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Impact of COVID-19 on DCMS sectors: First Report Contents

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3Culture and the Creative Industries

37.In this chapter, we outline the challenges facing parts of our creative industries in the wake of the Covid-19 outbreak. While each sub-sector of the creative industries faces distinct challenges, the performing arts were some of the first to be affected by social distancing.94 Now, even as other sectors of the economy reopen, cultural institutions face an uncertain future given the potential for extended or renewed closures in the face of subsequent waves of the pandemic, and changing audience habits.95

38.The importance of access to cultural events was crystallised by theatre company Border Crossings, which told us:

The current crisis does not make our cultural life something that should be put on hold until things are “back to normal”. We have to recognise that we are undergoing a fundamental change in the way we live—we have to imagine a different future. It will be from the cultural sector that the essential new ideas emerge.96

39.After months of raising concerns about the cultural sector with DCMS Ministers, we were encouraged by the Government’s announcement on 5 July of a £1.57 billion support package for cultural, arts and heritage institutions.97 As our evidence demonstrates, such support was urgently needed. Currently there is little detail on how this support will be distributed. We trust the analysis in this report will help the Government and associated public bodies to make distribution choices that achieve maximum benefit for the whole cultural sector.

The impact of Covid-19 on the performing arts

40.On 16 March, the Prime Minister said that people “should avoid pubs, clubs, theatres and other such social venues” to slow the spread of Covid-19, before banning all public gatherings from 23 March.98 While venues had been taking precautionary measures and experiencing declining demand in the weeks prior, these announcements resulted in theatres, concert halls and grassroots music venues immediately ‘going dark’ with no roadmap for when they would reopen.99

Figure 4

Theatre

41.Enforced cancellations and indefinite closures caused immediate financial pressures for performing arts organisations. In the first 12 weeks of lockdown, more than 15,000 theatrical performances were cancelled with a loss of more than £303 million in box office revenue.100 A joint submission by the representative bodies for professional theatre across the four UK nations estimates the total loss of income will be some £630 million because:

All theatres, including those whose funding model includes an element of public subsidy, are heavily reliant on income from ticket sales. In addition to the loss of performance fees and box office sales, theatres and theatre companies have suffered loss of income from all associated/secondary income (including bar/restaurant/café sales, event hire fees, and theatre rental income).101

42.There are just under 1,100 theatres in the UK, with more than half operating as charities.102 The Theatres Trust estimates that at the start of the outbreak approximately 35% of theatre charities held less than one month’s reserves, and 59% held less than three months’ reserves.103 Julian Bird, CEO of UK Theatre and the Society of London Theatre, told us that 70% of theatres and production companies risk going out of business by the end of this year, and that this figure is consistent no matter where in the country they are located, or whether they operate on a subsidised or fully commercial business model.104 This was echoed in evidence from Shakespeare’s Globe, which warns that “without emergency funding and the continuation of the Coronavirus Job Retention Scheme, we will spend down our reserves and become insolvent”.105 The permanent closure of theatres in Southampton, Southport, Leicester and Bromsgrove has already been announced.106 The Theatres Trust warns:

This erosion of cultural infrastructure could have long lasting impact on access to the arts, careers in the creative sectors and the UK’s position as a world leader in this sector and as a major contributor to tourism.107

Live Music

43.The Music Venue Trust estimates that 93% of the grassroots venue network faces permanent closure, with 86% of venues reporting that their core threat stems from an inability to meet commercial rent demands.108 Grassroots music venues, as well as recording studios, act as research and development incubators of Britain’s highly successful music industry and are an invaluable part of the UK’s cultural musical heritage.109 Without them, as Horace Trubridge of the Musicians’ Union told us, “we have a real hiatus in the traffic of artists from the bedroom to the venue to the record deal to the festival stage at Glastonbury”.110 At the other end of the scale, the National Arenas Association projects that the 23 UK arenas it represents will lose almost £235 million worth of ticket sales over a six-month period.111 Union Chapel, a renowned music venue in north London, told us it “will not survive […] beyond Spring 2021 if the current situation continues without further government intervention”.112 The Association of British Orchestras also warns that “the UK’s orchestras are facing an existential crisis” because:

With touring having dried up from January, the national shutdown being implemented in March, and the prospect of restrictions on mass gatherings lasting to the end of the year, they face up to a year of lost income from concerts, tours, recordings and commercial activity.113

44.The UK’s thriving festival and live events sector has been particularly badly hit, with UK Music estimating that “90% of all festivals in 2020 will be cancelled”.114 The Association of Independent Festivals says that 92% of its members face permanent collapse and 98.5% are not covered by cancellation insurance, despite having already incurred an average sunk cost of £375,000 per event.115 The seasonality of the industry means that cancellations over spring and summer mean a complete loss of income for the year ahead, which could have devastating consequences for the SMEs and self-employed workers in the live events supply chain.116 This is reflected in evidence we have received from lighting and sound technicians, equipment suppliers and providers of safety and site management, with the director of an audio consultancy stating:

Given the lead time for organising large events I am now resigned to my company having no work at all this year, and therefore no income. My business will inevitably be wound up or become bankrupt.117

Such losses will impact the sector’s ability to resume in the long-term, as evidence from a supplier of video equipment to major festivals such as Glastonbury states:

If a large proportion of suppliers do not survive we will not be able to support the demand for live events and meetings in the future.118

The loss of live music during Covid-19 has brought into clearer view the concerns of musicians, songwriters and composers, regarding their earnings from the streaming of recorded music. This matter was raised with the Secretary of State when he appeared before us.119 The Department should investigate how the market for recorded music is operating in the era of streaming to ensure that music creators are receiving a fair reward.

Creative workforce

45.The cancellation of cultural events and closure of venues has had knock-on effects across the creative workforce, with theatres including the Birmingham Hippodrome and the National Theatre announcing redundancies in June.120 The impact on the self-employed workforce has been even more immediate. Office for National Statistics (ONS) figures indicate that just over 30% of the creative industries workforce is self-employed, compared to the UK average of 15%, yet levels vary significantly by sector: in 2018, for example, 72% of the music industry was self-employed, as was some 70% of the theatre workforce.121 Evidence from Tracy Brabin MP, the Shadow Minister for the Cultural Industries, details the economic impact that the loss of work has had on cultural freelancers: declining income, uncertainty around maternity allowance or eligibility for mortgages, the inability to recoup money already spent on equipment, rehearsals and touring, and concerns about decreased work opportunities in the long term.122

46.It is highly probable that financial pressure will cause people to leave the creative industries for alternative employers: 19% of respondents to a Musicians’ Union survey said that they were considering abandoning their careers as musicians, while 17% of respondents to an Equity survey are now working outside the entertainment industry, with a further 20% actively looking for other work outside theatre.123 Concerns about talent drain extend beyond the performing arts to other parts of the UK’s vibrant creative economy. The British Film Institute told us:

There are already significant skills gaps and shortages across film and TV, for example production accountants, and these risk the continued growth of sector. With job insecurity highlighted by recent events, these shortages will become even more pronounced and widespread and potential new entrants to the sector will be put off. There is going to be a loss of labour capacity within the industry which could impact its ability to recover post Covid-19.124

47.There are concerns that pressures on the creative workforce will also impact on diversity and inclusion within the cultural sector. Dr Dave O’Brien from the University of Edinburgh told us that the creative industries workforce remains “highly exclusive” because of “the role of social networks, the need for financial resources to support low or no pay jobs and business risk taking, and the cultural elements in commissioning and hiring decisions”. He argued that:

COVID-19 will unquestionably make these issues worse. There will be fewer cultural organisations, whether in the arts, in media, music, film and TV, publishing, or in museums; There will be fewer job and project opportunities; Competition for those opportunities will intensify; the winners will be those who already have economic, social, and cultural resources.125

The National Theatre, which is “modelling very substantial redundancies in our workforce of over 1,200 posts”, recognises that “almost two-thirds of our staff are under 40” and therefore there are “very real concerns about a generation facing mass youth unemployment”.126 Andrew Miller, the Government’s Disability Champion for Arts and Culture, highlights that the threats presented by the pandemic “to health, livelihoods, social care and creativity are all frighteningly magnified for disabled people”, and that failing to consider disabled workers’ needs in the recovery of this sector could threaten recent progress the UK has made in becoming “a recognised global leader in disability arts”.127 Likewise, Theatre Peckham shares a “fear that the number of people from culturally diverse backgrounds will be forced to leave the industry resulting in long-term loss and undoing the vital impact which we have made over the years”.128 Caroline Norbury MBE, CEO of the Creative Industries Federation, told us that “there is a real danger that the attention we have put into diversity and inclusion measures will suffer as a result” of Covid-19. She said:

We need to be on the front foot to make sure that we do not let diversity and inclusion become a ‘nice to have’. For simple business reasons, they have to be central. The creative industries have a global market opportunity. If we are to take advantage of that, we need a workforce that is diverse and can understand what it means to work in a global market. It is a central business challenge as much as a moral obligation.129

Engagement work

48.The Covid-19 crisis has also impacted the important work that arts organisations do in communities. In 2018/19, 77% of adults and 96% of children engaged with the arts,130 and cultural activity has proven benefits for health and wellbeing, as our predecessor Committee explored in its 2018 inquiry on the social impact of participation in culture and sport.131 Prior to the outbreak, Arts Council England put understanding “the role of culture in building and sustaining communities” at “the heart” of its next 10-year strategy, yet there are concerns that this ambition is now under threat.132 Engagement work has already been disrupted during lockdown, with Orchestras Live estimating that more than 5,000 public engagement opportunities have been lost, and there is a risk that cuts arts organisations make due to Covid-19 will hit talent development and/or education and participation programmes in the long run.133 As an example, a consortium of regional theatre venues that do not receive funding from Arts Council England, but conduct development and outreach work that typically reaches more than 445,000 participants, states that “without funding intervention, our commitment to studio, artist development and community and education work is likely to be heavily eroded at best and wiped out at worst”.134

Digital arts

49.Many arts organisation have responded to this period of enforced closure by making productions available for streaming online or through partnerships with broadcasters.135 The Old Vic Theatre is staging virtual performances of its production of ‘Lungs’ starring Matt Smith and Claire Foy, Wigmore Hall has partnered with the BBC to broadcast live concerts and Union Chapel has streamed live gigs by Laura Marling around the world.136 Such initiatives require organisations having access to the necessary digital infrastructure and, as the National Theatre observes, “the current period has laid bare the disparity in digital capability between larger and smaller organisations”.137 Moreover, digital productions are not without cost, and although the Old Vic is a notable exception, much of this content is being made available free, with audiences encouraged to make donations. Mr Bird told us that “the levels of donation for those free streams of performances has been remarkably low”,138 and the Association of British Orchestras told us that digital content “can never replace the power and earning potential of live performances and commercial activity”.139 Furthermore, Manchester Literature Festival states that smaller organisations are finding it “difficult to monetise digital content particularly at the moment when so many big cultural institutions are providing content for free”.140

The UK’s creative environment

50.The Secretary of State told us that he had commissioned officials within the Department to establish what of “the core architecture” of the creative industries the Government “really have to support” through this crisis.141 However, this risks missing the highly interconnected nature of the creative industries, including the prevalence of co-productions and the fact that supply chains and artists often work across sectors.142 Immersive theatre company Teatro Vivo stresses the contribution that smaller arts organisations make to larger ones, stating:

Big institutions rely on the creativity of small companies to create the thriving artistic climate that the UK has. We also connect the different areas of the arts community that large organisations struggle to reach alone. We enable large organisations to work with us to reach those who wouldn’t usually enter their buildings. There is a great deal of theatre that happens in and with local communities who don’t access the Arts in any other way, and it is at just as much risk as the mainstream work that makes the headlines in this time of crisis.143

This means that insolvencies or decreasing work opportunities in one part of the industry will have consequences across the cultural ecology on which the UK’s cultural reputation is based. Phoebe Waller-Bridge’s BAFTA, Emmy and Golden Globe winning BBC show ‘Fleabag’ started life as a one-woman play which she performed in London and at the Edinburgh Fringe Festival. As the Fringe Society’s evidence states:

The work presented at the Fringe is seen and bought by other festivals, venues and curators across the UK and the world, which leads to numerous years of work for those artists, scriptwriters, stage designers, etc.144

However, with the 2020 festival cancelled, the Fringe Society warns that its future is under threat due to the £1.5 million deficit, while other festival stakeholders, such as independent venues, face a £21 million deficit.145

51.The Covid-19 crisis presents the biggest threat to the UK’s cultural infrastructure, institutions and workforce in a generation. The loss of performing arts institutions, and the vital work they do in communities by spreading the health and education benefits of cultural engagement, would undermine the aims of the Government’s ‘levelling up’ agenda and Arts Council England’s next 10-year strategy, and reverse decades of progress in cultural provision and diversity and inclusion that we cannot afford to lose. In addition to the emergency funding already announced, the performing arts need a sector-specific recovery deal that includes continued workforce support measures, including enhanced measures for freelancers and small companies; clear, if conditional, timelines for reopening, and technological solutions to enable audiences to return without social distancing; and long-term structural support to rebuild audience figures and investment in time of economic uncertainty.

Government and non-departmental support for the performing arts

Employment and business support measures

52.The Coronavirus Job Retention Scheme (CJRS) has benefited many organisations within the creative industries, with the Theatres Trust, Really Useful Group and many in the performance supply chain describing it as a “lifeline”.146 The Mercury Theatre Colchester told us that CJRS has enabled Essex’s only full-time producing theatre “to save numerous jobs and retain skills” which it observes is “particularly needed for those […] outside London and the major cities”.147 However, the scheme is due to end after October 31 and the Chancellor has ruled out any further changes or extensions.148 We have heard stark warnings that closing the scheme before cultural institutions are back at full capacity will lead to widespread redundancies.149 The Really Useful Group recommends that “the scheme should remain for companies in sectors where the recovery is in the longer term, such as the Events, Performing Arts, Entertainment Technology, TV & Film Sectors”.150

53.The limits of the Self-Employment Income Support Scheme (SEISS) have had a serious impact on creative workers, who are significantly more likely to be self-employed than the general population.151 Although HM Treasury estimated that SEISS would cover 95% of those who receive the majority of their income from self-employment, the evidence we have received indicates this is not so in the creative sector. The Treasury Committee has done important work to understand why certain categories of self-employed workers are missing out on Government support,152 and we have also heard from creative freelancers who are struggling because of the way their work is structured and remunerated.153 Directors UK, which represents film and TV directors, questioned the Government’s rationale for restricting eligibility for SEISS to those earning £50,000 or less a year. With its research finding that “nearly half of respondents (43%) are not eligible for support as they earn just a few thousand more than the cap allows”, it argues:

The Government has justified the cap by stating that those who earn over the £50,000 threshold earn an average of £200,000. Our member research clearly shows this not to be the case. The spread of profit/earnings for all those working as Ltd/PSCs and sole traders combined, ranges predominantly from £20,000-£70,000. With the largest number (21%) falling into the £40–50,000 grouping, closely followed by £50–60k (17%).154

UK Music also argues that “the existing schemes do not recognise the portfolio nature of many careers in the music industry”.155 Horace Trubridge from the Musicians’ Union gave us the example of those who teach for local authorities or music education hubs on the equivalent of zero-hours contracts. He said:

They make up their income over the course of the year by playing some live gigs or creating some shows or whatever, but that does not amount to 50% of their overall income. Because they are on the zero-hours contracts for their PAYE work, their salaried work, they cannot be furloughed, and because they earn less than 50% of their overall income from their gigs, they cannot qualify for the SEISS either.156

Many in the live events supply chains and television industries are ineligible for support because they operate under personal service companies (PSCs) or limited companies, and receive remuneration through dividends. This might be through no choice of their own: Viva La PD, which represents screen producers and directors, states that “many professionals in television have had to establish PSCs as a contracting modality prescribed by production companies”.157

54.The Secretary of State and Ministers have been unable to provide us with any concrete figures for how many people working in the DCMS sectors have not been covered by Government’s employment support measures, despite our repeated requests.158 The Minister for Digital and Culture, Caroline Dinenage MP, did tell us that the number “varies from sector to sector” but “in some cases it is around 30% to 35%”.159 This chimes with the Institute for Fiscal Studies’ estimation that 38% of self-employed people are ineligible for SEISS.160

55.We have been told that the raft of other business support measures have also failed to cater to the needs of the creative industries. The Coronavirus Business Interruption Loan Scheme (CBILS) is of limited applicability because taking out a loan is not financially viable for the many small creative businesses that typically operate on small margins.161 Some 87% of respondents to a UK Theatre survey said that they would not be accessing the CBILS because “boards simply cannot accept the risk of taking on debt when future income remains unpredictable”.162 Likewise, take up of the Bounce Back Loan Scheme within the creative industries is unclear, given that the 12-month interest-free period might end before all sectors—especially the highly seasonal events industry—have returned to full capacity.163 A number of schemes, including the Local Authority Discretionary Grants and the Retail, Hospitality and Leisure Grant (RHLG), require businesses to occupy properties to be eligible. However, this excludes any businesses with a rateable value of £51,000 or over, and those not covered by the business rate regime—such as a number of theatres, festivals and outdoor events such as fairs and circuses.164 The Theatres Trust explains that many theatres’ rateable value puts them over this limit, stating:

Theatres are by design large buildings in town centre locations and have a higher rateable value than other leisure and hospitality organisations of a similar scale of operation. […] Using Rateable Value as a proxy to assess the scale of these businesses and their level of resilience does not work for theatres and we would propose an increase in the limit, potentially targeted at cultural venues or venues operated by charities.165

With many festivals also not eligible to pay business rates, UK Music states:

Only 1% of businesses surveyed in the events sector said they had been successful in accessing the RHLG, this raises questions on how effectively the current system has been supporting these businesses to date.166

Caroline Norbury from the Creative Industries Federation stressed that when it comes to designing policy interventions to support the creative industries, the variety seen across the sector means that “one size does not fit all” and therefore greater “flexibility is the key”.167

56.The Coronavirus Job Retention Scheme and the Self-Employment Income Support Scheme have been a lifeline for all those in the creative industries who have been eligible for them. However, the closure of the schemes in October and the fact too many self-employed people have missed out on support to date, means the future of our creative workforce remains at significant risk. From October 2020 at the latest, the Government should introduce flexible, sector specific versions of the CJRS and SEISS guaranteed for the creative industries until their work and income returns to sustainable levels. Any such measures should account for the differences in timeframes for the easing of Covid-19 restrictions across the four nations. Support for the self-employed, in particular, should be urgently reviewed and amended so that it covers people who have been excluded to date. The Treasury Committee’s report, ‘Economic impact of coronavirus: Gaps in support’, proposed practical solutions for how this might be achieved, which we endorse.

Sector support package

57.Throughout our inquiry, we heard calls for Government to increase its direct support for the cultural sectors, with evidence pointing to the disparity in support between the UK and other nations. For example, UK Music told us that:

The Netherlands and Switzerland have respectively announced £261 million and £227 million funds targeting support to their cultural sectors. Germany has led the way with a generous support package worth €50 billion, that covers artists and small businesses. If the UK does not match these, our artists will exit this crisis from a lower base and therefore be at a disadvantage to their international competitors.168

In early June, Caroline Norbury also noted the difference between England and the other UK nations, stating that Scotland, Wales and Northern Ireland have been “able to bring in sector-specific support—which is also happening in other European countries—in a way that we have not here in this country”.169 When we put these concerns to the Minister for Digital and Culture, she explained that although for Government “the first issue was to keep people in employment”, she recognised the need to consider the support arts organisations need to reopen. She went on to tell us:

It is important that we start to rebuild consumer trust and confidence in getting out again and going to enjoy these incredible venues and the great artistic fare they have to offer. Even if they need to be supported financially in the interim and in the initial period, I would like to see that happen.170

58.On 5 July, the Government announced a £1.57 billion rescue package for the cultural and heritage sector. The package includes £880 million in grants and some £270 million in loans, and although, as we have demonstrated, loans are often not practical for smaller arts organisations, it is encouraging the Government has anticipated this and confirmed that any repayable finance will be made “on generous terms tailored for cultural institutions to ensure they are affordable”.171 On announcing the package, the Government stated that “further details will be set out when the scheme opens for applications in the coming weeks”. This had echoes of the Government’s previous announcement of £750 million in support for charities: despite those funds being announced on 8 April, eligibility criteria and application guidance was not published for the £200 million of it distributed by the National Lottery Community Fund until 22 May, and by 3 July it was reported that only 1% of that money had actually been paid out to charities.172 Moreover, it is unclear how the support will benefit those individuals and small companies in the creative supply chains: on 7 July, the Minister for Digital and Culture told MPs that the best way to support freelancers would be getting institutions back up and running; however, this ambition is directly undermined by the Government’s own restrictions around reopening.173

59.We welcome the Government’s commitment to provide £1.57 billion in funding for our cultural and heritage sectors; however, whether it is enough to safeguard the cultural sector will ultimately depend on how long institutions remain closed or subject to social distancing, and we are concerned that freelancers and small companies will continue to fall through the gaps of Government support. It is also regrettable that it took so long for the package to be announced, as the uncertainty inevitably led to closures and redundancies in the cultural sector that might otherwise have been avoided.

60.The Government must learn from the shortcomings of previous support schemes, including those for charities and self-employed people, to ensure this package is tailored to the unique characteristics of the cultural sector and its workers, and reaches them promptly. The Government must recognise the interconnected nature of the cultural sector and should not restrict support to well established, high profile, institutions: it is essential that cultural freelancers and small companies in the creative industries supply chain are also eligible for direct support. To reduce uncertainty, the Government must publish eligibility criteria and application guidance as soon as possible, and ensure that the funding reaches recipients no later than October 2020.

Industry-backed proposals

61.The performing arts sectors have put forward a number of proposals for ways in which their recovery might be further supported. Many sectors called for a temporary cut to VAT on tickets for up to three years.174 It is positive that the temporary 5% VAT rate for the hospitality industry will extend to the performing arts; however, it covers just six months.175 We have also heard calls for Government to incentivise private investment in commercial theatre, which even before the pandemic was considered a high-risk option for investors.176 Theatre Tax Relief was introduced in 2014 to allow those staging productions to claim deductions on their taxable profits and tax credits against losses.177 The League of Independent Producers recommends that the rate be extended to 50% for at least three years, and that the definition of ‘core expenditure’ is explicitly extended to cover productions that were interrupted by Covid-19 closures, marketing activities and operating costs.178 It argues:

This would mitigate losses already sustained by the sector such that productions that were affected by Covid-19 are more likely resume performances once theatres re-open. It would also provide producers and investors with greater confidence to ensure that new and larger-scale productions are greenlit whilst the sector rebuilds its audience, thus ensuring greater employment.179

Festivals Edinburgh also calls for “less restrictive” gift aid rules and tax and match-funding incentives to encourage philanthropy.180

62.A new Cultural Investment Participation Scheme (CIPS), or so-called Culture Bond, for both not-for-profit and commercial theatre has also been suggested. The scheme would have two strands: a charitable version whereby the Government would invest up to 50% of the theatre’s operating costs in return for a social return and economic participation in the institution; and a commercial version, whereby Government would provide up to 30% of a production’s total capitalisation, as long as 70% is met by private investors, in return for a share in subsequent profits.181 UK Theatre and the Society of London Theatre estimate that the package of measures it has proposed will cost approximately £330 million for every three months that closures continue, and state that the scheme:

would ensure the swift economic recovery of the sector in the twelve-month period following the full re-opening of venues, with built-in incentives to private investors and philanthropists and whilst providing the government with in-kind social benefit and a potential financial return from the activities of both charitable and commercial organisations within the sector.182

In early June, the Minister for Digital and Culture confirmed that DCMS was considering the CIPS and tax relief measures, and “thrashing out with the Treasury right now which will work, which can be delivered at pace and which can be delivered without massive overheads”.183

63.In certain cases, venues and recording studios that have hosted some of the UK’s most eminent musicians could be classed as ‘assets of cultural value’. Such buildings might not qualify for listing on architectural grounds but are an invaluable part of the UK’s cultural musical heritage, and the Covid-19 crisis has put extra pressure on these assets. To protect grassroots music venues from permanent closure, the Music Venue Trust recommends “encouraging community ownership of freeholds”, which Government could support through a minor change to the Social Investment Tax Relief and by ensuring its manifesto pledge to a £150 million Community Ownership Fund is extended to cultural assets.184 It states that the current crisis “presents an urgent need to undertake this work, as many of these premises may otherwise be lost to residential development”—an issue closely related to the existing ‘Agent of Change’ planning guidance.185 UK Music also observes that although “fiscal incentives have been used to great effect to support creative sectors”, at present “there is no equivalent scheme for the commercial music industry”. It therefore makes the case that “the introduction of a tax credit for the music industry would educate investors and pump prime inflows of capital.186

64.To further combat the negative effects of closure, and to stimulate long-term recovery, the Government should introduce other fiscal measures. We recommend the cut in VAT on ticket sales for theatre and live music be extended beyond January 2021, for the next three years. The Government should increase Theatre Tax Relief to 50% for the next three years and broaden the definition of ‘core expenditure’ in line with the industry’s proposals. It should introduce a Music Tax Relief, modelled on existing reliefs such as the Orchestra Tax Relief. The Government should also develop a system to save ‘Assets of Cultural Value’ along the lines of the regime for ‘Assets of Community Value’. This would allow a moratorium on the sale of a building while stakeholders seek an alternative bidder to maintain the asset as a cultural business. The Government should also build on recent ‘Agent of Change’ planning reform to protect cultural assets by tightening planning regulations around change of use from venues or music studios to residential and other developments.

Emergency support by non-departmental public bodies

65.At the start of the crisis, non-departmental public bodies including Arts Council England (ACE) and the National Lottery Heritage Fund (NLHF) announced emergency funds to support their sectors. These were largely welcomed, and the speed of implementation and additional flexibility shown by funding bodies in relaxing grant conditions was particularly praised.187 However, there were concerns about the extent and timing of such support. Caroline Norbury from the Creative Industries Federation described ACE’s £160 million emergency pot as “a drop in the ocean”.188 Moreover, the fund supports recipients through to September 2020, although Derby Theatre told us that “is not the next 3 weeks we are concerned with but the next 3 years”.189 ACE received nearly 14,000 applications from individuals and organisations outside its portfolio, with 71.1% of them ultimately receiving support,190 but it still acknowledges it:

does not have the resources to secure the income of individuals or the future of shuttered organisations through an extended lockdown, nor the ability to support the costs of reopening under changed circumstances.191

66.Others have questioned the fairness of the eligibility criteria for ACE’s funding, which requires organisations outside its portfolio to demonstrate “a track record in publicly funded culture”.192 The Civic, a multi-function venue in Stourport states that this “immediately barred organisations that had not been part of the ‘club’, meaning good venues/organisations/practitioners were excluded by dint of the fact they had never been successful in securing funding of that type”.193 The Association of Circus Proprietors of Great Britain told us that “commercial circus, precisely because it has not needed help in the past has been forgotten and ignored in this crisis”.194 Similarly, UK Music states that “it is unfortunate that monies intended for [grassroots music venues] was not protected, and that ACE support is focused on organisations with a track record of public funding” as contemporary music does not have such an established track-record of public funding as other performing arts.195 Others are concerned that the distribution of ACE’s funding will exacerbate inequalities between subsidised and non-subsidised arts organisations.196 The Little Theatre Guild highlights that none of its 115 community-based, amateur theatres “receive any financial support from The Arts Council”.197

67.There are concerns that in suspending existing funds and drawing on reserves, ACE will have depleted capacity to fund the arts in the future. The Association of British Orchestras states:

Arts Council England’s emergency support package is welcome, but this is simply a smash-and-grab raid on lottery reserves and lottery funds that would have been spent in other areas, and as a result there will be an inevitable contraction in the lottery funding available for future projects.198

While ACE has announced its project grants will reopen from late July, and has held back more than half of this year’s budget for it, there are still concerns about the long-term implications for arts funding.199 The Paul Hamlyn Foundation expresses concern that the re-appropriation of ACE funds “could result in a greater than usual demand on trusts and foundations that commit funds to the arts sector when things return to normal”.200 Moreover, with £143 million or 90% of ACE’s emergency fund coming from National Lottery funding, the longer term impact on returns for good causes of the competition to find the next operator of the Lottery, and of Covid-19 itself, remains to be seen.201

68.Lessons must be learnt from Arts Council England’s emergency funding when it comes to distributing the additional Government support. Support cannot be limited to organisations with a track record of public funding. Although recipients must be able to demonstrate they will use public monies appropriately, such a restrictive criterion risks excluding vital parts of the cultural ecology, including whole sectors that have historically had less engagement with funding bodies such as contemporary music, circus and amateur theatre. In allocating additional sector funding, the Government must ensure support reaches cultural sectors and institutions that are in need, irrespective of whether they have previously received subsidy. It must also ensure an equitable distribution of cultural resources across all parts of the UK—north and south, rural and urban—and support for BAME and disabled artists and audiences.

Restarting the performing arts

69.Aside from the financial pressures, the other main challenge for the performing arts has been the question of how and when they will reopen safely. The Government’s Covid-19 recovery strategy and subsequent announcements by Ministers were clear that cultural venues will be some of the last places to reopen as lockdown is lifted.202 The UK is not alone in this: in New York, the Broadway League recently announced that all its theatres will remain dark until January 2021.203 The DCMS-led Cultural Renewal Taskforce is tasked with “identifying creative ways to get these sectors up and running again”.204 Yet the long period of uncertainty has been a challenge for institutions such as the Wales Millennium Centre, which told us, “we need to understand as soon as possible how long our closure might last whilst social distancing measures are in place. This timescale is essential for staff retention and forward planning”.205

70.On 25 June, the Secretary of State announced a five-stage plan for the return of live performance in theatres in England; however, unlike the Government’s May 2020 ‘Plan to Rebuild’, it contained no indicative timescales or public health targets for when each stage might commence.206 On 9 July, the Secretary of State announced that outdoor performances, stage 3 of the plan, could resume from 11 July; however, UK Theatre and Society of London Theatre continued “to urge the government to publish ‘no earlier than’ dates for initial indoor performances with a socially distanced audience and most importantly for full venue reopening (stages 4 and 5 respectively) to allow theatres and producers to plan and prepare”.207 On 17 July, it was announced that indoor performances with socially distanced audiences in England could resume from 1 August. As our evidence illustrates, the ability to plan and prepare is important because the performing arts will face multiple challenges when reopening.

Challenges

Lead times for performance

71.The lead times involved in tours and productions, not to mention any costs incurred in making spaces Covid-secure, mean cultural organisations will require significant time to prepare ahead of reopening. Horace Trubridge told us that “three months is an absolute minimum” for musicians to arrange a tour.208 Meanwhile theatre companies will need to rehearse productions and build up advance sales, whether developing new work or restaging shows that were interrupted by the lockdown.209 Evidence from Andrew Lloyd-Webber’s production company, the Really Useful Group, explains that:

For a typical West End production, rehearsals must start at least three months before a production opens to the public and if any development work or set build is required this will need to start at least six months prior.210

Receiving houses, such as Norwich Theatre, which hosts touring work rather than staging its own, will be dependent on other parts of the theatre ecology to reopen. It states:

We are reliant on producers being comfortable that touring their productions will be financially viable for them. At present in our largest venue, we have no available product until January 2021.211

These lead times mean that July and August are crunch times for organisations committing to their Christmas seasons, which means continued uncertainty about reopening could have devastating consequences far beyond the end of this year.212 As Julian Bird told us:

Christmas is absolutely essential for theatres. It is the time when most theatres are at their maximum capacity: pantomimes, Christmas musicals, Christmas shows. It is also the lifeblood for most theatres across the country annually. It is the time when they have more audiences in and when they can make profit that they use later in the year for other productions and for all that community education work.213

Indeed, the New Wolsey Theatre in Ipswich observes that sales for its pantomime, which brings in 25% of its annual turnover, have “unsurprisingly […] stalled”.214

Social distancing

72.Performance venues, like many hospitality businesses, have been clear that it will not be economically viable to reopen while any form of social distancing remains. Julian Bird from UK Theatre and Society of London Theatre told us that even at one metre distancing, theatre capacity will be reduced to 30% to 35%.215 Theatre Royal Plymouth, which generates 91% of revenue through trading activity and receives 9% in subsidy, explains:

Social distancing and only selling 30/50% of available seats is not financially viable for the larger scale venues which rely on 70/80% attendance year round to cover costs.216

Similarly, Horace Trubridge from the Musicians’ Union told us that live music’s economic model will not allow any form of social distancing, whether seated or standing. He told us that venues “need to sell 70% or 80% of the tickets just to break even on these gigs” and concluded: “I do not see it being a viable alternative”.217 The Institute of Theatre Consultants also observes that any form of social distancing will impact the audience’s experience of a live performance. It states:

Furthermore, the separation of audience members (even sitting as couples or more in a household grouping) would be such as to deaden the audience’s reactions and enjoyment of the experience. A theatre audience forms a closely interrelated and inter-reactive community, without that the ability to bond with the performance is severely diminished.218

73.Technological solutions could enable audiences to return safely without social distancing. The Really Useful Group has called on the Government to learn “from the management strategies that have been employed in other territories such as South Korea”. Its Seoul production of ‘The Phantom of the Opera’ has been able to continue throughout the pandemic because of a rigorous test, track and trace process.219 Leading event promoter Festival Republic proposes a similar initiative, called the ‘Full Capacity Plan’, whereby audiences will be required to obtain an app-verified negative Covid-19 test before attending an event.220 Richard Masters from the Premier League told us that while football is also considering similar technological alternatives to social distancing, it is “not working with other industries” on them at present. However, he told us that if cross-sector initiatives were developed, the Premier League “would be willing participants”.221

INTERNATIONAL COMPARISONS: THEATRE IN SOUTH KOREA Using an app, theatres in South Korea assess whether patrons present a risk to other audience members based on their travel to places with known cases and whether they have been tested for Covid-19. This information has to be presented with the ticket before the patron enters the theatre, with high-risk individuals refused entry. Theatres also use hygiene controls, including mandatory mask-wearing, and temperature checks to keep staff and audiences safe.

74.Physical proximity is also an issue for performers. While guidance for the resumption of sports and TV and film production was first published in May, the performing arts had to wait until 9 July.222 Theatre company Border Crossings argues that as “any performance that requires physical contact between performers will be hard to achieve under current regulations”, DCMS should “explore the arts as a priority area for continuous testing of personnel, on the lines being applied in football”.223

Audience attitudes

75.The willingness of audiences to return to live events will be central to the recovery of the performing arts, and Professor Stephanie Pitts and Dr Sarah Price from the University of Sheffield state that “arts organisations must not be expected to attract full audiences as soon as lockdown is lifted”.224 Indigo’s ‘After the Interval National Audience Survey’ found that only 19% of people would feel safe returning to live events because venues had reopened and 42% are not considering booking for four months.225 Moreover, there are concerns that key groups more vulnerable to Covid-19, including BAME audiences, will be reluctant to return.226 The Park Theatre in north London states:

It will be vital that audiences feel confident returning to live events, in particular the over 70s who are a vulnerable group and traditionally make up a significant portion of many audiences.227

Furthermore, Andrew Miller, the Government’s Disability Champion for Arts and Culture, highlights that:

It seems highly likely that enhanced safety measures coupled with incentives will be needed to draw possibly reluctant disabled audiences back into the habit of live event attendance. As disabled people account for 12% of the national audience for cultural events in England, this is a significant and vital challenge for the sector to address.228

Arts Council England also highlights the wider economic factors that could impact audience attendance in the months and years to come, stating:

Economic contraction could affect future levels of discretionary income that households will have available to spend on arts and cultural activities. International tourism will also be affected for some time, and this will have a severe impact on organisations with usually high numbers of foreign visitors and audiences.229

76.Since lockdown began, we and many others in the cultural sector have been warning DCMS about the challenges of resuming live performance. The £1.57 billion of support from Government will only tide the cultural sector over for so long and will not be sufficient to compensate for a loss of the Christmas season. The Cultural Renewal Taskforce has been slow to demonstrate meaningful progress. The fact it was only established two months after lockdown means valuable planning time for the return of live performance has been lost. Moreover, telling venues they can reopen with just a few days’ or weeks’ notice does not address the lead times for performance, the challenges of social distancing or the concerns about audience behaviours. To provide more certainty and allow for forward planning the Government should, no later than 1 August, publish ‘no earlier than’ dates for stage 5 of its plan to reopen performing arts venues.

77.We are concerned that innovative technology-based solutions are being explored across the theatre, sports and festivals sectors without full collaboration between them. This is exactly the issue the Cultural Renewal Taskforce was set up to address. The Cultural Renewal Taskforce must co-ordinate cross-sector work on technological solutions for mass gatherings, ensuring the sports and entertainment sectors work together, alongside NHS Test and Trace, to develop a universal, technological solution to enable the safe return of ticket holders to events.

Insurance

78.As well as highlighting problems that organisations face in making insurance claims due to Covid-19, submissions from across the music, theatre and screen sectors call on Government to back a pandemic indemnity scheme, similar to the Pool Re scheme established during the IRA bombing campaign in the City of London in the early 1990s or the Flood Re scheme, to ensure tours and productions are covered should any further Covid-19 related cancellations occur.230 This is needed because, as the Association of British Orchestras explains, “insurance companies have confirmed that due to Covid-19 exclusions, orchestras forced to cancel concerts under these circumstances will not be covered by insurance”.231 Similarly, LW Theatres states:

Every promoter, producer, and hirer of our venues has told us that they are unable to secure sufficient insurance for events/shows going forward. We need the government to back an insurance policy to enable content to reach us in the short to medium-term.232

This mirrors concerns from across the TV production industry. Trade association Pact states that “the one thing stopping all UK production from returning is the lack of liability cover”.233 While discussions on a new pandemic reinsurance scheme are under way, they will inevitably take time. To address the immediate need, Pact recommends that “Government set up a short-term fund guaranteeing to cover potential COVID-19 losses with industry also contributing to the loss were it to occur”.234

79.Government must address the urgent need for the UK’s cultural industries to be covered by adequate insurance. Without it, efforts to resume filming, touring and live performance are doomed to failure. Alongside working with the insurance industry to introduce a long-term pandemic reinsurance scheme, the Department for Digital, Culture, Media and Sport should establish an emergency fund to guarantee coverage for TV and film productions, stage productions, concerts and tours interrupted or abandoned due to Covid-19.

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