British pop star Olly Murs rehearsing his “Wrapped Up” video.
The UK has lost an increasing number of its live music venues over the past decade, and a proposed massive tax hike tied to a major overhaul of commercial property rates was threatening to be the final nail in the coffin for many venues. The proposed increase — which could have ranged up to 55% — had many venue owners biting their nails, but at press time it seemed as if the worst might not come to pass.
“It appears that the government has stepped back a bit [from the increase],” University of Edinburgh Professor Martin Cloonan told Venues Today. “There have been a lot of small venues closing across the UK. A report said London had lost around [54 percent] of its [grassroots] venues over the past 10 years. Like a lot of small businesses, anything the business of actually running the venue is going to be problematic,” he said.
In light of the hits venues have taken, and in an attempt to assess the health of the live music scene in the UK, the University of Edinburgh began the first-ever live music census on March 9. The project’s lead investigator, Matt Brennan, said in a statement announcing the census that grassroots clubs and theaters could be the most vulnerable if the tax rise passes in any form.
“Venues around the country have been telling us that they already operate on thin margins, so proposed increases in rateable values of up to 55% in some cases, will have a significant impact,” he said. “The UK Live Music Census will be very important in identifying challenges that the industry faces, such as rising rates and other issues. It will give us a detailed picture of what exactly it means to be a venue owner, a musician, and a live music lover in 2017. Our hope is that the Census will be a vital tool in strengthening a much-loved part of the UK’s culture.”
The census is being led by the Universities of Edinburgh, Newcastle and Glasgow and a nationwide survey for musicians, venues, promoters and audiences will be open until May 8 at the website: www.uklivemusiccensus.org. On the first night of the 24-hour tally, census takers were slated to visit performances across the country encompassing everything from street buskers to choirs, dance clubs and stadium gigs in Glasgow, Newcastle, Oxford, Leeds, Southampton and Brighton, including shows by Olly Murs at Leeds Arena, Nicola Benedetti at the Glasgow Royal Concert Hall, R&B in Oxford, and jazz in Newcastle.
The survey is intended to quantify the national challenges facing the music industry and assemble policy to help it remain viable. The survey effort predates the budget scare — which officially died on Wednesday (March 15) when Chancellor Philip Hammond announced that the government would not proceed with the proposed increases in the National Insurance rates for self-employed people — and it was originally conceived as a bulwark against any future proposed rise in the business rates, according to Cloonan. “We were just trying to get the fullest picture we can get given the resources we have. Venues are under all sorts of pressures, particularly within the inner city areas,” he said.
(Source material for news on tax increases failing — https://www.bbc.com/news/uk-politics-39278968)
Martin Ingham, chief executive of the National Ice Centre & Motorpoint Arena Nottingham and Chairman of the 21-member National Arenas Association said that his group has been engaging consultants in business rating valuations for months trying to assess the new valuations and their impact, as well as lobbying against the increases, which his members believe would disproportionately damage the arenas.
“The idea that the rates revaluations would be a geographic redistribution to reflect changing property values across the UK is not borne out in our members’ experiences and nearly every arena is seeing significant increases, of up to 45% in many cases, despite the transitional relief offered in the first year,” he said. The NAA, a member of the UK Live Music Group, sent a letter to Phillip Hammond, Chancellor of the Exchequer, seeking assurances that large increases were to be mitigated. He added that the Music Venues Trust, representing grassroots music venues, also wrote to Ministers drawing attention to the “real risk that massive percentage increases in property taxes could drive small venues out of business.”
In the end, he said, the Chancellor’s budget “offered pubs and smaller businesses a potential one-off transitional relief which will have no benefit to the Arenas and will only delay the inevitable pain for some of the smaller venues.” While he declined to comment on how the proposals might impact major venues like NAA member, London’s O2, he would only say it was aware that the increases could be “significant,” and that many arenas face potentially six-figure tax rate jumps, significant even with potential transitional relief in year 1, followed by the full impact of a similar amount from year 2 onwards. “It is a very big deal indeed because there is no way that these levels of costs are going to be wholly borne by any other players within the industry, so ultimately, the costs will have to be passed through to the consumer,” he said.
RZO co-founder and music business veteran Bill Zysblat said he could only speak for artists, but for his client, any tax increase is unwelcome, especially a potentially drastic 50-plus percent one. For a U.S. artist, depending on the rate, they will get a dollar-for-dollar credit in the U.S. against taxes paid overseas,” he said of the potential effect of the proposed rate hike. “It’s rare to route a tour around the tax rates in any country, but it may affect the concentration of dates you have in any single country. Venues generally compete with other venues in their territory, so if all of them are subject to the same tax, it might not be a blow to the venues within a particular territory.”
Zysblat said, tax or no tax, if an act is doing a 100-city tour, the need to play every major market might mitigate any potential increase. “Volatility is a fact of life,” he said. “Changing currency rates is a much greater danger. Tax rates are usually only changed annually at most and occasionally actually go down. It should be a factor, but generally not when booking.”