• This is a submission produced by Incorporated Society of Musicians (ISM) responding to the Treasury Committee “Economic impact of Coronavirus” inquiry. This submission responds directly to the questions in the Terms of Reference and a summary can be found on pp.1-3.
About the ISM
• The ISM is the UK’s oldest professional representative body for musicians, set up in 1882 to promote the art of music and to protect the interests of all those working in the music sector. The ISM’s membership comprises approximately 10,000 members and over 150 organisations working in every part of the profession. We support our members with legal services and advice, insurances, professional development and guidance in their work as a musician.
• COVID-19 has had a devastating impact on the music industry. Performers, composers, producers, conductors, agents, teachers, academics, advisers and sound technicians have all lost a significant amount of work and income due to the short-notice cancellation of concerts, festivals and school closures.
• We are deeply appreciative of the financial packages provided by the government for the workforce and for businesses. The introduction of the Coronavirus Job Retention Scheme (“CJRS”), the Self-employment Income Support Scheme (“SEISS”), the Coronavirus Business Interruption Loan Scheme (“CBILS”), and the Bounce Back Loan Scheme (“BBLS”) have provided much-needed support for the music industry during this extremely difficult period.
• The government’s decision to extend the CJRS to October to avoid a cliff edge is extremely welcome. However, many workers in the music sector are not being furloughed, despite being eligible. The CJRS also lacks the necessary flexibility to enable music businesses to function without a sufficient workforce. To improve the CJRS, the ISM recommends that the government:
• The SEISS, whilst not comprehensive in its coverage, is a lifeline for many music professionals who are registered as self employed. However, self-employed workers are currently facing a cliff-edge drop in income at the end of the month when the SEISS ends. The reality is that until mass gatherings are reintroduced, which is likely to be the last stage of lockdown easing, musicians cannot return to work. When normal activities resume, it is also uncertain that audiences will feel confident returning to live events and venues. Therefore, it is vital that the SEISS is extended until mass gatherings are permitted.
• Alongside an extension, the SEISS must be revised in its current form. By categorising workers as either employed or self-employed, the government has failed to understand the complexities of the music industry labour market, which is a mixed economy with most musicians undertaking work which is both self-employed and employed. This has caused many musicians to fall through the cracks and not receive any financial help.
• To increase the accessibility of the SEISS, the ISM recommends that the government:
• Many musicians are relying on Universal Credit as their only source of income. However, the welfare system is not structured to support the vast number of creative practitioners who are out of work. The ISM recommends that the government provide an alternative to Universal Credit in order to cover the income gap or make the application process more responsive.
• Widespread venue closures have caused huge financial difficulties for music organisations and businesses, particularly live music venues and festivals, which have lost an entire year of trade. Organisations in receipt of public funding, such as the Arts Council’s Creative Local Growth or the National Lottery Heritage Fund, have been shielded slightly by the impact of COVID-19. However, many music venues operate entirely in the commercial space and rely on tickets sale as their main source of income. They are facing urgent cash flow challenges and imminent risk of failing.
• We are grateful for the different financial support schemes available for businesses. However, many music businesses have not accessed the CBILS because they do not meet the lending criteria, or they did not want to take on additional interest payments during this difficult period. In addition, the BBLS does not adequately support much of the music industry that will be potentially out of business for the entire year. As part of a wider package of support for creative industries, the ISM supports the UK Live Music Group’s recommendations for the government to introduce tax breaks on ticket sales, provide financial support to ensure that landlords provide rent-free periods to grassroots music venues tenants, and extend business rate relief for the entire supply chain for live music events.
Support for the creative sector
• In response to COVID-19, we have seen musicians and businesses embrace digital opportunities in an attempt to generate some sort of income. The government must support the music sector to innovate and help find financially viable models for businesses to operate under social distancing measures. However, without significant financial support from government, this will not be possible. To protect the UK creative industries from financial devastation, the ISM recommends that the government introduces an urgent sector-specific financial package – similar to the €50 billion programme in Germany.
• COVID-19 has exposed the significant shortcomings in statutory protections for the self employed. It is disappointing that many of the core recommendations in the Taylor Review have yet to be implemented. The government must use the Employment Bill outlined in the Queen's Speech as a vehicle to build a legislative framework that protects the self-employed and is tailored to the complexities of the music sector. COVID-19 has also highlighted the structural problems that exist in the industry, such as the broken royalty distribution system and the inequalities in musicians’ contracts. COVID-19 presents an opportunity for the government and the music sector to work together to address these important issues.
• Finally, the music sector cannot survive the dual threats of COVID-19 and a hard Brexit this December. Brexit has already affected musicians in many ways, such as cancelled bookings and a loss of earnings. The UK Government must recover some of the time lost to COVID-19 that would have been spent negotiating our future relationship with the EU by requesting an extension to the transition period.
Economic and cultural value of the UK’s creative industries
• Creative industries are hugely successful, generating over £111bn for the UK economy. The sector has grown twice as fast as the UK economy as a whole over the last decade and is part of a bigger creative economy, employing over three million people and generating value across supply chains.
• Music is key component of our fantastic creative industries. There are thousands of musicians working professionally in the UK: teaching music to our children at school; performing within our celebrated orchestras and at renowned concert halls; and composing the music we hear on television and in our headphones.
• UK Music’s inaugural ‘Music By Numbers’ report revealed that in 2018 the UK music industry contributed £5.2 billion to the UK economy and the total export revenue of the music industry was £2.7 billion. British artists account for one in eight albums sold around the world.
• Music plays a vital role in the UK’s soft power, which is currently ranked second in the Portland Soft Power 30 Index (2019). The UK boasts an impressive music scene that affords us a prominent cultural platform on the world stage.
• At a local level, arts and culture play an important role in the lives of people, communities and places. Music venues and local music activity help create desirable places for people to live, by building stronger communities and fostering community cohesion. Various research studies have also highlighted the local economic impact of arts and culture, including references to financial return on investment and regional economic performance.
A precarious workforce
• However, life for average musicians remains incredibly precarious. Musicians’ earnings are extremely low in relation to the level of skill they possess; they are highly skilled but not highly paid. Most musicians work as freelancers with portfolio careers, which is why it is more accurate to consider ‘earnings’ rather than ‘salary’. Recent ISM research (2019) found that 55% of ISM members who all work in the music sector earn less than £20,000. 79% of musicians earn less than £30,000.
• There are also many areas of the music sector where employment practices are questionable. According to reports from our membership, many peripatetic teachers are employed or engaged by music education hubs on basic terms and conditions or zero-hour contracts which do not provide workers with adequate sick pay. Prestigious ‘conservatoires’ also use casual worker status, with many staff working on precarious contracts.
• The ‘Good work: the Taylor review of modern working practices’ highlighted instances where individuals are misclassified as self-employed and called for greater protection to those working under more flexible work arrangements. This review concluded that there was a need to “organise our national framework around an explicit commitment to good work for all” and that the government should work towards both self-employment and employment meaning the same for both tax purposes and employment rights. This culminated at the end of last year with the publication of the government’s Good Work Plan, which they described as their “vision for the future of the UK labour market”.
• The government has passed secondary legislation giving effect to some of the commitments in the Good Work Plan, including legislation to extend to workers the right to receive a written statement of employment rights. However, because this only came into affect from April 6 (after the outbreak of COVID-19), many casual workers who have been impacted by this crisis will still not have a written statement confirming their rights. However, many of the core recommendations in the Taylor Review have yet to be implemented. It is also currently not clear how the government intends to proceed across the full range of issues as it has not yet responded to the numerous consultations on these reforms.
• The precarious and unpredictable nature of musicians’ work has also contributed towards higher levels of anxiety. Research carried out by Help Musicians UK (HMUK) revealed that those working in music may be up to three times more likely to experience depression, compared to the general public.
• Musicians work across many types of employment making them very difficult to categorise. Many musicians, including 93% of the ISM membership, undertake work which is both self-employed and employed, working with different employers or contractors and often on their own account. For example, many teach on an employed part-time basis often on zero hours contracts while also working as a performer in different settings from theatre to wedding bands. There is no typical type of musician and no two musicians will have identical portfolios of work.
• In general, contracts offer limited protection for musicians. Most musicians will receive a single performance fee, which will cover all costs associated with that performance, such as rehearsals, accommodation and travel. This means if a musician is unable to perform due to unforeseen circumstances, such as becoming ill, they will not be paid. There is also no statutory or common law definition of force majeure or a force majeure event in English Law.
• The model for royalty distribution on streaming services like Spotify and Apple Music is not fit for purpose, with an unfair division of streaming income between the streaming services and the music community, between the recording and the song rights, between the reproduction and the performing rights, and between the artist and the label. Because of this broken system, musicians rely almost entirely on revenue from ticket and merchandise sales to generate the vast majority of their income.
• Analysts have estimated that Spotify pay artists about $0.00318 per stream, which means that a rights holder would receive $3.18 (£2.74) per 1,000 streams. Not only is this universal rate very low, but it is also extremely unfair for artists who stream longer tracks, such as those in the classical sector. For example, streaming a full opera running for over three hours will generate the same income as a pop song for 3 minutes. As a result, musicians will receive a minority cut of income – commonly 15-20% – from the payment of streaming royalties. This is only after some or all of the label’s initial and ongoing costs have been paid.
• Musicians also rely on collecting societies to receive royalty incomes, with roughly half of all musicians belonging to either PPL & PRS for Music. In April, PRS for Music announced a record £174m royalty distribution to members, marking the highest ever April payment in its history. However, some have raised concerns that these collective societies impose high commission fees.
• The Ivors Academy and Musicians’ Union launched the Keep Music Alive campaign to “fix streaming” urging the government to explore necessary reforms and regulation of the industry. The ISM supports this campaign and looks forward to working with industry stakeholders to agree an equitable, sustainable and transparent model for royalty distribution in the streaming era.
Lack of public funding
• The scale of public investment in UK’s creative industries is much lower than our European neighbours. For example, the Arts Council England distributes £576.5 million of funding per year to the creative sector (for a population of 56 million). This funding pot for the whole of England (56 million population) is equivalent to Berlin’s cultural funding package via the Senate Department for Culture and Europe, which is approximately £525.7 (€600) million annually (3.8 million population).
• Many musicians are therefore not supported by public funding. For example, unlike orchestras in European countries, which receive upwards of 80 per cent of their income from public funding, the average for British orchestras is just 30 per cent. This means UK musicians are far more reliant on earned income to survive and are therefore particularly vulnerable to any loss of earnings.
Challenges for SMEs
• The music industry is also a sector that has traditionally struggled accessing mainstream finance. Research by the Creative Industries Council found that 72 per cent of creative SMEs using external funding did not have enough finance. Most music venues work on the basis of very tight margins and cashflow is therefore critical. SMEs make up a significant proportion of the music sector. According to Intuit QuickBooks, almost three in five SMEs have experienced problems with their cash flow.
• Therefore, long before COVID-19 came along, the music industry was not structured in a way that provides financial security for musicians who cannot work because of unforeseen circumstances, such as a global pandemic.
• The music workforce, including performers, composers, producers, conductors, agents, teachers, academics, advisers and sound technicians, have all lost a significant amount of work and income due to the short-notice cancellation of concerts, festivals and school closures.
• The application of force majeure (or “Act of God” clauses) in musicians’ contracts has caused significant issues. Across the world, this blunt instrument was used for coronavirus-related cancellations and musicians have lost a significant amount of income as a result. Whilst public funders, such as the Arts Council England, have honoured funding commitments, many musicians in commercial settings have received little or zero compensation for cancelled events. This includes additional costs associated with their cancelled gigs, such as rehearsals, travel and accommodation.
• In March the ISM ran a 24-hour survey to understand the immediate impact of COVID-19 on the music workforce. The results were as follows:
• In May we ran a survey of our membership, which provides a snap shot of the impact of COVID-19 during the lockdown.
• The wider self-employed workforce has also been significantly impacted. According to the LSE-CEP Survey in April, the self-employed:
• Widespread venue closures have caused huge financial difficulties for music organisations and businesses, particularly live music venues and festivals, which have lost an entire year of trade. For example, the Southbank Centre, which is the UK’s largest arts and cultural organisation, warned that it will have used up its financial reserves by September, forcing its closure until April 2021 unless it gets further government support.
• In April we conducted a survey to understand the financial impact of COVID-19 on music businesses and organisations. Of the 70 music businesses and organisations who responded:
• Comments from respondents included:
‘Our sales are close to zero as there are no performances, but we have cut basic costs substantially and hope to survive.’
‘The furlough scheme does not help music management businesses where valuable colleagues could still work productively from home - but under the scheme are being paid by the government to do nothing. Furloughing is also bad for mental health and well-being and morale - which creates extra work for the company as we are "looking after" furloughed staff.’
‘[My business] is not getting a rates holiday because it is not seen as a leisure business. I have bills to pay and no income.’
‘We are at risk of losing many music shops and associated businesses.’
‘We are a performing organisation and can't perform. We are now [looking at using our] reserves.’
‘If disruption continues past June the business will struggle to survive without significant support.’
‘Financial help for organisations in our sector feels limited and it seems likely that small organisations are going to fail.’
• Our survey findings echo data published by various organisations in the creative industries. For example, according to research carried out in April by the Creative Industries Federation:
• The Association of Independent Festivals (AIF) reported that 92 per cent of its members have said they face costs that could ruin their businesses as a result of cancelled events. In addition, the vast majority of their members (98.5 per cent) are not covered by insurance for cancellation related to COVID-19. Costs include potential refunds of up to £800m for events that were due to take place this summer across the UK festival industry at large.
• According to the UK Live Music Group, the impact of COVID-19 means that without government support the live music industry is facing:
• Section 4 of this submission seeks to answer the following questions set out in the Terms of Reference:
• Section 4A analyses the limitations of the CJRS, section 4B assesses the limitations of the SEISS, and section 4C focuses on access to Universal Credit.
• As outlined in the government’s guidance, the CJRS is “designed to help employers whose operations have been severely affected by COVID-19 to retain their employees and protect the UK economy”. We are deeply grateful for these far-reaching measures, which have provided financial support for many of our members during these very difficult times. However, there are still many musicians who are falling through the cracks.
Challenges for atypical workers
• COVID-19 has led to the closure of many places where hourly paid workers are employed. The government’s guidance confirms that employees and atypical workers on PAYE, such as casual workers, agency workers and individuals on zero hours contracts, are eligible to be furloughed. However, as stated in an answer to parliamentary question on 19 May 2020, “the scheme is not an employment right and it is up to the employer to decide who to furlough.”
• We have heard reports from our members that many atypical workers have not been furloughed so they are now facing severe hardship with no work and no pay. There has been confusion when it comes to atypical employees in relation to the updated guidance on Friday 17 April. With many casual employees working in the creative sector, there needs to be absolute clarity from government on the criteria for such workers.
• Professor Michael Ford QC and Professor Alan Bogg highlighted that there will be little economic incentive for employers and agencies to furlough casual workers as they do not have a contractual obligation to provide workers with work, and no correlative duty to pay. There are also disincentives to do so, includes their potential future liability to pay redundancy pay after undertaking a fair redundancy procedure. This issue has not been addressed by the Updated Guidance. Therefore, to be furloughed under the CJRS, precarious workers will continue to be reliant on the altruism of their employer.
• The ISM recommends that the government sends clear communications to employers reminding them that atypical workers, including casual workers, agency workers, individuals on zero hours contracts, and casual workers, are eligible to be furloughed.
Furloughing employees in educational settings
• Music professionals in educational settings are also facing difficulties when trying to claim for wages through the CJRS. As outlined in the guidance issues by the Department for Education, educational settings are supported by public funds and therefore not eligible for the CJRS. However, the guidance also states that where private income streams have either stopped or been reduced, and where certain conditions are met, it may be appropriate to furlough staff. In this instance, education providers should receive a grant from the CJRS.
• This guidance is particularly relevant for visiting music teachers working in state-funded schools and colleges who are generally paid through the parents’ fees, which are not public funds. Therefore, according to the guidance they are eligible for CJRS. However, the reality for many of our members is that they are not receiving any financial support. We also have reports of music examiners in higher education who have not been furloughed, despite meeting all of the criteria in the guidance.
• On 21 May we wrote to the Department for Education asking the government to send clear communications to education providers that atypical workers who meet these conditions are eligible for furlough payments. There is also the added complexity for visiting music teachers who also receive income through public funds via the pupil premium. It is not clear in the current guidance whether this part of their income can be furloughed. We have also asked the government for clarity on this issue.
Working for employers during furlough
• A significant challenge for the music sector is that an employee is not permitted to work for an employer by whom they have been furloughed. The Updated Guidance (published on 4 April 2020) repeats previous advice that an employee can take part in volunteer work so long as they do not provide services to or generate revenue for or on behalf of the organisation. The government has stated that the purpose of this is to prevent fraudulent claims and protect individuals from employers who could ask them to work in an effectively full-time way while only paying 80% of the wages.
• Whilst workers must be protected from unscrupulous employers, this measure is putting insurmountable strain on organisations in the music and wider arts sector that have had to furlough their staff and are now struggling to function without a sufficient workforce. It should be recognised that because of how tight the margins and cashflow are in such organisations, they simply do not have the cash to keep workers on but now they are also finding that their businesses are struggling because of a lack of key staff following furloughing.
• Other countries have put schemes in place which allow furloughed employees to continue working – even if it is just on a volunteer basis – so businesses can survive during and beyond the COVID-19 crisis. For example, The Australian JobKeeper Payment is a temporary scheme open to businesses impacted by the COVID-19, providing $1,500 per fortnight per employee for up to 6 months. This scheme supports employers to maintain their connection to their employees, enabling business to reactivate their operations quickly – without having to rehire staff – when the crisis is over. Similarly, the Canadian Emergency Wage Subsidy is a scheme to help employers avoid layoffs and rehire employees. The government will cover 75 per cent of salaries for qualifying businesses, for up to 3 months, retroactive to March 15, 2020.
• We welcome the fact that the CJRS has been extended to the end of October and staff will be able to return to work part-time from August. This will help organisations manage the very difficult situation of returning to work. However, to help arts sector businesses get back on their feet in preparation for opening, the government should allow furloughed employees to work or at the very least volunteer if they wish to for the organisation they have been furloughed from.
• Reopening an arts sector business cannot happen over night, unlike businesses in other sectors. Many music venues in the UK are listed buildings and require essential building safety to be maintained during lockdown. The marketing and programme of music events will also require long lead in times before the re-opening of venues. Arts sector businesses require diversely skilled teams just to keep the show on the road. Many employees will be worried that their venue will be at risk of permanent closure and that they will not have a job in the future so allowing employees to volunteer will help staff feel valued and less scared of their future. The creative sector is a people business and allowing furloughed workers to volunteer will be good for the business and good for the worker.
• The ISM recommends that the government allows furloughed employees to continue working or at the very least volunteer for the organisation they have been furloughed from.
Extending the SEISS
Revising the SEISS
• According to the government, the SEISS was designed to target those who need it most and would capture 95 per cent of the self-employed. However, there are significant gaps in its coverage. Despite many of the issues being raised publically and in private correspondence, the government has chosen not to plug these gaps. As a result, many musicians who desperately need support have fallen through the cracks.
• A recent survey of musicians by Help Musicians found that of those who identified as self-employed, 25% said they thought they wouldn’t be eligible for self-employed support:
• Another survey carried out by the Musicians’ Union found that two-in-five (38 per cent) of its members – the majority of whom are self-employed – have fallen short of the criteria required for the government’s assistance schemes.
(a) The 50% threshold
• As noted, there is no typical type of musician and no two musicians will have identical portfolios of work. Because of the mix of work between being employed and self-employed, the requirement for 50% of income to be from self-employment in order to be able to access 80% profits means many musicians will not be able to get financial support for self-employed work.
• The policy justification for this threshold is unclear, particularly when employees and workers paid via PAYE can be furloughed by more than one employer. Why is there an expectation that individuals whose income derives from a combination of employment and self- employment can cope with a significant drop in income more easily than employed people?
• The ISM recommends that the government lowers the threshold of income from self-employment from 50% to 25%.
(b) Calculating profits
• The taxable grant offers three months’ support, at 80% of your average monthly self-employed profit from your last three tax returns (2016-17, 2017-18, 2018-19). Dr Jane MacArthur FCA DipABRSM of Amati UK Ltd provides useful guidance and example grant calculations for musicians to follow.
• However, it can take a very long time for musicians to build up a portfolio of work and any break can impact this significantly. Many musicians are graduates or have been on maternity or sick leave in the past three years. This means their average profit will come in much lower than a typical working month and affect the payment they will receive via the SEISS.
• In contrast to the CJRS, employees will get furloughed based on their salary, not their maternity, parental or sick pay. The Chancellor urgently needs to close the loophole.
• The ISM recommends that the governments allow graduates, those who have been on sick leave or maternity leave, or those who have returned to work in the past three years to discount years that do not reflect their current position.
(c) £50,000 threshold
• A self-employed individual is not eligible to apply for support unless their trading profits are less than £50,000. Therefore, an individual with a profit of £51,000 will get no help at all, whereas someone with a profit of £49,000 will get the maximum help available.
• The government has stated that the £50,000 is designed to target those who need it most. However, in contrast, there is no cap on earnings in the eligibility criteria for the CJRS. This means a senior director earning £200,000 per annum, or any other employee, can receive a salary of £2,500 a month if furloughed under the CJRS. The government has failed to provide a satisfactory explanation for the striking difference in treatment between the employed and the self-employed.
• The ISM recommends that the government removes the £50,000 cap.
(d) The newly self-employed
• Newly self-employed musicians have been left with no financial support under the current measures. Under the SEISS, a self-employed individual cannot claim a grant unless they have submitted an Income Tax Self-Assessment tax return for the tax year 2018-19, and continued to trade in the tax year 2019-20. Therefore, to be eligible for the scheme the latest date a self-employed person can have started working would be 5 April 2019. Those who commenced self-employment in the tax year 2019-20 cannot claim support under the SEISS. In stark contrast, under the CJRS any individual who was on the employer’s payroll on or before 28 February 2020 is eligible to be furloughed.
• The HMRC may not have the capacity to handle an influx of self-assessment tax returns for 2019-20 within the next few months. However, it is not clear why special provision could not be made for those who commenced self-employment during that tax year.
• The ISM recommends that the government extends eligibility to individuals who have been self-employed for less than a year or provide equivalent meaningful support to these workers.
(e) Limited Companies
• We have also received correspondence from members in relation to businesses who operate under a Limited Company and take dividends as a source of income. Many musicians run ensembles, teaching practices and other types of micro businesses and have lost thousands of pounds’ worth of income due to COVID-19. These Directors, who make up 14% of self-employed people, are not eligible for any of the financial measures and therefore are not receiving any support from the government during this difficult period. It should be noted that many workers who fall into this category do not have a high income and desperately need help. Given that the financial support would be capped and temporary, this is extremely unfair.
• The ISM recommends that the government extends eligibility to individuals who operate under a Limited Company and take dividends as a source of income or provide equivalent meaningful support to these workers.
• For many musicians who are not eligible for financial support via the CJRS or the SEISS, Universal Credit is their only source of income. We welcome the changes made to the welfare system in response to COVID-19, such as the increase to the standard allowance for all new and existing claimants for 12 months and the removal of the minimum income floor. However, the five-week wait and other pre-existing design problems still remain. It is clear the system as a whole is not sufficiently structured to support the vast number of musicians and creative practitioners who became immediately out of work overnight.
• A flash survey (based on 2,073 responses) carried out by Help Musicians found that 67 per cent of those applying indicated they had experienced problems with the process (primarily long waits for contact, technology issues, and confusion on rules). Another survey of almost 1,800 creative freelancers carried out by the Creative Industries Federation found that only 4 per cent believed that Universal Credit would meet their basic living costs, and young people, women, and early career-starters are losing out the most.
• The ISM recommends that the government provide an alternative to Universal Credit in order to cover the income gap or make the Universal Credit application process more responsive.
• Section 5 of this submission seeks to answer the following questions set out in the Terms of Reference:
• We welcome the introduction of the CBILS in response to the urgent cash flow challenges creative industries are facing. However, many businesses are struggling to access these loans and many charities are not eligible because their trading income falls beneath the 50% threshold. On Sunday 12 April, three weeks after the launch of the scheme, the government has admitted that just 1.4% of businesses that enquired about its CBILS have so far been successful. For those who have been successful, this finance will come too late.
• We asked the music sector about their views and experiences of the CBILS. Only 26 businesses responded to our survey. This low response rate and the largely negative feedback we received would suggest that the CBILS is inadequate for the needs of the music sector.
• Based on our survey findings, 40% of businesses eligible for the CBILS submitted an application. A key reason why businesses have not applied for the loan is because they did not want to add to a difficult financial situation by taking on additional interest payments.
‘We decided not to apply for a loan as the T&Cs are too strict on payback in an unknown future.’
• For those businesses that have applied, a significant proportion of respondents reported that their experience was slow and challenging. None of the organisations we surveyed have so far been successful with their application.
‘4 weeks since applying and still no response from my bank. It has just been poor all round at every level’
‘Absolutely awful. First application was denied after approved lender withdrew from the market as Govt said they couldn't take personal guarantees.’
‘Slow and challenging, we are expected to use their "language", whilst they have no comprehension of ours!’
• For businesses waiting to hear back on the outcome their application, the majority respondents stated that this leaves them at risk of closure and/or making all their staff redundant.
‘We are currently on stop with our suppliers. Once the restrictions have been lifted we will have no way to pay the suppliers to continue trading without a loan to help cash flow temporarily’
• On 27 April the Chancellor announced the BBLS to support loans of up to £50,000 to small businesses with a 100% government-backed guarantee for lenders. The ISM welcomed the announcement, which we hoped would address some of the cash flow issues many businesses are facing. However, for much of the creative industries, particularly the live music sector, this is not a temporary shutdown of business but an entire year of income and trade that has been wiped out. Therefore, the BBLS does not adequately cover what they need to stay afloat.
• In response, the UK Live Music Group is calling for government help in a number of critical areas including:
• The ISM supports the UK Live Music Group’s recommendations for the government to introduce tax breaks on ticket sales, provide financial support to ensure that landlords provide rent-free periods to grassroots music venues tenants, and extend business rate relief for the entire supply chain for live music events.
• Section 6 of this submission seeks to answer the following question set out in the Terms of Reference:
• Section 6A outlines sector innovation and section 6B covers the need for targeted support for creative industries.
Pivoting to online performance
Embracing digital opportunities
Transitioning to remote teaching
Accessing digital technology
Exploring new business models
• However, without a vaccine, social distancing measures in large-scale venues must continue for months, potentially years. For many live music venues who operate on small profit margins, this will not be financial viable.
• Spatial and financial analysis carried out by independent journalist Zach Finkelstein shows that socially distancing a large concert hall is not financially viable without government intervention. According to his analysis, a 2,600-seat hall, under social distancing, would seat fewer than 500 people. To break-even with last year’s ticket revenue, a company would have to charge more than four times the price for a ticket. 
• Without significant financial support from government, the consequences of this could be devastating. The financial model for concerts and gigs is the same as for the theatre and is based on near-capacity audiences. Social distancing just does not work for venues financially. Another potential consequence, which we want to avoid, is concert halls raising prices, which would mean that only the wealthiest individuals could see symphonic or opera works in person. Without financial backing from government, there is also a risk that musicians’ fees or salaries could be significantly cut to account for reduced audiences and as noted previously this is not a well-paid profession.
Health and safety
• Without a vaccine, there are also significant health and safety risks for musicians and audience members. Musicians typically operate in close proximity to each other before and after rehearsals, and during performances. Singing, brass and woodwind instruments present additional risks because of the contact with the mouth and the expelling of breath. In Amsterdam 102 members of one choir fell ill, and cases have been reported in Europe, America and the UK.
Future of touring
• Working internationally – whether that involves performing, recording, teaching, collaborating or other activities – is an essential part of the profession’s ability to earn. There is not enough work available in the UK for musicians to sustain their livelihoods so they must travel abroad. Because of Brexit and the end to freedom of movement, this has become more difficult and uncertain for musicians.
• However, touring is now in jeopardy due to restrictions on visiting artists (and all travellers). For example, people arriving in France from the UK will have to self-isolate for 14 days from 8 June, which the French government announced as a reciprocal measures to the UK government recent quarantine policy. Australia and China have also imposed 14 day quarantine. Promoters in some countries, for example, Australia are now discussing inviting only locally based soloists and conductors for as far as the whole of next season.
• There is also a great level of uncertainty around when audiences might feel confident returning to live events and venues after lockdown. Indigo carried out a survey of 86,000 audience views on returning to arts events, booking tickets now and in future, and missing out on live events during lockdown. They found that only 19 per cent of the public would return to attending events just because venues reopen and 41 per cent would not consider booking for events for at least 4 months.
• The government must support the music sector to innovate and create financially viable business models. Without a signification government intervention, music venues cannot operate under social distancing measures.
• As noted, the financial support packages announced by the government have not been sufficient for the crisis facing creative industries. In response, a range of funding pots have been announced.
(a) Arts Council England
• On 24 March 2020 the Arts Council England announced a £160 million emergency response package to support individuals and organisations across the cultural sector in response to COVID-19. £20 million will be available to creative practitioners and cultural workers. To qualify, individual freelance creatives must make 50% or more of their income from creative freelance work and have delivered publicly-funded work and lost income as a result of COVID-19. Those who do not have funds to remain stable through COVID-19 can receive a grant of up to £2,500 or up to £3,000 if an individual has extra costs relating to a disability.
• We welcome this emergency funding from Arts Council England, which will help support freelance creatives through the COVID-19 crisis. However, this uses lottery reserves, which means there will be an inevitable contraction in the funding available for future projects. It is also not sufficient to meet the needs of those who work in the music sector. As this fund is for all art forms and disciplines covered by Arts Council’s usual funding programmes, only a small number of individuals and organisations will receive financial support. Most musicians will not be eligible.
(b) Local government and devolved administrations
• Local government, devolved administrations and metro mayors have also provided additional financial support to try and plug the gaps. For example:
(c) Music sector
• The music sector has also launched a number of funds to provide additional support to those who have been most impacted by the current crisis. For example, PPL recently announced that it has pledged a £700,000 contribution to hardship funds established by Help Musicians, The Musicians’ Union and AIM. The Music Venue Trust has launched a Grassroots Music Venue Crisis Fund, calling on the music industry, cultural sector and high net worth individuals to contribute towards extending our existing Emergency Response Service to safeguard the nation’s grassroots music venues.
(d) Government support
• However, these funding pots are not sufficient for an industry in crisis. A significant targeted financial investment is desperately needed to ensure the UK’s creative industries can survive during and beyond COVID-19. In Germany on March 23, the Minister of State for Culture Monika Grütters unveiled a €50 (£54 billion) aid package for artists and Cultural Businesses hit by COVID-19, which was described as a "rescue umbrella for the cultural, creative and media sector". Without a significant intervention of this sort in the UK, the cultural sector may be irreparably damaged when this crisis is over.
• On 17 April 2020, the government announced targeted financial support for England’s fishing businesses totally £10 million. The purpose of this support scheme is to meet the immediate needs of the industry by helping English fishing and aquaculture businesses with their fixed costs such as such as insurance, equipment hire and port costs. While of course fishing is important, the government should not to lose sight of how valuable the creative industries are and their extraordinary growth in recent years. As previously stated, the UK’s creative industries generate over £111bn for the UK economy – equivalent to £11.5m per hour.  By way of comparison, in 2016 the fishing industry contributed £1.4 billion to the UK economy over the course of the year.
• Early this year it was reported that the government is pressing ahead with plans for a post-Brexit festival of Great Britain and Northern Ireland, which will cost the taxpayer £120 million. We would urge the government to reinvest the funding as part of sector rescue package.
• To protect the UK creative industries from financial devastation, the ISM recommends that the government introduces an urgent sector-specific package of financial support – similar to the €50 billion programme in Germany.
Cultural Renewal taskforce
• On 20 May the government outlined the appointment of Neil Mendoza as the new Commissioner for Cultural Recovery and Renewal. As part of this announcement, the government stated that an Entertainment and Events Working Group is being created as part of the Cultural Renewal taskforce, with the aim of developing advice and guidance on the reopening of cultural venues across the nation.
• We welcome the setting up of the Task Force but would urge that there is representation from the music sector. There is currently none. Whilst musicians are experiencing similar challenges to professionals in theatre and ballet as a result of COVID-19, it is also a unique workforce. It is therefore vital that musicians have a voice on this Task Force to help shape decision-making.
• It is also important that the Entertainment and Events Working Group is evenly balanced in representation. The ISM, with its deep roots in the music world combined with its independence and strong policy work, is well-placed to make a meaningful and constructive contribution to this working group on behalf of the music profession.
• We are also concerned that local government is not represented on both the taskforce or the Entertainment and Events Working Group. Local authorities are the biggest funders of arts and culture in England and must also have an active role in strategic decision making.
• Section 7 of this submission seeks to answer the following question set out in the Terms of Reference:
• Section 7A focuses on improved protections for the self employed, section 7B covers extending the Brexit transition period and section 7C looks at other policy recommendations.
• COVID-19 has exposed the significant shortcomings in statutory protections for the self employed and the structural problems that exist in the music industry
• As noted in section 2, musicians are mainly self-employed and have limited employment protections. In the December 2019 Queen's Speech, the government announced an Employment Bill, which will give effect to many Good Work Plan recommendations. We would urge the government to use this Bill as an opportunity to ensure our legislative framework is tailored to the needs of the music sector, which operates in a mixed economy of employed and self-employed. The COVID-19 crisis has also exposed the flaws in musicians’ contracts. As part of the Employment Bill, we would like to see a statutory definition of force majeure or a force majeure event.
• The government must use the Employment Bill as a vehicle to build a legislative framework that protects the self-employed and is tailored to the complexities of the music sector.
Impact of Brexit
• Brexit is another significant challenge facing the music profession and poses a huge problem for working in the EU more widely – not just for touring, but any performance, recording, teaching or collaborative opportunity. After the transition period, when freedom of movement and the free movement of goods ends, musicians will face substantial obstacles to working in the EU.
• The ISM conducted its fifth survey on Brexit and musicians as part of the ISM’s ongoing series of Brexit reports which have taken place annually since the referendum in 2016. Respondents to our survey said that losing access to the EU market would be ‘career ending’ as there’s not enough work available in the UK to sustain a living.
• Brexit has already affected musicians in many ways, most concerning of which is cancelled bookings and the loss of future bookings, and therefore reduced earnings. 71 per cent of survey respondents reported difficulties securing work in the EU - they described a significant drop in bookings (both between the referendum and now, and bookings in the future), a pattern of contracts not being renewed, and composition commissions drying up. There is a worrying trend in the survey data about why there was such a significant drop in bookings: it appears there is increasing reluctance from EU promoters and organisers to book UK talent because UK musicians are seen as risky and there’s too much uncertainty surrounding their ability to work. Respondents to the survey described a ‘hiring chill’ towards UK musicians, and some said that adverts for auditions and jobs specifically said they were for EU nationals only. Musicians have traditionally relied on the EU for much of their income: there is simply not enough work in the UK to sustain them.
• Covid 19 has already destroyed much of the work of musicians in the UK. When taken together with the threat to the music sector posed by a hard Brexit without vital elements such as a two year multi-entry touring visa, it is difficult to see how the music industry will survive. And yet music is worth £5.2bn to the UK economy and contributes much to the UK’s soft power. There is every reason therefore for the UK government to do more to support the music industry in these difficult times.
Extending the transition period
• In the ISM’s new report, we make 10 recommendations for the government to consider in their Brexit negotiations with the EU. The most immediate is to extend the transition period for two years beyond 31 December 2020. The transition period was designed to last for two years to allow sufficient time to negotiate a new relationship with the EU and minimise financial shock to the UK economy. But this time has been eroded, first by political stalemate, which reduced the transition period to only eleven months, and then by attempts to manage the impact of COVID-19. If the music industry survives until Christmas, then the last thing it needs is a hard Brexit trading on WTO terms in January 2021 – which is a real possibility given the extremely tight deadline for Brexit negotiations as things currently stand.
• The UK Government must recover some of the time lost to Covid-19 that would have been spent negotiating our future relationship with the EU by requesting an extension to the transition period.
• The other recommendations in the report relate to mechanisms that should be introduced to enable the continuation of touring and working in the EU after the transition period. These include a two-year multi-entry touring visa of the EU, a cultural exemption to allow the temporary transportation of instruments and equipment to the EU, an expansion of the list of CITES-designated points of entry and exit to include Eurostar, Immingham and Newcastle, the continuation of the EHIC scheme and the A1 certificate for reciprocal social security contributions.
• In summary, COVID-19 has had a devastating impact on the music industry as a whole. We are deeply appreciative of the various schemes introduced by the government. However, we are particularly concerned about the SEISS, which is due to end in May and is not sufficiently tailored to meet the needs of musicians, who operate in a mixed economy undertaking work which is both self-employed and employed.
• The CJRS and the SEISS share the same essential purpose, to support members of the working population whose livelihoods have been put in peril by the collapse in economic activity caused by COVID-19. However, there are significant inequalities between these two schemes and musicians, who are predominantly self-employed, are being penalised. As a result, many musicians are falling through the cracks and not receiving financial support during this unprecedented period.
• In order to protect musicians and the industry as a whole, the government needs to immediately address many of the issues we have raised. However, the only solution to protect the music industry and wider creative sector from long-term financial devastation is a significant and targeted financial support package that is similar to the €50 billion programme in Germany. COVID-19 also presents the government with an opportunity to address many of the structural problems that exist for the self-employed workforce and the music sector. Finally, an extension to the Brexit transition period is the only sensible option to protect the position of the UK music industry.
 ISM (2019). Members Fund Survey. ISM Group
 University and College Union, Counting the costs of casualisation in higher education (June 2019) https://www.ucu.org.uk/media/10336/Counting-the-costs-of-casualisation-in-higher-education-Jun-19/pdf/ucu_casualisation_in_HE_survey_report_Jun19.pdf
 Can Music Make You Sick? Final Report and Recommendations https://static1.squarespace.com/static/5981ffde914e6bc993575278/t/59cd0c5f46c3c43c96190d82/1506610315886/CMMYS_WEB.pdf
 Jack Blundell & Stephen Machin, Self-employment in the Covid-19 crisis, A series of background briefings on the policy issues arising from the Covid-19 pandemic, A CEP Covid-19 analysis, Paper No.003
 Written PQ HL3990 asked by Lord Black of Brentwood on 05 May 2020 https://www.parliament.uk/business/publications/written-questions-answers-statements/written-question/Lords/2020-05-05/HL3986/
 Written PQ HL3987 asked by Lord Black of Brentwood on 05 May 2020 https://www.parliament.uk/business/publications/written-questions-answers-statements/written-question/Lords/2020-05-05/HL3987/
 Written PQ HL3990 asked by Lord Black of Brentwood on 05 May 2020 https://www.parliament.uk/business/publications/written-questions-answers-statements/written-question/Lords/2020-05-05/HL3990/
 See ISM 5th Annual Report (May 2020), Will Music Survive Brexit? https://www.ism.org/news/new-ism-report-brexit-transition-period-extension
 ISM 5th Annual Report (May 2020), Will Music Survive Brexit? https://www.ism.org/news/new-ism-report-brexit-transition-period-extension