Written Submission from Creative UK to the House of Commons Culture, Media and Sport Select Committee’s inquiry on Grassroots Music Venues

About Creative UK

1. Creative UK is an independent not-for-profit membership organisation that champions the Creative Industries and their ability to catalyse change, socially and economically. We fuel the creative sector by investing in people and businesses, empowering innovators and entrepreneurs by connecting them to each other, and with finance, business development, and skills training, to enable them to reach their full potential – without compromising their ideas.
2. Our members are based all around the UK and range from freelancers and small and medium-sized enterprises (SMEs) to providers of further and higher education, trade and representative bodies, arts and cultural organisations, heritage sites, industry powerhouses and local authorities. We also provide expert resources and financial opportunities that are tailor-made for the cultural and creative industries, offering bespoke investments, access to funding, loans, growth mentoring, policy development, industry insights and analysis through engaging with members, stakeholders and UK Government departments.  
3. Creative UK works right across the entirety of the creative and cultural industries, and this includes representation and work with members in the music and performing arts sectors.

Executive Summary

4. The UK music sector makes a significant contribution to the country’s economy – it contributed £6.7 billion (GVA) to the UK economy in 2022.[1] However, that contribution is being undermined by a lack of adequate provision for grassroots music venues (GMVs), while larger companies are reporting record profits. While efforts have been made by industry and UK Government to support GMVs, it is not enough. Creative UK supports the Music Venue Trust’s call for a levy to be added to ticket prices for gigs at larger venues and the money generated to be funnelled back to the grassroots.[2] Ensuring that the music sector maintains a system of ‘economic recycling’ will strongly benefit the talent pipeline and the sector itself. This will in turn enhance the UK’s ability to use its music sector as a soft power tool.
5. The UK Government must maintain the 75% business rates relief for GMVs. If the relief is removed, this will cause immense damage to the music sector.
6. Creative UK supports UK Music’s call[3] for the UK Government to reduce VAT rates back to 10% (from the current 20% rate) in line with much of Western Europe, the UK’s nearest competitors.

Background

7. According to the Music Venue Trust, the grassroots music sector contributed £501.1m to the UK economy in 2023 (an increase of £0.8m compared to 2022). However, the total sector expenditure was £498.6m (a decrease of £0.4m compared to 2022), leaving a profit margin of 0.5% (the profit margin for 2022 was 0.2%).[4]
8. Despite the slight increase in profit margin and overall contribution to the economy, the grassroots music sector took a battering in 2023. 125 grassroots music venues (16%) closed down over the course of the year,[5] which led to the loss of 4000 jobs, 14,500 events and 193,230 opportunities for musicians. 80 more venues are in crisis. Meanwhile, seven new arenas are being built, which will generate hundreds of millions a year.[6] This is amplified by recent reports that Electric Group – which owns large music venues in Brixton, Bristol, Sheffield and Newcastle – and entertainment giant Live Nation reported record profits in 2023.[7]
9. The grassroots music sector is renowned for being the Research & Development (R&D) wing of the wider music sector as they can act as the launchpad for artists’ careers. According to the Music Venue Trust, the Grassroots Music Sector subsidised the development of new music by £79 million in 2022 – that figure rose to £115 million in 2023.[8]

The main issues affecting grassroots music venues (GMVs)

10.       The cost-of-living crisis is one of the most significant issues directly (and indirectly) facing grassroots music venues (GMVs). GMVs have seen their energy bills sky-rocket over the last eighteen months and they have been unable to fund the rise. Artists performing at GMVs have been adversely affected by the crisis due to the higher levels of inflation in fuel and heating when they rehearse and travel between gigs. GMVs have also seen audience numbers decrease as the public face rises in energy, transport and food costs and are therefore unable to afford tickets.
11.       Economic unviability facing GMVs is compounded by disputes with landlords, who are forcing up rent and threatening to end leases (or prevent leases from renewing) if they are not paid. The Music Venue Trust has noted that rent increases are a particular pressure point, with the average rent paid by GMVs increasing by 37.5%.[9] Matchstick Piehouse, the Deptford-based venue, is destined to close as it could not come to a resolution with its landlord to stay open (despite fundraising efforts).[10] More recently, the renowned LGBTQ+ venue Heaven is facing closure following a rent increase of £320,000.[11]
12.       Furthermore, GMVs are at the mercy of business rates. According to the Music Venue Trust, the removal of the current 75% rates relief would increase costs to the sector by £15 million.[12]
13.       Some GMVs are at risk of being affected by planning applications – this can include using the building itself for another purpose, or redeveloping the wider area into residential spaces. On the latter, this can lead to a high number of noise complaints.
14.       In Spring 2022, the UK Government set the VAT on concert tickets back at 20%, following a period of reduced rates. This has meant that the UK has the third highest rate of VAT on concert ticketing in Europe, behind Denmark and Lithuania.

How industry and governments at all levels can respond

15. Creative UK supports the Music Venue Trust’s call for a levy to be added to ticket prices for gigs at larger venues and the money generated to be funnelled back to the grassroots.[13] This system of ‘economic recycling’ will strongly benefit the talent pipeline and the wider music industry, which will in turn enhance the UK’s ability to use our music sector as a soft power tool. Efforts have been made to address the widening chasm between the fortunes of the larger arenas and GMVs:

15.1.                    The UK Government pledged more than £8 million for initiatives supporting GMVs and emerging artists as part of the Creative Industries Sector Vision.[14]

15.2.                    In June 2023, the venue operator ASM Global established a partnership with the Music Venue Trust, committing to donations, marketing support and training for GMVs.[15] Popular artists have also started to support GMVs: Enter Shikari are donating £1 from every ticket sold for their February 2024 tour to the Music Venue Trust.[16] ASM Global will match the funds raised by Enter Shikari at their OVO Arena Wembley show in February 2024.[17]

15.3.                    Halifax-based The Piece Hall became the first venue to offer an option for ticket-buyers to donate to the Music Venue Trust,[18] and Swansea Arena launched a partnership with the Trust to raise £20,000 for GMVs.[19]

16. Creative UK welcomes the Chancellor of the Exchequer’s announcement in the 2023 Autumn Statement that the 75% relief to business rates for grassroots music venues will continue beyond April 2024. Creative UK urges the UK Government to keep the relief in place.
17. Creative UK calls for the UK Government to reduce VAT rates back to 10% - that was in place in the COVID-19 pandemic – in line with much of Western Europe, our nearest competitors.
18. Creative UK supports the following industry initiatives to help GMVs:

18.1.                    In June 2022, the Music Venue Trust launched its Own Our Venues scheme as a crowdfunded project – it formed part of a campaign to “take control of the freeholds of music venue premises and bring them under a protected status of benevolent ownership”.[20] In March 2023, it established Music Venue Properties,[21] a Charitable Community Benefit Society, after having raised over £2.3m in donations and investments.[22] In October 2023, Music Venue Properties made its first acquisition.[23]

18.2.                    The Musicians Union has set up the Fair Play Venue Scheme, where GMVs declare their support for the fair treatment of artists as well as their opposition to pay-to-play and unfair ticketing deals.[24] As a certified Fair Play venue, artists (and audiences) would be more likely to return, which in turn would benefit GMVs.

18.3.                    In July 2018, the Agent of Change principle entered into the UK Planning Policy Framework, following four years of campaigning by the Music Venue Trust.[25] Creative UK believes that local councils must ensure that developers continue to meet their obligations as the Agent of Change.

March 2024