Written evidence submitted by the Mercury Theatre Colchester

Re: Call for Evidence - Impact of COVID-19

I am writing on behalf of the Mercury Theatre Colchester in response to your call for evidence as to the impact of COVID-19.

The Mercury Theatre was founded in 1937 and with an annual budget of £3.9 million is the only full-time producing venue in Essex presenting a wide range of drama, music, comedy and dance attracting audiences of more than 130,000 (in addition to more than 34,000 engaged in education and outreach work).

We are currently engaged in a significant capital project to refurbish and update our theatre (£9.8 million investment). The theatre is currently closed but was due to open on the 28th September this year. The impact of COVID-19 means that we will have to delay our opening until at the earliest January 2021. The result will be the loss of income from our programme and additional capital costs to our contractor at present estimated to be at least £1,136,000 (to 31st March 2021).

Please find to follow our detailed response:

What has been the immediate impact of Covid-19 on the sector?

• Our closure means loss of box office income as well as the loss of ancillary income such as catering, bars, merchandise and hire of space.  This represents 74% of our turnover.
• Fundraised income has radically reduced: trusts/foundations are refocussing on other priorities or seeing their own decline in income for at least the next 6 months, sponsorship is under review, events have been cancelled and individual giving is dependent on audience loyalty and household finances.
• There continues to be a confusion over the place of charitable theatres e.g. the public assume we are a commercial entity or part of our local authority.
• There is significant disruption to future business as theatres like us rely on collaboration to produce shows and the whole industry has paused until further notice.  There will be significant time and cost in restarting the industry nationally.
• The lack of any certainty undermines our planning, financial decision making and contractual obligations.
• Our community and learning activity are suspended or moved online therefore hugely reducing the education, social, health and wellbeing opportunities for participants (a large majority of whom are disabled or vulnerable people).
• We have been faced with immediate unbudgeted costs of moving our staff to home working, mothballing our buildings and additional security and insurance cover.
• Our construction project has slowed down with additional costs (such as fees) and a delayed opening (therefore loss of income).
• All investment, employment and support for our freelance artists and practitioners has effectively stopped, undermining our viability and the careers of a large portion of our industry workforce and lifeblood.  New entrants to the industry are particularly hard hit (such as our apprentices, work experience students and internships/trainees). This group more than likely will not be offered training or work experience this year.
• We remain very concerned for the welfare and income of our employed staff; wages are typically low and any reductions during furlough hit hard.
• We are concerned about the potential loss of our audiences as consumer confidence has been lost. There is clear evidence that people will initially be reluctant to return.  Our efforts to grow our audiences have effectively gone backwards, undermining real success over the last decade in both growing earned income and diversifying audiences.
• To date our public funders (such as Arts Council England and Colchester Borough Council) have been very supportive but they themselves face significant financial pressures that could threaten investment in the arts and theatre in future years.
• Whilst there are many negatives challenges the pandemic has forced us and the sector as a whole to look afresh and positively at how we engage with audiences. We have recently digitally screened our panto over Easter that reached over 61,000 households (approx. 230,000 people).

How effectively has the support provided by DCMS, other Government departments and arms-length bodies addressed the sector’s needs?

• The lack of clarity on theatre closures that the Prime Minister’s first announcement was phrased as ‘advice’ caused significant confusion and potential insurance issues.
• We appreciate the challenges but there remains no timeline for any effective re-opening planning; all scenarios are purely speculative.
• The Job Retention Scheme has been a lifeline and has allowed us to save numerous jobs and retain skills (particularly needed for those of us outside London and the major cities).  Given the loss of income we face, redundancies would have been inevitable without the scheme.
• The current loan schemes are not a viable source of support for us or for the sector as they could increase debt that will be difficult to repay on typically tight margins, never mind any future downturn in box office. We have discussed a loan with our bank and they have refused as we have no assets against which to borrow.
• The rates scheme has benefited us in a small way (£10,000), but this applies just one of our seven buildings as the rateable value of the majority of our buildings is too high.
• The Arts Council has been quick to respond for the sector overall, including valuable support for freelancers and non-regularly funded organisations. 
• The support for NPOs addresses the needs of some organisations, though not for us as the initial support only covers the period to 30 September. We and many others expect our financial crisis will occur after this date. 
• It remains that the majority of Arts Council funds are allocated towards London, national and larger organisations.  There is no guarantee that the Arts Council will take into account the fragility, scale and need for smaller and more local organisations who already operate with less funding, less access to philanthropy and sponsorship, and in areas of deprivation.  The culture of philanthropy is much less developed and therefore calls for emergency giving will result in less support.
• We like others have received no commitment from Arts Council England to support construction projects that were already underway: Covid-19 is increasing our construction costs and has reduced or erased our fundraising opportunities, adding further significant financial pressure.
• The weekly newsletter from the DCMS has been very useful
• We have been pleased to see the support for Business Improvement Districts (of which we are a founder member in Colchester and have been asked to participate in their Recovery Board).
• Our membership body, UK Theatre has offered good leadership, advocacy and kept the industry informed and engaged.
• Colchester Borough Council our local authority has been very, very supportive in offering advice, advancing grant payments, and freezing rent payments to aide our cashflow.

What will the likely long-term impacts of Covid-19 be on the sector, and what support is needed to deal with those?

• Continued financial support from the Government will be essential to prevent the collapse of the industry.  Recovery will take years not months.
• The early evidence shows short to medium term loss of audiences who are reluctant to return to venues such as ours until they are assured it is safe.  Then there is the loss of quality of experience: theatre is based upon a shared live event and a poor experience will not encourage people to return.  Evidence also shows audiences are far less likely to book in advance and will want more flexible booking/refunding policies.  This will impact on our cash flow, as theatres such as ourselves rely upon advance box office sales.
• We and our colleagues will need a strong message from the Government that venues are and can be safe, and standard or a kitemark scheme is consistent across the cultural/tourism sectors and gives assurance to the public that they can and should visit.
• Social distancing is a serious financial challenge: our buildings and business models require maximum possible occupancy.  Theatres like ourselves expect to lose two thirds to three quarters of their potential occupancy to implement 2-meter distances etc.  It will not make economic sense to reopen with social distancing measures. 
• We have been heartened to have been active on the COIVID Emergency Planning Board for Colchester – Colchester One that has resulted in strong partnerships consolidating or forming. These can be built on and resources shared across the voluntary, statutory and public sector.

What lessons can be learnt from how DCMS, arms-length bodies and the sector have dealt with Covid-19?

• The sharing advice, best practice, and new ways of working across the sector enabling individuals and organisations to speak as one voice and learn from one another.
• Improved communication within the theatre industry.  If we must live with Covid-19 for some time we need information on risks, plans and issues.  Horizon scanning that would help with future preparation.
• As an organisation locally and regionally we have been seen alongside other frontline services as being part of the emergency planning and in recent weeks part of the solution (e.g. the regeneration of the town centre or social cohesion and community well-being).
• The strong initial leadership from Arts Council has been welcomed and needs to continue into longer term support.

What will the likely long-term impacts of Covdi-19 be on the sector, and what support is needed to deal with those?

• For ourselves and others there has been much more online engagement and high expectation from our audiences and users. In the future we and others will need to invest in how to record and distribute our work.
• There potentially could be more demand for outdoor work, and support towards this form of theatre which is typically a higher financial risk as audiences built their confidence before ‘coming indoors’.
• Greater understanding by local and national government as to where arts and culture are playing leading roles in community partnerships and disseminating good practice.

We would be happy to meet DCMS Officers or Members of Parliament to discuss this response further.

Should you require any further information, please do not hesitate to contact me.

We look forward to working with the department to rebuild the sector for the future.

Steve Mannix

Executive Director