Written evidence submitted by the Royal Albert Hall

May 2020

Written evidence – impact of the coronavirus

Craig Hassall, CEO of the Royal Albert Hall on behalf of the Royal Albert Hall

Executive summary

• The Royal Albert Hall has been closed since 17 March and cannot viably reopen until government guidelines allow organised gatherings
• The current social distancing guidelines make the ongoing viability of the Royal Albert Hall impossible financially, operationally and artistically
• Without revised government guidance to replace the current social distancing measures the Hall will not be able to re-open safely
• Without government support, there is a danger that the Hall will not be able to afford to re-open to the public and may remain closed

Key Points
 

• Since it was forced to close in March 2020 the Hall has foregone over £8.5m in income and refunded over £4m worth of tickets
• The Hall has seen donated actual income of only £70k during the same period
• The Hall is an independent charity that operates without government funding, so has not been able to access any Arts Council or other funding to ease the cash flow crisis beyond the Coronavirus Jobs Retention Scheme
• In order to carry out critical compliance work on our Grade I listed building – which would have been funded through reserves – the Hall has had to apply for a CBILS loan of £5m
• All other scheduled capital works, including projects already underway, have been deferred to 2021 and beyond
• If the Hall is unable to operate fully until April 2021, it will be in deficit by £1.5m in early 2021 having taken a CBILS loan of £5m and after exhausting its reserves

Background information

1. The Royal Albert Hall turns 150 in 2021. The last time the Hall closed its doors to the public was during the Blitz.

2. The Hall’s reach is global – 1.7m annual visitors from all over the world,10m visits to the website, average attendance 88% for 391 events in the auditorium in 2019, 37 charity performances including school performances supporting the community.
    
3. The Royal Albert Hall is not able to reopen fully if social distancing measures as outlined by government currently remain in place. This evidence is being submitted to the Digital, Culture, Media & Sport Committee to highlight the devastating impact that COVID-19 has had on the entertainment sector and this world-renowned venue. 

4. The Hall hosts rock, pop and classical music concerts, theatre, dance, films, Cirque du Soleil and even boxing and tennis. Millions of people experience events in the world-famous auditorium but also through broadcasts, recordings and digital channels, while its 1,000 events in secondary spaces help to welcome a young, diverse audience.

5. The education and outreach programme provides inspiration regardless of age or background. It includes long-term cross-generational projects, schools’ matinees, family events, performances at day centres and hospices, special tours, performances and workshops for primary and secondary schools, and work with some of the biggest names in music to present unique and inspirational performance workshops.

Our financial model

6. The Royal Albert Hall operates at no cost to the public purse, sustaining income of £39m via box office, commercial income and donations, and plays a significant part in the cultural industries’ £10.8bn annual contribution to the UK economy.

7. In 2019 the Hall spent £15.2m on staff and a further £10.7m on annual maintenance of the Grade I listed building. The remaining costs are show management and production, marketing and support required to enable 1.7 million people to visit the Hall for 391 events in the auditorium and over 1,000 events in other spaces.

8. In an average year, the Hall makes a surplus of around £6.5m, all of which goes towards major capital projects to maintain and enhance our Grade I-listed building and our education and outreach programme.

9. When the Royal Albert Hall was forced to close it had cash reserves of £12.6m. All bar £3.8m of operating contingency was earmarked for capital projects. During the course of closure all the cash will have been used up to pay for operating costs and a small number of critical compliance projects to ensure safety and prevent further deterioration of the building. All other projects are being terminated or deferred.

10. Unlike many similarly sized organisations, the Royal Albert Hall receives no Arts Council England or government funding, but behaves very much like a subsidised organisation:  delivering significant public benefit through its programme of events, an education and outreach programme and an archive, and the additional  responsibility of the upkeep of the Grade I listed building.

11. Should the Hall be unable to reopen safely, projections show that it will become insolvent early in 2021 in spite of a potential CBILS loan of £5m.

Serving the nation during lockdown

12. Since closure, the Hall has established a series of concerts from artists’ homes, Royal Albert Home, which has generated almost a million views, and donations from viewers.

13. This streamed content provides a service to the nation at a time when the nation most needs cultural sustenance however the income generated from streaming content cannot replace the income generated through normal operations.

14. When we emerge from this crisis the nation will need its cultural beacons more than ever, so we have a collective responsibility to ensure that they can survive.

Impact of COVID-19

15. Events that have already been cancelled include the Olivier Awards on 5 April, the Premiere of the new James Bond film on 31 March, a week of shows in aid of Teenage Cancer Trust and a two-week run of English National Ballet’s Swan Lake. So far, 95 different events have been cancelled or postponed and the BBC Proms, which runs from July to September, have announced that only the final two weeks of the eight week season will go ahead, and these final two weeks are likely to be behind closed doors.

16. The Hall provides essential infrastructure for access to the arts and without being operational it would be unable to allow access for schools groups, for music therapy sessions or for other charities to hold fundraising events such as the annual Festival of Remembrance.

17. The Coronavirus Jobs Retention Scheme has allowed the furloughing of 80% of the staff since closure on 17 March. There has also been an application for a £5m CBILS loan facility to help through the period of closure, but the Hall will still be in a perilous financial position, with essential maintenance for our Grade I listed building not undertaken, an uncertain future for performances under social distancing guidance, potentially more than £5m of debt, and no reserves.

18. Taking on this level of debt with no reserves is not prudent financial management for a registered charity that operates on an annual break-even basis, but without undertaking the urgent safety and compliance works for which this money is required, the Hall will not be in a fit state to reopen. Meanwhile, it has been unable to fund essential repairs, building work and maintenance on the Grade I listed building for which the reserves had been earmarked.

19. All alternative means for cash-generation have been exhausted, e.g.

1. available un-restricted reserves, accrued for capital projects;
2. emergency relief asks to donors;
3. government schemes – including the utilisation of the Coronavirus Job Retention Scheme
4. CBILs loan facility

20. It is understood that Arts Council England has advanced funding to all its National Portfolio Organisations to ensure their stability and cashflow, and additionally NPOs may apply for emergency funds from a £90m pot.

21. In stark contrast, the Hall was told to apply to ACE’s Emergency Response Fund for up to £35k from a £50m pot available generally to organisations in the cultural sector who can evidence they can contribute to delivering a new ACE strategy, ‘Let’s Create’. The application to this fund was unsuccessful.

Coping with Coronavirus

22. The Royal Albert Hall welcomes the contact it now has with DCMS, and the response to the crisis in the cultural sector from parliamentarians, particularly our constituency MP, Nickie Aiken.

23. The Hall has always been at the heart of the nation and is a charity that is proudly independent of regular government funding. Its very independence is what puts it in such peril approaching its 150th anniversary in 2021.

24. The DCMS taskforce is welcome and the Hall is grateful to have been invited to join one of its sub-committees.

25. There is a concern that the taskforce itself has no representative from the music industry, which alone contributed £5.2 billion to the UK economy in 2018.

26. It is important to us that government grasps the magnitude of the issue for theatres and concert halls. Theatre contributes £112 billion to the economy each year, and 34 million people go to the theatre – more than twice the yearly attendance of the Premier League.

What are we asking for?

27. We are asking for DCMS to support the arts sector in the following ways:

• To ensure that the CJRS continues for venues that cannot reopen safely for as long as it is impossible for them to open sustainably
• Emergency investment for the cultural sector, so that when it is possible for us to re-open we are still going concerns
• To continue working with the arts sector to create a sector-wide set of guidelines that enable operational, financial and artistic logic for reopening safely without social distancing measures in place
• To support venues to equip themselves for the revised ways of working to ensure COVID-19 secure venues, and maximise public safety
• Providing necessary ongoing investment until public confidence and audiences return

28. We are determined to survive to reopen as soon as it is possible to do so within government guidelines.

29. We welcome the working groups that have been set up with DCMS for a road to reopening, and are watching with interest the London Palladium’s efforts to create a COVID-friendly theatrical experience, following the example of South Korea. This will only be possible if government’s test, track and trace system is in place and fully effective, as is hoped from June.

30. We are investigating paid-for streamed concerts; socially-distanced concerts; and options to reopen following the South Korean model. The success of any of these options will be dependent on public trust and sector-wide clarity of the guidelines, and even so we expect to see a significant drop in income over the medium to long term.

How can we repay the country?

31. We are committed to working together with DCMS on the cultural rebuild effort when the time comes. Plans for our 150th anniversary are in flux, but we hope to be able to move our anniversary launch event – a projection mapping event from Kensington Gardens, projected onto the Hall’s façade, culminating in a performance by an internationally renowned British band, from November 2020 to March 2021, 150 years to the day after the Royal Albert Hall was opened on 29 March 1871. This would be a fitting way for the nation to celebrate the value of the nation’s cultural heritage, and re-attracting visitors from the around the world.

32. The Hall, alongside its independent siblings the Old Vic, the Royal Academy and Shakespeare’s Globe, is proud to have demonstrated over many years that we are self-sufficient. If our future can be assured, we can rebuild and continue to contribute to the country’s economy and cultural life. We do not foresee, or desire, a shift towards future state dependency. We are asking for one-off support in a time of crisis.