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Music world reacts to Rishi Sunak’s budget: “We urge the government to look at this again”

Rishi Sunak

Figures from the music and nighttime industries have shared their reactions to Chancellor Rishi Sunak’s Spring Statement.

Delivering the mini-Budget in the House Of Commons today (March 23), Sunak said that the government would cut the basic rate of income tax from 20 per cent to 19 per cent by the end of the current Parliament in 2024.

He claimed that the move was “fully costed and fully paid for in the plans announced today”. Elsewhere, Sunak confirmed that retail, hospitality and leisure sectors will have a 50 per cent discount in business rates up to £110,000.

Sunak’s new policies are aiming to alleviate the economic slump caused by the coronavirus pandemic and Russia’s invasion of Ukraine, and to ease the current cost of living crisis in the UK.

In a statement following the announcement, the Music Venue Trust said that it “warmly welcomes the Business Rates discount, which will maintain the 50 per cent Business Rates for grassroots music venues that the government announced pre-pandemic.”

It continued: “However, with no action for businesses on energy bills, or NI liability, or VAT or any support for the sector to recover from the 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, & services running in excess of 20% across the sector. Cuts and price increases are therefore inevitable.”

Chancellor of the Exchequer Rishi Sunak
Chancellor of the Exchequer Rishi Sunak CREDIT: Justin Tallis – WPA Pool/Getty Images

The MVT went on to call on Nadine Dorries – the Secretary of State for Digital, Culture, Media and Sport – to “enter into meaningful discussions with the live music industry to create R&D tax incentives/financial support to realise that ambition”.

Michael Kill – CEO of the Night Time Industries Association – has also shared a statement in response to the Chancellor’s plans, which he said “lacked the kind of support the sector needs if it is to fully recover from the pandemic amid an unprecedented cost of living crisis”.

He continued: “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 independant and SME businesses across the UK.”

Kill said that it’s important for there to be clarity in regards to “what cost inflation means for businesses in the Night Time Economy”, adding: “Many are likely to reach a tipping point in the next 12 months as they face a perfect storm of challenges.”

the crowd while Two Door Cinema Club perform on stage during Leeds Festival 2021 at Bramham Park on August 29, 2021 in Leeds, England. (Photo by Andrew Benge/Redferns)
the crowd while Two Door Cinema Club perform on stage during Leeds Festival 2021 at Bramham Park on August 29, 2021 in Leeds, England. (Photo by Andrew Benge/Redferns)

He added that nighttime settings continue to trade below pre-pandemic levels and said such businesses “face debt hangovers from the pandemic” amid a “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,” he explained of the response to the Omicron variant of COVID over the festive period. (At the time, grassroots music venues warned that they were on the “brink of collapse” after Prime Minister Boris Johnson brought in ‘Plan B’ measures).

“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,” Kill added.

“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 & 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.

“It is very disappointing that today he took none of these steps.”

Meanwhile, Paul Reed – Association Of Independent Festivals CEO – said he was “disappointed” that the Chancellor hadn’t responded to the AIF’s “repeated calls” to grant an extension to the 12.5 per cent VAT rate on festival tickets beyond the end of March.

VAT is currently charged at 12.5 per cent on tickets for live events, but Sunak is planning to restore tax to its pre-pandemic level of 20 per cent on April 1.

“Festival organisers are experiencing cost increases of between 20-30 per cent, which is way beyond rapidly rising inflation, with extreme pressure along the entire supply chain,” Reed added.

“We urge the government to look at this again and maintain the reduced rate on VAT.”

Reed continued: “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.”

Greg Parmley, LIVE CEO, commented: “Live music is facing new and unprecedented challenges that threaten to wreck one of the UK’s cultural crown jewels – a 7.5 per cent 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.”

Parmley went on: “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 £4.5bn industry to continue boosting the UK economy.”

LIVE is now urging the government to work with the industry to consider a cultural VAT rate of five per cent on ticket sales. It’s also asking for a restructure of the government’s reinsurance scheme to allow for artist cancellation due to COVID-19 to be covered.

Last week, Sunak was urged by UK Music chief Jamie Njoku-Goodwin to scrap a large VAT tax hike on concert and live event ticket prices.

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