Written Evidence Submitted by Selladoor Worldwide Limited

Selladoor Worldwide (“SDW”) is a touring theatre production company, producing 8-10 productions a year across the UK and globally.  The group also operates 3 regional theatres; The Landmark Ilfracombe, Queens Theatre Barnstaple and New Theatre Peterborough.

The company regularly tours British-made productions into Europe, Middle East and Asia Pacific – and have satellite offices based in Madrid and Bangkok. The company has won numerous awards for the work it produces, including The Stage International touring award in 2020.

The company has over 100 salaried colleagues, and employs annually between 400-500 freelance artists, crew, managers and company members across our productions and events.

This evidence has been composed by David Hutchinson (CEO) and Phillip Rowntree (CFO), responses relate to the DCMS’ line of questioning and headings reflect that and throughout our submissions the ‘Sector’ refers primarily to Live Theatre Performance and The Export of Live Theatre from the UK.

1. What has been the immediate impact of Covd-19 on the Sector

1.1.   Loss of Revenue, both UK and International

In 2019, 1.3 million people purchased a ticket to see a SDW show with a gross box office revenue globally of over £30M across theatre productions alone.

With the interruption of business by Covid-19 and closure of theatres - the majority of SDW productions planned for 2020 have now been postponed or cancelled until 2021 at the earliest. Excluding the potential pantomime productions at the end of the year which are currently in doubt, SDW total attendance in 2020 will have dropped to just over 42,000 patrons with a gross box office of just £950,000. That represents a 97% reduction in revenue across SDW productions in 2020 which is nothing short of devastating and means that without urgent continued government support, the operation is in jeopardy in surviving a significant period of zero income whilst burning through reserves.

With the immediate loss of revenue from mid-March across all productions and venues – and assuming that we won’t reopen across our operation until Q1 of 2021, even after taking advantage of the job retention scheme, business rate cuts and small business grants - we anticipate a deficit of £2M by end of 2020.

1.2.   Crisis of Exporting Shows Internationally

In 2019, SDW toured work to 19 foreign territories, bringing UK artists and crew across the globe as far as New Zealand, Hong Kong and Singapore to UAE, Spain, Belgium and Switzerland.

The export of quality work made in the UK and performed and produced by British artists and creatives is a major part of SDW’s business operation – and proves that the Sector is a major export Sector for the UK. However with the combined closure of theatres and mass gatherings across the UK and international territories, the closure of the aviation Sector and the significant economic impact for economies around the world – we assume it will take anywhere between 3 and 5 years for the consumer confidence in our key international markets to resume to pre-Covid levels.

This will have a major impact on a significant proportion of SDW’s business operation, and with little immediate guidance to how to safely travel a company of performers across the globe – there are significant practical challenges that will prohibit SDW exploiting its UK made work in the key international theatre markets.

1.3.   Touring – The Landscape of Bringing Shows into Venues as they Collapse

The logistics and high running costs of touring theatre across the UK has inherent challenges in any climate, but as we rebuild touring productions in a post-Covid world there are many variables and challenges that would make touring work in the UK difficult – not least how to ensure artist care and the best working practise to minimise any spread of Covid-19 between touring companies.

Given the practical implications and the consumer confidence downturn, we anticipate considerably less capital will be committed to touring production unless we can mitigate concerns around touring productions having to pause or go down temporarily due to an outbreak of Covid-19 of another phased lockdown.

Equally insurance companies will not be able to support this type of work in mitigating losses due to business interruption by Covid-19 – so the options are few on how to insure against these new risks and put work out into regional theatres.

1.4.   Venues – The Catastrophic Future of Running Regional Venues with Reduced Consumer Confidence

Whilst theatres may be able to reopen by the end of 2020 – there is currently no surety that audiences will be confident enough to return to their local theatres at pre-Covid levels. SDW are awaiting further indications from the government on how to best employ good working practises around a Covid-19 code of conduct to reassure patrons on how SDW are equipped to protect their safety.

These measure will undoubtably take time, and investment, to install in SDW’s historic buildings and there will also be a significant requirement for investing in a thorough communication campaign to reengage audiences back to theatres. All of these measures could take at least 6-9 months to take affect from the moment there is a clear date for reopening – and so urgent government support to bridge the funding gap between theatres being allowed to reopen, and achieving attendance and box office at pre-Covid levels – will be absolutely vital to prevent theatres going into administration as they simply run out of cash.

2. How effectively has the support provided by DCMS, other Governments and arms-length bodies addressed the sectors need?

An assessment of the individual schemes available are provided in detail below alongside recommendations on how schemes could be adapted to support the Sector, but in general, the financial support received during the Covid-19 Pandemic specifically with regard to SDW alone has been utilised and is a welcome support mechanism during this period of lockdown. 

But it is worth noting that these schemes currently appear to end at a fixed point or are based on the assumption that the Sector can reactivate in a relatively short period of time, this assumption is incorrect.  Additionally, SDW is only a single part of a Sector that functions and relies on its interconnectivity of performance spaces, support offices, employed colleagues, freelance colleagues and supply chain network.

To that end, the Sector is disadvantaged as a result of a one size fits all approach as currently the support available does not meet the needs of the Sector as a whole.

The majority of the support schemes, including Arts Council Emergency Grants and the Business Interruption Loan scheme have all been conceived as a lifeline for business continuity for a limited period through to the end of the summer only. As the reality of the length of business interruption/closure extends to the end of the year, the funding and support does not go far enough to avoid a sector collapse of many companies, buildings and cultural organisations and the government will need to go much further, injecting vital cash funding, job retention allowances and schemes to protect the commercial and subsidised sector from collapse.

2.1.   Coronavirus Job Retention Scheme (“CJRS”)

SDW has accessed and made applications to the CJRS.  It is acknowledged that this support has allowed SDW to retain all colleagues, both in head office and in theatres, during the lockdown period.  In general colleagues have been supportive of a reduction in salary and grateful of a certain level of income security.

Income security from the CJRS is very different to job security.  Currently the CJRS will run until October, but with alterations to the scheme from August.  It is believed there will be an expectation that employers will need to contribute to the CJRS from that point.  Given there is no possibility of organisations operating at the same capacity as pre-Covid conditions, come August it will force SDW alongside many employers to terminate non-essential colleagues during this period.  In addition, the proposed end date of the CJRS is October, long before it is believed that large public gatherings can occur and will present a cliff edge where the company’s reserves have been decimated yet income not expected to resume until 2021. This could lead to the hugely negative attrition of skills, talent and personnel across the Theatre sector which will take years to recover – long beyond the end of the pandemic.

Similarly the required financial runway in order to relaunch productions and to ready theatres for performances is longer than most other industries and the current end date of the CJRS falls way short of the likely reopening of theatre venues and the return to any form of earned income.

Recommended Alterations – Extend the CJRS to allow for the long term impact of social distancing on live performances as well as allowing certain colleagues to undertake some work whilst continuing to receive income support through the CJRS in order to ready productions and theatres for reopening.

2.2.   Self Employed Income Support Scheme (“SEISS)

Notwithstanding the complexities of such a scheme, the SEISS significantly fails a vast majority of the Sector.  Actors and Stage Managers, as well as multiple freelance colleagues working in Production, Marketing, Press and Creative, are the vast majority of the Sector and integral to delivering the work it does.

Currently the SEISS is only available until June for those who are able to access it, but the Government has failed to acknowledge the uncertain nature of employment within the Sector.  Many freelancers are required to supplement their income with part time work, often for a majority of the year.  This part time work often manifests itself in the hospitality sector which is equally as affected as the arts sector.

These key members of the Sector fall outside of both the CJRS and the SEISS and are now without a reasonable monthly income to support themselves.  The biggest concern in this regard is that the Sector will see an attrition of talent as these individuals seek alternative and more secure employment.

Recommended Alterations – Extend the SEISS both in terms of its availability, but also its scope to encompass more of the Sector.  Alternatively, permit producers who have cancelled or postponed projects to enrol freelancers onto the JRS as an employee.

2.3.   Time to Pay

Time to pay has been a great help in deferring VAT and other payments in order to preserve cashflow, we acknowledge the financial risk this exposes the Treasury to.  Again, the deferral period is based on initial expectations as to when lockdown restrictions will end.

Recommended Alterations – Extend the Time to Pay scheme in line with the lockdown and allow bespoke, longer term agreements for the repayment of deferred tax.  Similarly, provide an additional 3 months of automatic deferrals.

2.4.   Business Rates Holidays

Currently all arts venues are to benefit from 100% reduction of business rates until April 2021.  It should be acknowledged that at this point Producers and Managers will only just be beginning to deal with difficulties faced by relaunching productions and venues with limited resource.

Similarly, a large portion of the support network and supply chain operates out of offices which are not currently covered under the Business Rates Holiday.

Recommended Alterations – Extend the Business Rates Holiday to April 2022 and allow members of the Sector’s support network to be included in the relief

2.5.   Coronavirus Business Interruption Loan Scheme (“CBILS”)

While SDW has been able to access the CBILS via Barclays, this does come at an additional cost over the coming years.  SDW will need to adjust its projections and budgets in order to meet interest payments.

Similarly, many members of the Sector have had significant difficulty in accessing loans or have been denied altogether due to a lack of understanding surrounding the calculation of profitability.  Many banks utilise EBITDA as the calculation upon which affordability of a loan is calculated.  However, a significant portion of income for theatre producers is generated via the Theatre Tax Relief scheme (“TTR”), which is treated as positive taxation post-EBITDA and therefore is not properly considered by many banks in evaluating profitability

Recommended Alterations – Extend the payment of interest by the Government until such time as lockdown is fully eased on the arts sector, mandate that TTR is consider before EBITDA by banks.

2.6.   Future Fund

The future fund is largely redundant for the Sector on the basis that it is unusual that investors would receive equity in a production vehicle. 

Recommended Alterations – The Government to consider apportioning some of the Future Fund as theatrical investment to participate in commercial productions.

2.7.   Retail and Hospitality Grant Scheme

SDW has accessed two grants for two of its venues, with the third being ineligible due to the value of property, yet faces equal, if not greater financial difficulty.

Recommended Alterations – Extend the Retail and Hospitality Grant Scheme to include all venues operating within the Sector.

2.8.   Lifting of lockdown measures

Support has been overwhelmingly inadequate in this regard.  The Sector was blind-sided by the abrupt closures with no warning, it caused confusion and a lot of time, energy and financial resource was wasted as a result.

In the absence of any guidance SDW initially opted for a three month period of delay and rescheduling.  This required many man hours.  In light of the continuing lack of information from the DCMS or Government we have had to take the decision ourselves, for the sake of colleagues and audiences, to postpone all activity until the end of November.

The DCMS should be providing clarity on lockdown timetables in order to allow the Sector to respond accordingly, but to also assure that support schemes will remain available to businesses within the Sector for as long as they are unable to open at full capacity as a result lockdown and social distancing.

Recommended Alterations – Provide genuine clarity, as soon as possible, as to the Government’s timeline for easing lockdown measures for theatres, live events and large scale gatherings.  Guarantee that support schemes will remain in place on a Sector by Sector basis for those continuing to be affected by lockdown.

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

The Sector, while one of the key players in tourism, culture and therefor the economy, is likely to be one of the greatest economic casualties of the pandemic.  We consider the following to some of the key issues the sector will face moving forward.

• Attrition of talent from the Sector as key talent seek to secure long term employment outside of the Sector.  Especially key talent from lower earning backgrounds without the financial backing to continue in the Sector.
• Long term financial insecurity for producers and venues as a result of delayed productions and programming, with many organisations suffering acute financial difficulty in the short term.  Many regional venues and smaller producers rely on a consistency of product in order to afford overheads and staffing costs.  With delayed productions and limited product there is a significant risk that producers and venues, specifically regional producers and venues, will be forced to endure a prolonged period of darkness or to be closed all together.
• Reduction in theatrical investment as a result of heightened risk of financial loss due to potential additional peaks in the virus or due to audience attrition resulting in poor ticket sales.  This will particularly impact new and emerging talent and productions already perceived as particularly high risk.
• Reduction in available product with many producers and theatres finding ongoing operations increasingly unviable the knock on effect to venues would result in prolonged closures and significantly reduced employment and turnover.
• Reduction in profitability and taxable revenues are a natural occurrence following the shrinking of an Sector.  Given the annual contribution made by the Sector will have a significant impact on the Sector.
• Reduction in international exports due to ongoing restrictions on international travel.  Many UK producers export work all round the world and in the light international restrictions would be unable to do.

In order to support the Sector moving forward the Government need to commit to supporting the Sector in the ways laid out previously.

• Commit to the ongoing extension of support schemes for as long as the sector remains unable to fully reopen as a result of social distancing.
• Provide a detailed roadmap as to the steps the Government anticipates following as we emerge from the lockdown in greater detail than has already been discussed and offer bespoke guidance to the theatre Sector.
• Expand business rates relief into 2022 and include non-public facing buildings that support the Sector.
• Include all theatres, regardless of rateable value, in the Retail and Hospitality Grant scheme.
• Ensure freelance members of the Sector, currently falling through the cracks, are supported during this pandemic, to ensure a world leading Sector remains post lockdown.
• Adapt the Future Fund, or other suitable fund, to allow the Government to Invest in Theatrical Productions moving forward.

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

The sector has proven itself, in spite of historic undervaluing of its value to the economy and cultural capital to the country by Government – including the disregard shown in light of the current pandemic – to be united and strong.  But’s its resilience can only be measured by its ability to plan.  The sector has at all times acted responsibly and should be commended for its commitment to colleague and customer care.

The DCMS has not provided any real clarity on how the sector is to survive and ultimately thrive during this Pandemic and as such the sector has been largely left to flounder while it finds its own way.  Key lessons to be learnt by the DCMS in SDW’s opinion are as follows.

• Provide advance warning of significant measure that continue to impede the sector.
• Provide clear, concise and regular information with regard to the road map for easing lockdown.
• Work with sector to develop policies that allow the safe reopening of sector in full.
• Understand that while the sector is able to adapt to new ways of working the required investment in order to facilitate this will be significant.

5. How Might the Sector Evolve after Covid-19 and how can the DCMS Support Such Innovation to Deal with Future Challenges?

Undoubtably the Sector will have to collaborate on an even higher level post Covid-19 as there will undoubtably be a number of casualties including theatre buildings, artists and organisations who have already had irreparable business damage as a result of Covid-19.

The importance of being able to monetise productions and work as widely as possible will be key and ensuring there is a viable touring circuit both in the UK and Internationally will be critical for buildings to be able to realise an earned income outside of their walls.

Co-funded productions, and closer partnerships between the subsidised and commercial sectors will be key in order to build sustainable lives for good quality work with less capital available in the market. There are of course ways of innovating how to reach audiences – and the digital potential that Covid-19 has highlighted for our sector – but the core of the work generated by the Sector is in auditoriums, within a close proximity to audiences – and that fundamental won’t change regardless of other platforms that the work might diversify out to.

Appendices

Schedule of Estimated Gross Turnover Lost as a Result of Postponement or Cancellation due to Covid-19

The following table show summary information of the gross turnover lost or deferred as a result of Covid-19

Productions

Venues