the COVID shutdowns that the industry wanted to see extended, that being the VAT relief scheme for ticket sales.

Currently, the VAT rate on tickets is set at 12.5%, but that is due to expire at the end of this month, with the rate returning to 20%. With the live sector still very much in recovery mode after two years of disruption caused by the pandemic, industry reps argue that that tax relief is still very much required, but Sunak did not commit to extend it yesterday.

Live industry trade body LIVE is now specifically asking the government to not only defer the VAT rate increase but also to consider returning to the 5% rate on ticket sales that was in place earlier in the pandemic. It is also calling for the government’s widely criticised reinsurance scheme for the events sector to be restructured so to allow for artist cancellation due to COVID-19 to also be covered.

Here are responses from the live music industry…

Association Of Independent Festivals CEO Paul Reed: “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. 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”.

LIVE CEO Greg Parmley: “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. At the same time, the last remaining help from government is being withdrawn”.

“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. 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”.

Music Venue Trust: “Music Venue Trust warmly welcomes the business rates discount, which will maintain the 50% business rates for grassroots music venues that the government announced pre-pandemic”.

“However, with no action for businesses on energy bills, or national insurance 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. 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”.

Night Time Industries Association CEO Michael Kill: “Today marks two years to the day since we went into lockdown and nightlife businesses were forced to close. Though you wouldn’t know the hell that these businesses have gone through in those two years from today’s statement, which lacked the kind of support the sector needs if it is to fully recover from the pandemic amid an unprecedented cost of living crisis”.

“The cost of living crisis is really starting to bite – millions of consumers are quite clearly going to struggle to pay household bills over the coming months, which will have a direct impact on our industry, particularly independent and SME businesses across the UK”.

“It’s also important to be clear about what cost inflation means for businesses in the night time economy: many are likely to reach a tipping point in the next twelve months as they face a perfect storm of challenges. These include the fact that nightlife continues to trade below pre pandemic levels; that businesses face debt hangovers from the pandemic; all coupled with soaring cost inflation”.

“What should have been a key period to in part recover losses last Christmas was hampered by the fiasco in the message on socialising being communicated by the government. This has left the sector in a fragile situation as it looks to rebuild, and will mean that much public money that has been spent keeping viable businesses afloat will be wasted if they go under”.

“It is for all these reasons that 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 national insurance 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. It is very disappointing that today he took none of these steps”.

UK Music Chief Executive Jamie Njoku-Goodwin: “After two years of devastation from the pandemic and fresh economic challenges coming down the track, the music industry has been desperate to get back on its feet and get the support we need to secure a sustainable recovery. So we welcome the confirmation of the extension of business rates relief that will benefit many music venues”.

“However, the spring statement missed the opportunity to help the UK music industry at crucial point in its fightback from the impact of COVID-19. We are disappointed that the Chancellor failed to abandon his planned VAT hike in April from 12.5% to 20% on ticket prices which would have been a lifeline to grassroots music venues in particular. The tax hike is likely to mean that ticket prices could increase at a time when household budgets are already stretched because of the rising cost of living”.

“As the collective voice for the UK music industry, we will continue to press the government to help the music industry play a leading role in the post-pandemic recovery. We would like to see the government pave the way for the music industry to enjoy the same kind of fiscal incentives enjoyed by the film, television and animation industries. This would encourage investment and help us nurture the talent pipeline for our world-leading music industry”.

“The government must also look at more support for the self-employed who were among the hardest hit by the pandemic, particularly in the music industry where two-thirds of the workforce are self-employed”.

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