Written evidence submitted by Tracy Brabin MP
Appendix
Creatives and the Covid-19 pandemic
Economic impacts of the current crisis on freelancers and self-employed workers in the creative industries
Introduction
“We spend our lives trying to bring happiness and entertainment to everyone else’s lives. Now we can’t do that and as such have the potential to lose everything.”
“I am a television director and have just seen the business wiped out overnight. Thousands of people, many young with no savings behind them are now facing an immediate future of no income for what could be four months or more. No warning or notice just finished”
“Self-employed workers, particularly in the arts, have no way to claim lost income or sick leave, and we have few options to continue our work remotely. The terrifying truth is that many of us are only one cancelled contract away from homelessness.”
“It feels as though the sword of Damocles is hanging over our heads. I’m awake at night wondering what in God’s name I will do if future work is cancelled and I have no income.”
“I'm not scared of Covid-19, but I'm scared of the impact it's having on our means of living.”
These are just a few of the heartbreaking comments I received when posting a call for evidence from freelancers and self-employed workers on their experiences during the Covid-19 pandemic.
There are more than five million self-employed people in the UK, accounting for over 15 per cent of the national workforce and a staggering 47 per cent of the workforce in the creative industries – the fastest growing part of our economy. From self-employed musicians to freelance sports videographers, it is the graft of these workers that keeps our world-class creative sectors going.
Unfortunately, freelancers and self-employed workers are particularly exposed to the economic impacts of the current COVID-19 pandemic. Before becoming MP for Batley and Spen in 2016, I worked as a freelance writer and actor for over thirty years, so I know full well the feast-and-famine nature of freelance creative work. Yet this situation is far more urgent and terrifying than any seasonal lull: many workers face long months ahead without a penny of new income coming in, and the lasting financial consequences could drive them out of the industry entirely.
The Government was slow to wake up to this threat. Despite calls from myself and others to urgently introduce income support for self-employed and freelance workers, the first two packages of measures brought in by the Government covered only businesses and employed workers. Finally, last week – on the 26th of March – our voice was heard, with the Chancellor announcing a package of financial relief for self-employed workers. That these measures were brought forward at all is a testament to the brilliant campaigning work of Bectu, Equity and the Musicians Union, the Creative Industries Federation, the Association of Independent Professionals and the Self-Employed, and my fellow Labour MPs including the outgoing Shadow Chancellor John McDonnell MP and leadership candidate Sir Keir Starmer.
The Chancellor did the right thing last month, but too often during this crisis freelance workers have seemed an afterthought for this Government. The report which follows is a summary of the many thousands of emails I have received from freelancers and self-employed workers in recent weeks, highlighting the challenges they are facing. While some of these issues have been adequately addressed by the Government’s support package, others remain unresolved. It is critical for the future of the creative industries – and, indeed, the UK economy as a whole – that these gaps are filled in, and my hope is for this document to serve as a crucial body of evidence for doing just that.
Tracy Brabin MP
Shadow Secretary of State for Digital, Culture, Media and Sport
Key challenges for freelancers and self-employed workers
The following section summarises the issues submitted to me in thousands of emails from freelancers and self-employed workers following my call for evidence. It is not intended to be exhaustive, but rather to serve as a broadly representative summary of the experiences of freelancers and self-employed workers in the creative industries during this crisis. The issues raised fall into four broad categories:
This account of the submissions received is primarily descriptive, with occasional commentary highlighting where Government plans may make an impact. Where relevant, I make additional recommendations for further Government support, with a more comprehensive set of next steps laid out at the end of the document.
1. Loss of income
“I am - as all artists and freelancers I know are - bracing myself for having no income from my work in the coming months.”
“I don’t have very much in savings and I’m worried about paying my rent, bills and food with no other income coming in and no sick pay.”
An overwhelming number of the submissions I received from freelancers and self-employed workers cited loss of income as their biggest concern during this crisis. With mass gatherings prohibited and almost all new creative work – including TV production – shut down, many workers are now facing the prospect of months without being able to work. It is this issue which is addressed most comprehensively by the Government’s support package, but significant gaps remain.
Freelancers on PAYE contracts
“I've worked in the film and TV industries all my life. Freelance, climbing the ladder of the camera department in TV drama and on feature films. I was always on short engagements, 1 weeks notice, PAYE.”
One issue raised in several submissions is that a substantial minority of freelancers – particularly those working in TV and film production – are not sole traders but employees who frequently move between short term PAYE contracts. Such workers are not eligible for support under the Government’s Self-Employment Income Support Scheme, as they do not fill out self-assessment tax returns. Many will not be covered by the Government’s Job Retention Scheme for employees, either, unless they were on payroll as of the 28th February 2020. Those hired after this date, or awaiting contracts due to start after this date, are not eligible for support. Some freelancers on part-time or zero-hour PAYE contracts may only be eligible for limited support through this latter scheme, and will therefore be forced to receive most of their income through the benefits system. I would urge the Government to review support for this group of freelancers as a matter of urgency.
Force majeure clauses
“The artists who are in a ‘lucky’ situation are those whose contracts include a ‘kill fee’ - a percentage of the agreed payment in the event of a cancellation, but often the kill fee does not apply in the event of force majeure.”
“As a self-employed person, if the work isn’t performed I simply don’t get paid. Both of my types of work, and payment for, can be cancelled by ‘force majeure’ cancellations.”
A large number of submissions highlighted the prevalence of force majeure clauses in contracts signed by freelancers and self-employed workers. While these clauses are often in place to protect small businesses and other organisations from unexpected and potentially catastrophic financial impacts, they can have an outsized impact on freelance and self-employed workers. The Government should ensure it includes force majeure clauses in any future review of the rights and protections afforded to freelance and self-employed workers.
Seasonal work
“I work in a seasonal industry, and make most of my money between April and September. That’s left me with no work left for the time being.”
“I work a lot in opera and the summer festivals are absolutely key for my annual income. I have a £10,000 contract with Glyndebourne for the summer, and have enormous fears about this being cancelled and not being paid.”
“I work as a football broadcaster, writing and voicing television programmes about the Premier League, Serie A, the EFL and major championships. Right now I have no paying work for the foreseeable future - and personally I think it will be next season before we get going again.”
“I am a freelance video editor in TV, my main concern is for the Euros and Olympics, which is a good 10 weeks work for me all told, and will be a serious problem if they don’t go ahead.”
Another key problem which has not yet been adequately addressed by the Government is that much of the creative sector operates on a seasonal basis. Workers in the performing arts sectors, for instance, rely heavily on income from seasonal events and in particular arts and music festivals. Sports journalists, videographers and photographers, likewise, depend on the yearly sports calender, which has now been suspended. While the Government has, rightly, focused on introducing measures to mitigate against loss of income for businesses and workers right now, the seasonal nature of these industries means that if major work projects are cancelled now they will not be resumed in many cases for another year. There is a risk, then, that many workers will continue to accumulate debt during this crisis – in the form of rent, living expenses, and deferred tax bills – which cannot be easily paid off afterwards. The Government should consider further options to help self-employed and freelance workers in highly seasonal industries, including additional flexibility in agreeing payment plans with HMRC and the possibility of tax waivers and reductions.
Older and retired workers
“I’m a 64 year old actor in the ‘WASPI’ bracket. I should have got my state pension at 60, and instead won’t receive it till I’m 66. I find it ironic that this Government seem to be concerned about my age for health concerns regarding Covid-19 but not enough to pay me my pension!”
A small number of submissions came from women born in the 1950s. The hardships experienced by many of these women as a result of the rise in the pension age has been well-documented elsewhere.[1] Submissions from 1950s-born female freelancers and self-employed workers highlighted the fact that they are less likely to have private pensions and are therefore forced to work well into their 60s. These challenges are compounded further by the current crisis, and the Government should therefore consider specific targeted relief for WASPI women who are freelancers or self-employed workers in the creative industries.
2. Families, relationships and future plans
“The current situation truly terrifies us as a family. We really are worried as to how we will manage.”
Many submissions highlighted the unique challenges faced by freelancers and self-employed workers with parental and caring responsibilities during this crisis. While some of the hardships experienced by these workers are closely linked to loss of income, there are additional factors that make their situation more complex and may require the introduction of further support measures from Government.
Pregnancy and parental leave
“My wife is 36 weeks pregnant and will be induced in 11 days. We are luckier than many of our colleagues in the promotional industry as we have some savings. My wife will begin to receive Statutory Maternity allowance from next week but this alone will barely cover our mortgage.”
“I am six weeks pregnant and so concerned that I need to continue earning income now, while I still can, as my earning potential is going to dry up later this year.”
The difficulties facing freelance and self-employed women who wish to have children has been highlighted extensively by IPSE and others, and is thought to be a contributing factor to the low ratio of women to men in the self-employed workforce.[2] Several submissions came from women whose partners are also freelance or self-employed workers, and are therefore not currently able to earn income which would supplement that lost during pregnancy. Other submissions came from workers who had planned to continue working or take on additional work in the early weeks of their pregnancy to make up for the loss of earning potential later in the year. In both such cases, the sudden loss of income caused by this crisis is a double-blow: not only hurting earning potential now but also severely harming the capacity of couples to plan effectively around their pregnancy. Finally, another group of workers were concerned that loss of work due to this crisis would make it near-impossible to accrue the 26 weeks of work needed to be eligible for Maternity Allowance.
It is abundantly clear, from these submissions, that the crisis has aggravated the already-precarious situation suffered by pregnant freelance and self-employed workers. The Government should urgently explore options for providing further financial relief to workers in this situation, and – in the longer term – review the permanent support measures available to pregnant freelancers and self-employed workers.
Childcare
“We have a two-year old son and have no idea how we will manage if his nursery closes and one of us has to stop working. The uncertainty is stressful and it’s almost impossible to prepare for every possible situation.”
“We have a two year old daughter who attends nursery – obviously we get no help to cover those costs and even if the nursery closes we will still be expected to pay for her place. If we reach a point where we have to take her out of nursery we will be expected to leave a three month notice period, which will cost several thousands of pounds.”
A number of submissions referred to the difficulty of paying for childcare, with schools shut and many nurseries still expecting payment despite closure. Submissions highlighted that freelance and self-employed workers may be more exposed to these challenges: without a regular pay-check, many will be forced to keep working remotely where possible and therefore unable to take on childcare responsibilities themselves.
Savings and future plans
“My partner and I have been living 200 miles apart for the past three years since we graduated from university. We've been trying to build a deposit and earn enough to pass affordability checks. Thanks to the problems faced with Coronavirus this will again become a distant dream.”
“I do also technically have a second emergency fund in terms of my house deposit savings…which it’s looking ever more likely I’ll have to ration out to myself.”
“My very hard earned savings I've worked so hard to save for with the hope of one day being able to put a deposit down on a property are going to have to be used up.”
While again closely linked to loss of income, the issue of long-term financial planning for couples was raised in several submissions and deserves separate treatment. It was highlighted that many freelancers and self-employed workers are being forced to dip into savings pots such as retirement and deposit funds, with severe impacts on future plans such as home-buying and having children. Most frequently cited was the depletion of these funds and the need to start saving all over again, but some submissions also voiced concerns that the temporary loss of earnings due to Covid-19 could lead to future mortgage and credit applications being rejected.
3. Sunk costs
“If the theatres are closed during the Edinburgh Fringe Festival, this could genuinely mean bankruptcy for thousands of artists, theatre makers and comedians. It costs tens of thousands of pounds to take a show to the fringe, much of which would have already been invested by now.”
“Our event insurance does not cover pandemics, so we will lose all monies and investment paid to artists, management, marketing and PR. This includes booking fees, artists flights and trains, accommodation plus advertisements, posters, social paid promotion all in the excess of about £40k.”
One issue raised by a large number of submissions was the problem of sunk costs – for example rehearsal and travel expenses, the cost of equipment, and other production expenses – which workers will not be able to recover during or after the crisis.
Equipment costs
“The company is hoping to recuperate some of the financial loss, e.g. van hire and sound equipment hire. But getting any money back looks unlikely.”
“I have just upgraded my equipment, through necessity, which has depleted my savings pot. Financially I think I can last for about three months without any further income but after that I'm in trouble.”
Workers including freelance musicians, sound and video technicians, and stage producers raised concerns that significant expenditure on hiring, buying and upgrading equipment will not be recouped during the course of this crisis and will lead to a significant shortfall. The sudden and unexpected onset of the Covid-19 pandemic meant that many workers bought, hired or upgraded their equipment – in some cases on credit – with the assumption that a full calendar of work for the months ahead would allow them to claw back the expenditure.
Rental costs for performance and rehearsal spaces
“Rehearsal spaces in London have to be booked months in advance, and it’s a common practice that the artist or performer has to front these costs. But now with events cancelled I’m not likely to get any of that money back.”
Another group of workers raising concerns about sunk costs were performers who had spend significant sums of money hiring spaces for performance or rehearsal. In ordinary times these expenses would be covered by the venue, commissioning organisation or festival after the fact, but many submissions pointed out that these payments are usually subject to force majeure clauses which leave the worker liable for costs in the event of unforeseen cancellation.
Cost of producing goods
“I run a womenswear fashion label based in Hackney. Things started to go wrong during Paris Fashion Week, with our usual 55 stockist placing orders went down to 2 orders for A/W 2020.”
While most submissions came from freelancers working in the sports, performing arts and screen sectors, a significant minority came from self-employed workers in the arts, fashion and crafts sectors. For these workers the issue of sunk costs is particularly acute, as they have in many cases been left with significant amounts of stock that they are unable to sell on due to the cancellation of arts fairs, fashions weeks and other showcase opportunities. While this stock can be sold on over the internet, or can be held back for further sale opportunities once this crisis is over, in many cases vendors are being forced to sell items at large discounts, cutting the profit margin or eliminating it entirely.
Travel costs
“Many of our artists are travelling from abroad and contractually we are still obliged to pay them should they cease to make the event due to any travel restrictions”
“I have spent money on travel and accommodation for upcoming performances but Airbnb have strict cancelling policies. When I explained the reason for my cancellation,the owner said she was also losing money and if she couldn’t re rent the apartment, I would lose my money.”
4. Long-term impacts
“To allow self employed people to claim statutory sick pay is helpful, but doesn’t fix the problem... the loss of project work is far more devastating than having to self isolate for a couple of weeks.”
Many of the remaining issues raised in submissions can be loosely termed ‘long-term impacts’ of the crisis. They include, but are not limited to: impacts on future work prospects for freelancers and self-employed workers; the breakdown of professional relationships with employers, subcontractors, and funders; and changes in the structure of the industry due to the temporary or permanent closure of venues and companies.
Future work prospects
“Many of us also look very nervously ahead to past the virus, when the economy will be suffering and music understandably will be low on people’s priorities.”
“I’m not self employed but I work for an outside broadcasting company where all staff have been temporarily laid off (unpaid) as a result of 85 per cent of our work over the next 2 weeks being postponed or cancelled due to Covid-19.”
Many workers who submitted responses voiced concerns about their future work prospects once this crisis is finally over. These centred around the loss of regular or recurrent employment opportunities, the irreplaceable nature of seasonal work as outlined above, and the likelihood of a slow and drawn out recovery for the sector and the economy as a whole.
Relationships with employers and subcontractors
“Freelance artists are at the bottom of the chain of festivals and theatres, libraries, schools and museums closing, and have no protection at all.”
“I understand that the theatres are also in a very precarious situation and risk loss of revenue, but I experienced no collaboration from the Theatre and an intransigent adherence to the contract. I have been closely associated with the Theatre for over twenty years and yet still no meaningful conversation of how we might all support each other was had.”
“The majority of my work is done without written contracts (this is not in any way unusual for this part of the industry) as such fees for cancellation are often down to individual relationships and the clients ability to pay. In this part of the sector it is very rare that a client can pay without the box office income associated with an event despite their funding.”
Several submissions highlighted the difficulty of negotiating settlements with employers, venues and subcontractors, voicing concerns that this crisis could lead to the breakdown of long-term professional relationships.
Access to other funding streams
“We’re a tiny charity with a turnover of barely £150,000 a year. We only ever JUST break even, and we run the risk that our essential but small project-based funding will be pulled by charitable trusts and foundations if we can’t deliver all of our objectives.”
A minority of submissions raised questions around funding from charitable trusts, foundations and other organisations. While this funding will in most cases continue to be disbursed throughout the crisis, concerns were raised that it could be pulled in the event of undelivered objectives. Some trusts, foundations and other grant-giving organisations will have rules governing this eventuality, allowing certain restrictions or conditions on funding to be waived, while others will not.
Venue closure
“If a lockdown is imposed, then small performance venues may find themselves forced to close permanently.”
“I’m an independent producer and joint CEO of a charity and theatre company in London. Right now we’re facing possible bankruptcy straight in the eye, and we don’t know if we can in good faith promise those artists we’ve already engaged that we’ll be able to pay them for their time.”
The ongoing and severe impact of the Covid-19 pandemic on arts and cultural venues has been well documented, and I have elsewhere raised concerns with Government about its initial approach to this problem.[3] What has been less explicitly discussed, however, is the severe impact this will have on the broader creative ecosystem which freelancers and self-employed workers depend on. Numerous submissions cited fears that venues would close permanently, decimating not only employment opportunities but also local creative supply chains.
Conclusion and further measures
The package of financial support announced by the Government last month was welcomed across the creative sector and represents a huge step forward in efforts to support freelance and self-employed workers throughout this crisis. However, as the summary above highlights, more remains to be done in order to ensure a fair and just settlement for these workers.
As a matter of urgency, the Government should:
Over the next few months, the Government should:
[1] Women Against State Pension Inequality: https://www.waspi.co.uk/
[2] IPSE, Women in Self-Employment Report: https://www.ipse.co.uk/policy/campaigns/women-in-self-employment/women-in-self-employment-report.html
[3] Letter to Rishi Sunak, 17th March 2020: https://twitter.com/TracyBrabin/status/1239971110197686277?s=20