Written evidence submitted by The Association of Independent Festivals (AIF), The Association of Festival Organisers (AFO) and the British Arts Festivals Association (BAFA)
Submission to House of Commons DCMS Select Committee Inquiry on Impact of COVID-19 on DCMS Sectors
The UK festivals sector encompasses a broad variety of events, including indoor multi-venue arts festivals, street and free events, outdoor festivals, those focusing on one artform and those embracing a range of disciplines. This diverse, vibrant sector celebrates and refreshes our communities and our sense of place, plays a key role in developing and supporting artistic development, and is uniquely able to reach audiences and connect people.
Our festivals are world renowned and play a huge role in the cultural life of the UK, making a significant contribution not only to the UK’s economy and artistic ecology but also to community cohesion, regeneration and development, education, social justice, wellbeing, mental and physical health.
The festivals sector is a major player in the UK economy: the music festivals sector alone welcomes audiences of 4.9 million according to UK Music’s 2019 report, Music by Numbers – this is the fastest growing sector for audience attendance and festivals represent £6bn of a £70bn events industry, according to the 2020 UK Events Report by Business Visits & Events Partnership (BVEP).
Here, in this evidence requested by DCMS, we bring together three of the largest and most respected festival associations: AIF (Association of Independent Festivals), AFO (Association of Festival Organisers), and BAFA (British Arts Festivals Association). Each organisation has written its own paper to demonstrate the diversity of our festival members which cover a wide range of festivals and events. Together, they promote rock and pop music, literature, classical music, street arts, jazz, folk, visual arts, roots, comedy, world music, spoken word, choirs, craft, community arts, education and participation, and many other genres.
We believe that no other cultural sector has been more impacted by Covid-19 than the festivals sector. The festivals sector was the first to be affected by the pandemic and will be the last to emerge from it. Our sector is diverse and distinct, and our work is often invisible but has a huge impact on the cultural fabric of the UK. AIF, AFO and BAFA are coming together for the first time to ask that festivals are recognised and prioritised for support by government to ensure that this sector is able to survive the pandemic and continue to be the lifeblood of the many communities and audiences that they serve, as well as the vital role they play in supporting performers and artists, suppliers, venues and the broader tourism industry.
Our data reinforces the excellent return on investment that festivals make, not just economically but socially and culturally; we contribute a huge amount to the UK on a relatively small investment, and without us, many other sectors will simply struggle to survive.
Many of the points raised are common to us all, with others being genre specific. Of the estimated 975 festivals held in the UK each year, these three associations represent approximately 258 festivals (26%), representing a reasonable sample of festival activity in the UK. It should be noted that 975 is a conservative estimate derived from listings on www.efestivals.com and predominantly made up of music festivals.
Given that many of the festivals outside of our collective membership are unlikely to be members of trade bodies, it is even more important that we speak for the sector through this submission.
The three associations have also made some collective key recommendations to Government at the end of this submission.
This sector overview and the recommendations combined should be regarded as a summary of this submission.
Status 11th June 2020
Introduction- The Association of Independent Festivals (AIF)
- The Association of Independent Festivals (AIF) is a leading national trade association representing the interests of over 65 festivals across the UK. Our members range from 500-77,000 capacity and have a collective licensed capacity of over 820,000. According to our ten-year report published in 2018, our members generate an estimated £386m for the UK economy each year with almost 10% of that spend going to businesses based around each festival’s site.
- In a wider context, according to UK Music’s ‘Music by numbers’ report published in 2019, a total of 4.9m people attended a UK festival in 2018 (compared to 2.7m in 2012). The UK live music sector’s contribution to the economy grew to £1.1bn in 2018 (a 10% rise on 2017) and a total of 30, 529 people were employed in the live music sector in 2018, a rise of 7% on 2017.  30 million fans attended concerts and festivals in this year and 11.2m music tourists attended a live music event, which contributed £4.5bn to the UK economy.
- Clearly, UK festivals are world renowned, an intrinsic part of British culture and make a significant contribution to the economy.
• What has been the immediate impact of Covid-19 on the sector?
- The immediate impact of Covid-19 on the independent festival sector has been profound and far reaching. The overwhelming majority of festivals are not covered by communicable disease insurance as it is a standard exclusion in cancellation policies. This includes 98.5% of AIF members. Even if an organiser did have this specific extension in place, insurance underwriters were swift in making a global exception to this in January, meaning that even if you had such cover and the cancellation of your event is connected to COVID-19, they cannot make a claim even in the event of a Government imposed quarantines or restrictions.
- At the beginning of March, member festivals had already accumulated ‘sunk costs’ ranging from £20,000 to £1.7m with an average of £375,000 across 60 responses. Due to the insurance situation described above, these costs are not recoupable.
- Based on over 30 case studies we have shared with DCMS and the Treasury 92% of festival organisers have said that their firms are at immediate risk, with the effects of COVID-19 likely to result in business collapse under refund requests.
- All liquidity in the market ceased within 5-7 days of the lockdown. According to further member data, revenue dropped by 92% year on year within 14 days. Festival sales flatlined, with members reporting a 65.81% reduction in ticket sales as of 19th March. Subsequently, sales have almost completely ceased.
- The majority of AIF members are single event seasonal festival companies and its predicted that at least 90% of UK festivals will not take place this calendar year. A fundamental point we have repeatedly made to Government is that that seasonal businesses such as festivals will need ongoing support once lockdown ends and restrictions are eased. These businesses have lost an entire year of trade and income due to the Covid-19 crisis, rather than experiencing a temporary shutdown. They were amongst the first sectors to be affected and realistically will be the last to emerge from the crisis. The effect has been nothing short of catastrophic to festivals and the surrounding supply chain.
- A recent member employment survey detailed below has also revealed that the sector could be facing redundancies of 59% on average and will lose over half of its skilled workforce between September 2020 and February 2021 without support.
The headline results of the survey are:
- AIF members have an average of 16 employees (across a range of between 1-53).
- An average of 62% of AIF member employees are currently furloughed (as of 1st May)
- If the furlough system continued, members predict that an average of 62% of staff would remain furloughed on 1st September.
- If the furlough system continued, members predict that an average of 52% of staff would be furloughed on 31st December 2020.
- If the furlough system continued, members predict that an average of 24% of staff would be furloughed on 28th February 2021.
- Based on the present level of Government support, members will need to make 59% of their staff redundant on average between September 2020 and February 2021.
- Extrapolating out to the rest of the sector (To an estimated 975 festivals in the UK), the total job losses can be roughly estimated at over 9,000 (9204).
- These figures illustrate the cyclical, seasonal nature of the business, with the planning and sales cycle for festivals essentially resuming in February 2021. The upshot is that without Government support, the sector will lose more than half of its skilled workforce between September 2020 and February 2021.
- This will seriously inhibit the ability of these businesses to run events in 2021, as demonstrated by some of the comments in the survey including this quote: “We would make redundancies at the end of August if the scheme ended then. The only way we could avoid them was if the scheme extended to the end of October. It will severely inhibit our ability to work effectively when we do have shows again, because we will have had to let go experienced staff and be working with a reduced team till we are confident that our income is such that we are able to start to run recruitment again”
- With average employees of 16, the total estimated number of AIF member teams is only 1040 people. For many festivals, there are a small number of directors at the core with a very minimal 'take-home', usually supported by dividends, which won't be possible this year. These core people ultimately put the wheels in motion for several millions of pounds in ticket sales invested directly into artists/subcontractors and employing literally thousands of companies and individuals on a temp/seasonal basis. It would be a small investment for Government to support this sector through the winter, taking into account the amount of revenue generated annually.
• How effectively has the support provided by DCMS, other Government departments and arms-length bodies addressed the sector’s needs?
- Firstly, we welcome the positive dialogue and engagement with Civil Servants at the Department for Digital, Culture, Media & Sport, who have been willing to engage with us since the start of the crisis. This has included weekly catch up calls and frequent email dialogue. AIF has also been invited to dial into numerous calls with DCMS Ministers. DCMS officials have escalated our concerns appropriately and communicated follow up questions from other Government Departments such as Her Majesty’s Treasury.
- Despite this positive engagement, there is a sense that once issues have been escalated to Ministerial level, Government has not taken meaningful action to protect our sector and has not made any sector specific interventions. An example of this is consumer refunds- we presented case studies to DCMS and HMT illustrating that the festival business is facing an immediate cashflow crisis and businesses will collapse as a result of imminent refund requests, estimated across the industry at £800m. With ticketing companies ceasing to advance sales, cashflow became a serious issue very quickly. This will affect not only the majority of AIF members but a high percentage of festivals in the UK and other affected parts of the cultural sector such as national promoters and theatre productions.
- We believed that a temporary legal extension to refund period was also the most simplistic solution- it buys time and will alleviate the cashflow crisis across the sector. A key argument is that alongside maintaining the liquidity of live music business, this is also about consumer protection- if businesses collapse under refund requests (our most recent members survey presented to the Treasury suggests that 92% will) then customer refunds are also in serious jeopardy.
- There are clear precedents for this elsewhere in Europe. For example, in Germany, if a customer purchased a ticket before March 8th this year the legal refund window is essentially being extended to 31.12.2021. In the Netherlands, Dutch theatres, concert halls, pop venues, event and sports organisers, museums and festivals have jointly asked visitors to keep their tickets in order to support the cultural sector. The sector has jointly developed a scheme, with the support of the Ministry of Education, Culture and Science and in accordance with the rules of the ACM (Netherlands Authority for Consumers and Markets). 
- This was an industry wide ask and the eventual response from Government on this, stating that “The Government is not currently minded to change legislation to extend any refund window (as we discussed, there would be a number of difficult challenges for this to happen) nor endorse a voluntary voucher scheme - however, the Government does acknowledge the sector's efforts to share evidence and would encourage the industry to continue feeding in evidence on potential bankruptcies and any issues faced by your membership in accessing the financial support available. The Government continues to monitor the situation closely and will continue to review this situation regularly” was perfunctory at best considering it was the culmination of eight weeks of discussion and presenting data and evidence.
- There is no safety net for independent festival businesses, many of which have also fallen between the cracks of current government support measures such as loans and grants.
Issues with Government grants scheme announced for the retail, hospitality and leisure sector:
- There has been a lack of clarity regarding festival eligibility for these grants. DCMS confirmed in an email on 19th March that festival sites that take place on rateable sites are eligible for the business rates holiday, which suggests they are in fact classed as part of the ‘hospitality and leisure sector’ for this purpose. However, specific criteria of the grant for businesses that pay little or no business rates is that the applicant must be a “business the occupies property”, meaning that festivals appear to be excluded by definition. A further issue is that many festivals who pay business rates do so to the landowner, who is technically liable to pay them and passes the cost along to the festival operator contractually- meaning the landowner is eligible for the grant as opposed to the festival organiser.
- We have urged Government to categorically include festivals who pay business rates in this definition to remove ambiguity and provide some clarity to local authorities dealing with grant applications. This would have been a simple solution but has not been implemented.
- We welcome the announcement of the Local Authority discretionary grants fund, however with applications currently not open for this, it is too early to provide feedback.
Issues with Coronavirus Business Interruption Loan Scheme (CBILS):
- In AIF’s frequent discussions with DCMS, we have highlighted the key problems with these loans and festivals. In summary, the loan application must be “a borrowing proposal which, were it not for the current pandemic, would be considered viable by the lender”.  Due to the high-risk nature of festivals and the point in the financial cycle that this occurred, many of them will simply not meet the criteria. They had invested significantly in talent and infrastructure deposits, marketing, promotion and staffing costs yet typically do the majority of sales between April- June.
- The key issue for single event festival companies is that the size of loans required in some cases is not being considered viable by banks in the context of ability to repay even based on the assumption they return to previous performance levels. Festivals are a high-risk business and profit / loss can vary greatly from year to year based on numerous factors so previous annual accounts will frankly not always present the picture of a viable business by this definition.
- While it is positive that adjustments have been made so that any director who secures a £250k loan will not have to sign a personal guarantee under the Coronavirus Business Interruption Loan Scheme, due to the application of criteria that would apply in usual circumstances and the timeframe in receiving a loan, these loans are simply not fit for purpose for festivals and unlikely to be accessed by the overwhelming majority of the sector. At present, 1.5% of AIF members have been able to access CBILS.
- Furthermore- in late April, the eligibility criteria for scheme was amended by the British Business Bank to comply with the European state aid rules. The adoption of the EU definition of 'undertakings in difficulty’ is defined as “As at 31 December 2019, has a business lost more than half of its subscribed share capital (including share premium), as a result of accumulated losses”.
- This causes a problem for festival companies, some of whom are financed principally by long-term debt provided by shareholders as they grow. In addition, the share capital for many festival companies is literally the cost of setting up the company and many will have lost more than half of this in the course of running a seasonal business with varying profit / loss levels over several years. The revised eligibility criteria effectively prevents any debt funded business from applying for a CBILs loan.
- Bounce back loans: Unfortunately, with sunk costs averaging £375,000, these loans capped at £50k are largely insufficient given the sunk costs, expected impact of refunds and cashflow shortfall as previously illustrated though some smaller festivals may seek to access these. There are also reports of banks taking a long time to respond and turnaround these loans, which is counter productive to their purpose.
- Coronavirus Job retention Scheme (JRS): This has proved to be a vital tool that has protected jobs from redundancy, and it must be extended until such time as each sector emerges from crisis. AIF members have an average of 16 staff, 62% were furloughed at the beginning of May. As illustrated above, ending the JRS scheme once lockdown restrictions are eased but before the sector can effectively recover will lead to over 9,000 redundancies.
- There has been limited support for the extensive workforce that supports festivals. A workforce audit into festival and live event conducted by the Bristol Festivals network identified that 40% are freelance/sole traders and were therefore unable to benefit from the SEISS.
• What will the likely long-term impacts of Covid-19 be on the sector, and what support is needed to deal with those?
- To reiterate our fundamental point- single event festival companies are seasonal businesses. They need urgent support now and ongoing support after lockdown ends and restrictions are eased. This is not a temporary shutdown of business - it is an entire year of income and trade wiped out. If support is not offered throughout the autumn, then the sector will face widespread job losses that will seriously inhibit its ability to deliver events in 2021.
- Our focus primarily needs to be on 2021 and ensuring that members can get to the planning and sales cycle of next year with appropriate support to be able to cashflow and avoid widespread job losses across the sector having experienced a complete loss of trade and income for a year rather than a temporary shutdown of business. Unfortunately, some job losses will be inevitable due to the impact of COVID-19 but we ask that Government introduces measures to minimise the impact on individuals and businesses:
- In addition, Government should consider the overall impact on the market. If independent festival businesses become vulnerable to collapse, it may increase acquisitions and further consolidation across the festival and concert sector. This would in turn further concentrate power and ownership of the supply chain into the hands of major transnational companies.
- This specific concern was cited in France’s recently published emergency plan to save the cultural sector which states: "The goal is that small festivals can benefit from (these state backed loans), to avoid them being bought by big actors and structures”. 
- AIF publishes annual festival ownership maps, in 2019 highlighting that just under 30% of UK festivals over 5,000 capacity are owner or controlled by two US headquartered transnational companies, Live Nation and AEG Live, with Live Nation controlling 22.81% of the sector. https://aiforg.com/aif-publishes-updated-uk-festival-ownership-map-for-2019/
- In the wider context, a MINTEL report published in 2017 showed that Live Nation owned 47% of the overall festivals and music concert market in the UK. SJM concerts is its closest competitor with approximately 25% market share. However, as we’ve previously pointed out to the CMA, it’s an established fact that these two companies are strategically aligned as opposed to being in competition in the traditional sense, a situation that further increases the concentration of power in the live music industry resulting in two companies that are closely aligned controlling 72% of the market. For the sake of its future health and diversity its vital that the UK’s live music sector remains open and competitive as it enables new artists to break through, and entrepreneurs to operate in a climate where they can launch fresh and exciting events.
- The live music sector is fiercely competitive, but the data we’ve published to date rings numerous alarm bells - highlighting that a single transnational corporation is fast-headed towards widespread dominance. For independent festival operators and indeed the entire live music market, a Live Nation monopoly would quite simply be a stranglehold with profound and serious consequences and the effects of the Covid-19 crisis could easily exacerbate this.
• What lessons can be learnt from how DCMS, arms-length bodies and the sector have dealt with Covid-19?
- We recognise the clear need for public health interventions during this pandemic and we are completely supportive of their impact on public safety. It is crucial that as restrictions are eased that they are done so with as much clarity as possible for businesses so they can prepare. For example, in the initial announcement, the Prime Minister stated that Government “would no longer be supporting” mass gatherings with emergency workers without formally imposing a formal ban on large gatherings. This caused widespread confusion and rendered these events unable to take place and effectively uphold their licensing objectives around public safety. In addition, the Government has published a detailed recovery plan on 10th May but this this does not mention large organised gatherings at all.
- The approach has betrayed a general lack of understanding our sector and the long-term impact. The festival / events sector is often considered alongside Hospitality and/or the Meetings, Incentives, Conventions and Exhibitions (MICE) sector, both of which have very different considerations and undoubtedly will have a quicker recovery cycle. It would be useful to have a sector specific lead for live music events within DCMS. There was a sense that it was the same representatives from theatre, film and other sectors on the weekly ministerial calls with not much rotation and the entire music industry (including live) covered by UK Music in a five minute update. This isn’t sufficient considering the size and impact of the industry.
- We urge the Government to fully involve industry in the development of an exit strategy and to be clear and precise about when festivals can return, in order that operators can properly plan a recovery.
- The establishment of a cultural renewal task force and the invitation for AIF sit on the entertainment and events sub-group is positive. We need an ‘industry led, Government endorsed’ strategy to restore public confidence and work towards ensuring that festivals can safely return in 2021 in a way that is logistically and economically viable.
- It is worth noting that other countries have been aggressive in supporting their cultural and live entertainment sectors. The Netherlands and Switzerland have respectively announced £261 million and £227 million funds targeting support to their cultural sectors. In addition, the French government recently pledged a further €50 million to support the country’s music industry, as well as establishing a ‘festival fund’ to assist events forced to cancel by the Covid-19 pandemic.
• How might the sector evolve after Covid-19, and how can DCMS support such innovation to deal with future challenges?
- Ultimately, the festival sector is principally defined by mitigation of risk and innovation. The industry will need to innovate and look at futureproofing, including what realistic controls can be adapted to make the public feel safe but also what’s “reasonably practicable”.
- There are numerous issues to consider around festivals and social distancing measures. For example, it would be extremely difficult to avoid crowding around stages as well as during entry and egress, even if the site had sufficient space for social distancing. With the costs of infrastructure and artists fees, these events operate on extremely tight margins which means that it would not be feasible for most festivals to reduce capacity to allow for social distancing and still deliver a viable event. It is also questionable whether the levels of security/marshalling that would be needed would be acceptable to the audiences, assuming that the numbers of Security Industry Authority (SIA) approved staff were even available. Entry and egress from such events would pose particular problems as it would be almost impossible to manage a staggered entry approach for an event with for example 20,000+ people attending. There is equally concern that an emergency evacuation would be extremely challenging with social distancing measures in place- and therefore festivals could not feasibly uphold licensing conditions related to public safety.
- We can operationally adapt, and festivals can be testbeds for how this is potentially mitigated- whether through pre-testing or onsite testing facilities and / or systems verifying vaccination tied to ticketing processes, assuming that a vaccine will be developed and widely available before summer 2021. However, without parameters, timelines and top-level guidance from Government, it is extremely difficult to present plans. We welcome the opportunity to discuss these issues in further depth soon as part of the entertainment and events sub-group.
- This submission was prepared by AIF Chief Executive Paul Reed in consultation with the AIF membership.
AFO evidence to DCMS collated and prepared during May 2020
The Association of Festival Organisers (AFO), was created in 1987 when six festival organisers came together to share information and knowledge with the principle purpose, as it still stands, of improving the festival industry.
Now representing 120 festivals mostly of music and most of those in the acoustic music, folk, roots and world music scene with a small number of rock and pop, jazz and community arts.
Covid-19 has clearly had a devastating effect on the industry in general and in consultation with our sister organisations AIF and BAFA, we have brought together reports and evidence to the DCMS questions.
Immediate Impact of the COVID-19 Lockdown
The cancellation of 81% (97 festivals) from the AFO membership has decimated our corner of the events industry. The majority of our members festivals are run either by volunteers or self-employed and are invariably for the benefit of local and national charities. Apart from the overwhelming costs involved in cancellation, the charities themselves will also feel the impact of the whole summer’s cancellation before the end of the year.
In addition, AFO is already losing membership income from those who have cancelled their events and so do not have funds to renew their membership. This in turn could leave AFO in serious financial difficulties.
Support provided by DCMS
The support that DCMS have offered has had very little impact on AFO or its members as most are either run by volunteers or self-employed small companies. The expense already paid out for the 2020 season is gone in deposits to contractors or artists, and in many cases, wages to the temporary and full-time staff, along with general running costs and expenses.
The ticket agencies used have halted payments to the events, so cash flow has stopped along with ticket sales. There appears to be no funding schemes available in the government packages or advice from DCMS that will fit this situation.
Where many other businesses in the UK economy will restart as soon as the restrictions are safe to lift, our festivals are annual events and mostly in the open air. Our next period of business is more than one year away. It could best be described as trying to survive three winters, 2019/20 and then this COVID closed down. Followed by the winter of 2020/21 before any income comes around April 21.
Our business is hand to mouth and has an economy to survive one year at a time before the next event comes online. For some festivals it will be a tough two-year period, for others it will be the end of the road. There are reportedly at least 5% of our membership declaring they will not be back.
I believe it will take 2/3 years for this area of charitable and valuable socio-economic events to recover this. In turn it will have a major impact on the local economies, jobs, and charities normally served.
Our industry WILL return eventually and learn for both the planning and artistic areas of their work, as well as reviewing what constitutes cancellation in the eyes of the insurance world. Clearly COVID or similar epidemics will not be covered by cancellation insurance.
Lessons to learn (see also above)
We need to engage more with DCMS and other authorities so that they may better understand our place in both the entertainments industry and the management of community arts events and festivals. The economic value of festivals in the context of outdoor events is best described in research carried out by the Events Industry Forum (EIF), and can be viewed at https://www.eventsindustryforum.co.uk/index.php/contributing-billions-to-the-uk-economy
How will festivals evolve after COVID-19?
I believe our festivals and events will return, some in 2021, others will collapse and in time be replaced by new events. However, I also believe the industry and its customers will be very nervous for many years with suppliers needing large non-refund deposits and organisers needing more security of their own income and funding support. The grassroots world of festivals is not the giant corporation that gets the TV coverage and yet represents what is estimated to be at least 975 festivals and events.
In turn, provides the breeding ground for new artists, traders, marketeers, and organisers who put the heart into the communities in which they work.
DCMS could assist in some areas
Business rates are levied on some festival sites for the short period they are occupying i.e. the sites on rental from perhaps a landowner or farmer (who clearly is the one paying the rate and passing the cost onto the festival). This action is relatively new in recent years but is increasing throughout the industry. A halt on this on grounds that most of the festivals AFO represents are bringing social involvement, finance into their economy and jobs for locals. In short, they bring the boost in quality-of-life for the community in which they work.
Stop charging business rates as an unfair tax on an industry that provides or pays for its own police, fire safety, medical provision, health and safety, waste disposal and traffic control. This leads to the question, what is this business rate actually for?
DCMS could also play a part in encouraging local authorities to carry forward any licence fees paid for the 2020 season onwards to the 2021 season without any further expense or charges.
Finally, DCMS could support the grassroots of this festival industry in their recovery with verbal, published, and where possible financial backup and demonstrate the government’s agreement that the outdoor events industry in all of its forms are of vital importance to national pride, tourism, economics, and the UK’s way of life.
From research conducted by AFO in May 2000 of the 120 AFO festival members 97 festivals cancelled their 2020 season (81%) 23 have already happened in early-season or are hoping to happen in September/October.
The costs of cancelling their events varies from: 19% will have lost nought to £1,000
13% will have lost £1,000 - £2,000
13% will have lost £2,000 - £5,000
25% will have lost £5,000 - £10,1000 6% will have lost £10,000 - £15,000 13% will have lost £15,000 - £100,000
a total of 89% with 11% as yet unknown.
Of the 120 AFO festivals, 13% (16 festivals) have applied to the government for a grant of some form.
Of the 120 AFO festivals, 25% (30 festivals) have furloughed members of their staff. It is quite clear that the festival season being annual will have serious problems retaining its staff after the furlough scheme ends at the end of October 2020. Staff may well be made redundant or laid off until April 2021.
AFO would encourage the government to continue the furlough scheme for part-time, full-time, and self-employed festival organisers. Staff needed to organise the 2021 season through to the end of April 2021.
Of the 120 AFO festivals, 19% (23 festivals) have asked for a government loan. At time of writing none had been informed of their success or otherwise end for now.
AFO festivals range in size from as little as 500 attendees to 5,000 with just 3 of our members up to 10,000 thousand capacity. On average 3,200 people visit an AFO festival annually, therefore AFO festivals have mostly internal tourism visits of 384,000 people per year.
AFO is clearly part of the entertainment, tourism and live events industry. In particular outdoor events. (See Events Industry Forum/Bournemouth University Research) https://www.eventsindustryforum.co.uk/index.php/contributing-billions-to-the-uk-economy
With 25% of the professional staff that normally run festivals being furloughed for the spring and summer periods 2020 the industry is effectively asleep, however, when the end of the furlough scheme comes, the AFO members will have serious difficulties paying the wages of those who have been furloughed. This will almost certainly lead to redundancies throughout the winter months until the new season commences in April 2021. It is anticipated that many of these redundancies will lead to staff members finding employment elsewhere and then not being available for the new season. This in turn will lead to a skilled staff shortage. We would encourage government to look into continuing the furlough scheme throughout the winter of 2021 in order to retain the vital staff skills and knowledge for the 2021 season.
Governments support for the arts
Clearly the government financial assistance offered to the broad ranging industries of the UK is welcomed, however, very little of the schemes were applicable to the festival world as can be seen by the number of AFO members applying for grants, loans and making use of the furlough scheme.
It is disappointing in comparison to our European neighbours like Germany, the Netherlands, and many others where government grants for the sustainability of the arts through this difficult period have been considerable, but more importantly, direct to the arts organisations themselves. AFO would request that DCMS put some pressure on government to reconsider its support of the world famous and vital festival industry to help it get through the 2020/21 winter season.
The festival scene is well used to applying risk assessment to its work. Hand to mouth budgets, leaning on goodwill of self-employed and voluntary staff, the festival scene flourishes through each summer, even with challenges of the British weather, the economy, and the sometimes-fickle audience base. However, COVID-19 and the very necessary government regulations to try and control the virus have had a devastating effect of maintaining any kind of festival scene; 2020 is effectively cancelled.
We are now focused on recovery for the 2021 season. Whether the AFO festival membership can survive yet another winter before earning its living in the spring of 2021 is yet to be seen.
Our festival organisers and staff are very adaptable, skilled, and experienced and their contribution to local and UK economies, the tourist industry, the social impact on communities is well known and documented. On this occasion government assistance outside of the current schemes and the Arts Council should be considered directly with the festival movement, discussed, and considered in order that the industry survives to bring world famous festivals back onto the UK calendar in 2021.
Steve Heap, General Secretary AFO, May 2020
Who we are
British Arts Festivals Association (BAFA) is the longest standing festivals association in the UK, formed in 1969, and its 80 members represent a huge range of arts festivals, from very large, long- established organisations to new events, and those run voluntarily. Its members include festivals such as the BBC Proms, Cheltenham Festivals, Ventnor Fringe Festival, St Andrews Voices, Between the Trees, Gwyl Machynlleth, Greater Manchester Fringe, Camarthen Bay Film Festival and Ilkley Literature Festival, as well as universities specialising in festivals and event management, and sector support organisations. BAFA acts as the voice for the UK arts festivals sector and is an active member of the Creative Industries Federation and the UK hub of Europe Festivals Association’s Europe for Festivals, Festivals for Europe (EFFE) programme. It works closely with sister organisations Association of Festival Organisers (AFO) and Association of Independent Festivals (AIF), and Association of Irish Festival Events (AOIFE) as well as Association of British Orchestras (ABO) and European Union National Institutes for Culture (EUNIC).
More about our members
The arts festivals sector is thriving and eclectic, providing a unique platform for artistic development, commissions and collaborations, cultural tourism and community cohesion. BAFA’s members range from the oldest music festival in the world (Three Choirs Festival, 305 years old) and the BBC Proms to Dunster Festival or Between the Trees, both in their relative infancy. BAFA’s members are representative of the breadth and diversity of UK arts festivals, and together they are responsible for a huge array of events, new commissions, audience engagement and participation, supporting community development in settings from the Isle of Wight to Llanelli, the Isle of Man to Fife.
Some facts and figures from current analysis of our membership:
- On average, member festivals are 30 years old, although they range from the very oldest to those whose first planned event has been postponed due to Covid-19
- In a normal year, members collectively stage 725 days of events, with over 5,250 ticketed events plus many thousand street performances, fringe events, exhibitions and pop-up entertainment.
- Almost all members stage events featuring paid professionals, and projects involving and engaging their local communities
- Ticketed event attendance was well over 800,000 attendances for just 23 members, plus significant numbers attending free and participatory events
- Excluding our two largest members (who operate an FTE staff in excess of 11), our average member operates with 2.5 FTE staff, with many having no PAYE staff at all. The sector’s heavy reliance on freelance contractors and volunteers makes it hard to measure the number of jobs that may be lost, since take-up of furlough will be an insignificant indicator of the likely effect of workforce. Work has already been carried out by freelance artistic planners and promoters that has been paid on festivals that have since been cancelled, despite 100% of ticket sales being lost.
- Collective turnover of 45 members was in excess of £25m
- Almost none of our members receive more than 60% of their turnover from ticket sales: each year is a challenging, ‘from-scratch’ fundraising process, and many receive no public funding.
- The slim overheads of festivals mean that they contribute a great deal to the wider ecology of the arts sector: on average, 80% of our member turnover goes into direct festival costs: the fees of professional performers, composers, artists, authors, technical and production freelancers, local venue hire, and suppliers.
- Most member festivals take place in existing local spaces, and see a mix of local attendees and visitors travelling from further afield. Because the majority of our festivals do not create their own festival venues (unlike outdoor events, who set up and manage their own sites), they are often working within the limitations of externally owned buildings, many of whom are not year-round performing arts venues. This brings its own challenges in terms of trying to develop and manage safe working protocols for post-Covid events, not to mention the economics of socially distanced venues.
- While various studies of individual festivals have highlighted the economic benefits and boost to tourism brought to towns, villages and cities by festivals, there is no aggregate data available for the value of our members collectively although we know they play a vital part in bringing footfall to local areas, as well as celebrating, developing and sustaining their local communities. It is clear that the impacts are significant as we know that individual festival studies highlight festivals’ ability to deliver incredible return on investment, purely on a financial basis, before considering the broader cultural, social, cultural, community, education, health and wellbeing impacts that festivals deliver. For example, Edinburgh’s festivals contributed £280m to the local economy in 2015.
Impact on the sector
We believe that festivals have been more negatively impacted by Covid-19 than any other cultural sector, given that their financial models balance year-round expenditure and resourcing against income generated during a small part of the year. The lockdown and initial impact of the pandemic has coincided with a crucial period in the festivals’ calendar and has led to cancellations of all events from April – August, representing the vast majority of UK festivals. Festivals scheduled for September and beyond are faced with virtually impossible challenges in order to continue, and the financial impacts of cancellation, postponement and curtailment of events will see many organisations struggle to survive into 2021.
The immediate impacts have been:
- Cancellation, postponement or curtailment of all events planned from April 2020 until at least August 2020
- Extreme uncertainty about events from September 2020 onwards – many festivals are struggling to adapt a model of working which allow their events to go ahead in any way that is financially and practically viable, given the ongoing need for social distancing.
- Future audience uncertainty is a particular issue for BAFA’s member audiences, typically featuring a large proportion of attendees aged 55+ and more likely to be in a vulnerable category than outdoor festival attendees. Several BAFA members have participated in Indigo’s research After the Interval into future attendee behaviour, and the results reflect the difficulty of relying on audience income, already balanced on a knife edge for most organisations; only 19% of respondents said they would return to an event at an indoor venue just because it had re-opened. This will have a stronger impact on festivals catering for older audiences, and for artforms such as classical music and jazz.
- Similarly, the festival sector is hugely reliant on volunteers, many of whom will have similar concerns to festival audiences, and without whose hands-on support, many festivals will struggle to continue.
- Huge financial impact on whole festival infrastructure, from artists to suppliers – many festivals have found that their organisations and their key staff and suppliers simply fall in between the cracks of emergency funding schemes; they occupy buildings but don’t own them, and many have developed long-standing relationships with freelance workers who can provide the flexibility needed for seasonal variations in workload
- Longer term impacts on planning and the knock-on effects on future organisational stability and artistic ambition, for example commissioning new work or co-productions
- Major pressure on staff plus recruitment freezes mean lack of mobility and opportunity in the sector
- Loss of corporate support and real concerns about income in 2021, assuming organisations can survive until then.
- Similarly, concerns about trusts and foundation funding in 2021, given that many trusts have seen income drop and have diverted funds to emergency funding, meaning that there is real fear about income for 2021. Many public funders have also diverted a large proportion of their income to emergency funding and a cut in funds to the arts councils would have a hugely adverse impact on our sector.
Case study: Three Choirs Festival
Three Choirs Festival is a longstanding BAFA member and the world’s oldest classical music festival: it had to cancel this year’s event in July due to the COVID-19 outbreak. This represents the loss of an entire year’s trade and income rather than a temporary closure and will considerably impact both the organisation and its employees as well as its wider supply chain of freelance artists and technical staff. There is an urgent need to acknowledge the wide differences in cash-flow impact of the outbreak between organisations such as retailers and businesses whose organisational model is typically based on year-round work and resource expenditure, predicated on income from a short period. The Festival organisers highlight:
"Cancellation has wiped out very close to 90% of our budgeted income and despite reserves, mid-year forecasts suggest as much as a £160k loss this year without successful emergency fundraising. The short-term financial difficulty would be less worrying were it not for the fact that everyone expects the fundraising landscape to be harder than ever post-lockdown. Funds we would usually apply to are all suspended, corporate support seems unlikely given economic uncertainty, and like so many festivals, we have no core funding to fall back on. Everything is from scratch, every year. Coupled with this, speculation within the sector estimates between a 30% and 60% reduction in ticket income due either to caution among audiences or the effects of social distancing in venues."
In terms of the potential for audiences to return to festivals, Three Choirs Festival participated in Indigo’s After the Interval audience research programme (full report here), which produced the following data on Three Choirs Festival’s own audience:
- 2/3 will only book for events from Jan 2021 onwards
- 80% of respondents wouldn’t feel comfortable booking for future events until the Autumn - so even if the Festival brought forward the onsale date for 2021 festival, it wouldn’t help
- 30% of the audience don’t trust formal reopening as a marker of safety: that represents about £150k in ticket sales
- Capacity limits and shorter queues would be factors for more than 2/3rd of bookers returning: the festival breaks even at around 85-90% capacity
- Less than half its audience would be comfortable in the venues they stage the festival in
This indicates the scale of the problem which is made more challenging both by the typically older demographic of its member audiences and the difficulty of members using a range of venues, none of which they own.
How effectively has DCMS, government support and arms-length bodies addressed needs?
- More than 70% of respondent BAFA members have been unable to access any government support
- Furlough schemes have been positively welcomed by those able to use them but festivals’ heavy reliance on the relatively under-supported freelance sector, both year round and seasonally, as artists, suppliers and key personnel, leaves them extremely vulnerable. 72% of those working in the live music sector are freelance or self-employed, according to UK Music’s Music by Numbers (2019).
- New companies have been unable to access support as they have been trading for less than 18 months
- Approximately 50% of our members are charities. Ineligibility to access Small Business Rates Relief because of their mandatory charity business rates relief has therefore been a problem - although Small Business Grants can now be accessed via local authorities, some members have reported a slow response from this discretionary fund. There is also concern that some local authorities are capping grants at £5k due to competition, meaning that charities are being penalised at a rate of 50% compared to their non-charitable counterparts of the same scale.
- Support from local arts councils, where received, has been welcomed – there is concern both about the medium term impact of Arts Council England’s cash injection into emergency funding (i.e. what money will be available to support 2021 events?) and also the fact that the funding so far has been focused only on immediate rather than longer term danger of folding, as well as those organisations whose events did not fall into the 6 month period covered by emergency funding.
Long-term impacts on the sector, and support needed for those
- Decimation and permanent winding up of certain organisations, including small festivals and venues. Specific support for charities and new companies
- Redundancies and job instability – possibly downward pressure on wages, exacerbating historic issues with low and unpaid roles; skills gaps as freelancers change career for mid-term survival.
- Slow recovery of audience attendance, particularly older audience members
- Free online content may have an impact on live event attendance, and also on how some audiences value what is produced by the sector. Support for creating high quality hybrid/blended events may help both of these issues
- Lack of available funding next year will be a huge concern for festivals, many of whom rely on a mixed portfolio of funding (Arts Council, commercial sponsorship, ticket sales and earned incomes, trusts and foundations, individual giving) – trusts and foundations are already reporting depleted reserves, and emergency funding from the Arts Councils has used available Lottery funds. Could the Lottery funding spent on emergency funding be matched to support 2021 projects? Festivals reliant on commercial income are rightly worried about potential losses in 2021 in an already sharply competitive environment.
Conclusion: festivals’ role in the broader arts ecology
BAFA recognises the need to gather concrete evidence, statistics and recommendations for the sector, but it is also crucial to emphasise the unquantifiable importance of our sector. Since lockdown began, the cultural sector has reinforced its collaborative, supportive ethos; nowhere more so than in the support, advice and encouragement we have seen shared amongst our members. Many have written to us expressing concern, fear, uncertainty, hope and determination. For all, the common thread has been a passionate belief in the inherent value of the arts that we represent. What follows is just one short statement of this kind, that we feel captures the essence of why it is so vital that our sector emerges from this crisis ready to thrive again:
“Festivals are the lifeblood of the classical music ecosystem. They are the junctions where artists, audiences, volunteers and organisers come together with a shared vision of creating ‘festivalness’. They are the nurturers and pioneers of new artistic work. They are the networks that connect and embed the arts deep within the local area and can both solidify and change perceptions of place and community.
“Festivals have been studied by geographers, anthropologists, sociologists and economists. In the late 19th century, Émile Durkheim saw festivals as an ‘effervescence’…. a vast communal re-charging of batteries, a thing that was capable of transformational ‘intensification and electrification’ in a group of people. More recent writers continually note the ‘departure from the ordinary’ and ‘transgressions of the everyday routine’. UNESCO (2003) describe festivals as part of the ‘intangible cultural heritage’.
“You could say that a festival itself was ‘intangible’. Unattached to (and unhampered by) fixed venues and their traditional trappings, festivals are a fertile ground for innovation, experimentation and free thought. They are magically ephemeral; their intensity and short time-frame means that they have space to reinvent, refocus, respond and adapt quickly to new situations, opportunities and needs. Curiosity-driven and contemporary, they are creators of more new work than any other body, co-producing and co-commissioning as a way of life. Festivals take artistic risks and - collectively - they enable new work to flow quickly around the ecosystem, from festival to festival.
“Festivals have an unparalleled ability to embrace a sense of place and community. Festivals allow local people to see well-known buildings and public areas in a new light and they create ‘special’ places in lives that are transient or disconnected. Festivals usually encourage a ‘green culture’ with an emphasis on outdoor events, walking trails, close-proximity events and imaginative use recycling / upcycling materials.
“To understand the importance and significance of a festival, you need to look far and wide. Festivals spread into every nook and cranny of a city, town or village. They reach into the minds, imaginations and ambitions of schools, community groups and individuals. They breathe life into new creative work which continues to tour, develop and inspire far beyond the geographical area and short time-span of the festival itself. They give platforms to young artists who, in turn, repay that faith and investment by returning as ‘headline acts’, able to attract huge audiences. The cycle of supporting-showcasing is ongoing; having a strong relationship with a festival enables individual artists, large and small organisations to leverage significant funding and support, gain prestige and continue to generate more creative work. The unique type of creative programming that goes into making a festival is a model that inspires venues, institutions and individuals to be bold, courageous and adventurous with their programming… to make unexpected juxtapositions, connections and pathways between people, places and art forms. The loss of festivals from the ecosystem of classical music would be like removing the roots that sustain it.”
Kate Romano, CEO & Artistic Director, Goldfield Productions and Board Member of Lichfield Festival
Collective key recommendations of AIF, AFO and BAFA:
- That Government acknowledges a distinction between retail and seasonal businesses in terms of ongoing business support, i.e. festivals in the main take place from April to October, have lost a year’s income and trading during this pandemic, and cannot just re-start like a manufacturing industry.
- That Government issues clear guidance and timelines regarding when large, organised gatherings will be able to operate alongside high-level guidance on social distancing measures that would be expected in order to maintain public safety. We currently believe that festivals cannot happen if social distancing is the expectation, 2 metres or otherwise.
- If large, organised gatherings are going to be the last in line as part of a phased re-opening of business, ongoing support must also be phased accordingly, with a continuation of all existing employment (furloughing and self-employed schemes) on business support packages until the festival industry can get the planning and sales stage of 2021 online. If Government is not able to extend employment schemes beyond October on a sector-specific basis, it should offer the festival industry financial packages to ensure its survival through the winter months to 2021. [rolled the previous points 2 and 3 together as they were repetitive]
- VAT breaks on ticket sales for a minimum of 18 months so that festivals can see a result of this support (certain cultural festivals and exhibitions are already exempt).
- That Government takes a holistic approach to sector support by considering how the recommendations of the Charity Tax Group’s response to the Public Accounts Committee Inquiry into management of Tax Expenditures might also directly support the festivals sector in the longer term, in particular with regards to costs of irrecoverable VAT, the impact of which is likely to increase as festivals are hit by additional production costs to make their events COVID-Secure. The impacts of this will be most keenly felt among those organisations who rely on non-corporate donations and culturally exempt ticket sales, and therefore are not VAT registered or can recover a relatively small proportion of VAT expenditure.
- That Government develops a new creative tax relief, similar to Orchestra Tax Relief and Theatre Tax Relief, specifically for new work developed by/for festival organisations.
- Premises licence fee rollovers: We would recommend that the Government advises local authorities that large, single event premises licence fees should roll over to the 2021 season. There is no provision under the Licencing Act to negotiate annual fees for a premises licence, the only updated guidance which has been given to local authorities by the LGA is that local authorities can use their discretion around the suspension and recovery of fees. Therefore, they have no discretion to exercise and all annual fees remain due and payable even though the festival season has been completely cancelled for 2020.
- That Government considers a reform of the business rate system that involves previously zero-rated farmland used for festivals now having a rateable value for the period of the festival.
- That Government, in recognising the challenges the sector is facing and its recovery cycle, alongside the central role that festivals play in building and developing strong communities, and in healing post-crisis societies, should be focusing its funding on supporting existing events rather than channelling support into new events such as the proposed £120m that will be spent on a ‘Festival of Brexit’ in 2022.
- That Government offers further targeted consultation with the sector to determine what investment in resources, training and support for the development of hybrid/blended and online events – to include a small live audience and a larger online or outdoor audience – would be most beneficial to festivals during the medium term.
- That Government considers investment in ideas sharing and partnership development. Existing festival networks could lead on sector innovation. This sector is a creative and resilient industry, but its latent synergies could be exponentially increased with targeted support for sectorial development lead by the festival networks.
Finally, we recommend that DCMS commits to reviewing the situation in 3, 6 and 12 months time, so that it can respond to the ongoing circumstances, and continues effective dialogue with the festivals sector in the meantime.