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Music industry says UK government’s new COVID support schemes don’t work for live entertainment

By | Published on Friday 25 September 2020


While plenty of uncertainty remains regarding how long COVID-19 will continue to negatively impact on the live and night time entertainment sectors, the music industry is pretty certain on one thing: the latest round of financial support schemes from the UK government won’t help much. Indeed the boss of the Night Time Industries Association last night described his sector’s response to the government’s new COVID support measures as “shock, horror and despair”.

Many of the UK government’s previous schemes to support those people and businesses negatively impacted by the COVID-19 shutdown – in particular the furlough scheme for employees and the accompanying programme for the self-employed – are now winding down. However, with plenty of restrictions still in place to try to stop the continued spread of the virus – and those restrictions actually increasing again this week – there had been widespread demands for government support to continue.

Chancellor Of The Exchequer Rishi Sunak responded to those demands yesterday with a Winter Economy Plan. His big announcement was the launch of a Job Support Scheme to replace the furlough scheme. Basically, where ongoing COVID restrictions mean companies are not able to operate at full capacity, and therefore employees are not currently required full-time, the government will subsidise those employees’ salaries.

Providing an employee is working 33% of their usual hours – and the company is paying them for that – the government will provide a subsidy. When it comes to the pay that would have been due on the hours not currently being worked, the employer will be expected to pay 33% of that money, the employee is expected to take a 33% hit, and the government will provide the other 33%. Therefore, overall, the employer would be paying 55% of the employee’s usual salary.

For the self-employed, the previous scheme is basically being extended, though with much reduced support so that the government-provided benefit for freelancers is pretty much in line with that being offered to employees. So whereas previous grants for the self-employed paid out 70-80% of average earnings, the next round of support will pay out 20%.

Both of the newly announced schemes are based on the assumption that the world is now slowly returning to normal after the full-on COVID lockdown that occurred earlier this year, but because some COVID restrictions are still in place many businesses are not yet back to full capacity. The government, therefore, is providing some subsidy to help cover the slack.

That is why the new schemes aren’t much good for many of those working in the live or night-time entertainment sectors. Because for those people and companies things are not yet slowly returning to normal.

In many cases, ongoing COVID restrictions are sufficient that operations are still in complete shutdown, and nothing has really changed since March this year. Others may have resumed operations to an extent, but the combination of reduced hours, reduced capacity and reduced demand means that many businesses are not in a position to pay staff to work a third of their usual hours, let alone subsidise any unworked hours to the tune of 33%.

As a result, it’s feared that many music, live and night time businesses that had previously been relying on the furlough scheme will now have to make their employees redundant. Indeed, many already have, given the previous uncertainty over if and how the furlough scheme would be replaced. But those that had been hanging on to see if new support was offered will now have to start making lots of difficult decisions.

For freelancers in the creative industries – including music-makers, the vast majority of whom are self-employed – many are yet to see any of their usual fee-paying projects return, meaning a grant worth 20% of their usual earnings will not really help. Most of those people will likely have to seek work outside the creative sectors and – the concern is – many won’t then be able to return to the industry once COVID is over.

Sunak also again failed to address those self-employed people who have so far received no support at all from the government because they didn’t meet the criteria of the previous support scheme. That includes those who were very recently self-employed, or who paid themselves through a limited company rather than being registered with tax authorities as a sole trader.

Of course, the government would likely argue that – while it is true that the schemes announced yesterday don’t really work for those creative and entertainment businesses still pretty much in full-on shutdown – additional funding has already been provided to those businesses via the £1.57 billion in grants being made available to the cultural and heritage industries.

Of that funding, £500 million is being distributed via Arts Council England’s Culture Recovery Fund. It is true that the criteria for that fund means music companies that would not usually qualify for Arts Council support have been able to apply for a grant. Though it is as yet unclear how wide a range of businesses will actually benefit, with decisions regarding the first round of that funding due to be revealed later this month, and by no later than 5 Oct.

Given how much competition there has likely been for that funding, it remains to be seen how many music companies benefit, and whether those grants allow those companies to sufficiently boost their operations so that they’d be operating at a level where the Job Support Scheme would be viable and helpful.

Meanwhile, for freelancers, that funding will only provide support if the companies and organisations who are awarded grants are then in a position to hire their services. It’s still feared that many self-employed music-makers – and freelancers in the live sector – won’t see much benefit from that fund.

Sunak did make some other announcements yesterday that could help businesses in the live and night time sectors. In particular, the previously announced VAT cut on “hospitality and leisure services” – which includes tickets for shows and concerts – will be extended until the end of March, and there’ll be further flexibility for companies that have struggled to pay past VAT bills.

However, with the government itself admitting that COVID restrictions are now likely to extend very much into 2021, there remains plenty of doom and gloom in the live and night time entertainment sectors today. We await to see to what extent the upcoming Culture Recovery Fund announcements soften the blow.

Read the various responses from music industry trade bodies here.