Written evidence submitted by Music Venue Trust
Response Impact of Covid-19 on DCMS sectors
1. About Music Venue Trust
Music Venue Trust (MVT) is a registered charity which acts to protect, secure and improve Grassroots Music Venues (GMV) in the UK. 
MVT is the representative body of the Music Venues Alliance (MVA) , a network of over 800 GMV in the UK.
2. MVT Response to the DCMS Inquiry
The live music sector generates £1.5bn per annum in ticket sales, creating £300m per annum in VAT receipts alone for HM Government, in addition to a further £1.bn in revenue from catering, merchandise and sponsorship. All of this supports promoters, production companies, managers, agents, artists and others which form part of an inter-dependent eco-system that is the UK music industry. That industry generates £5.2bn in economic value to the UK economy and a further £2.7bn in exports.
The Grassroots Music Venue sector is the Research and Development arm of that wider industry, having developed and supported the careers of the majority of its biggest selling artists of the last sixty years from the Beatles and the Stones to Ed Sheeran and Adele. The sector has suffered a complete loss of income as a result of the Covid 19 Pandemic. MVT has consulted its member venues about their ability to open based on draft government guidance created by DCMS, EY, PHE and MVT in June 2020.
MVT has concluded, on public health and economic grounds, that this guidance results in the need for the sector to remain closed for live music events until October 2020. MVT has also consulted with the general public; over 50% state that they would not feel safe in a grassroots music venue under the suggested guidelines, and the majority believe that grassroots music venues should not reopen until October.
● The sector will experience a substantial loss of infrastructure within the next 3 months (July, August, September) 2020; without intervention 93% of venues face permanent closure
● Venues that are lost during this period will not return under any new operator; the cost of opening a new venue is prohibitive and the acquisition of replacement tenancy agreements by new venue operators not an economically attractive proposition for landlords
● Such a serious downturn in the number of trading venues would result in the collapse of the talent pipeline, rippling negatively across the multi-billion music industry for decades
● To prevent this outcome, MVT proposes a one-off intervention by HM Government to protect the grassroots music venues which are the cornerstone on which the industry talent pipeline is built
Existing Government Support Accessed by the Sector:
● During the period 20 March to 30 June, the sector acquired £48 million in liabilities
● General government schemes (CBILS, Bounce Back Loans, Furlough, Grants) delivered £35 million of support to mitigate those liabilities
● Between 1 July and 30 September, the sector will acquire £46 million in additional liabilities from remaining closed for live music events
3. Government Intervention Required
3.1 FINANCIAL SUPPORT
The sector is unable to open and will not survive this prolonged period of closure. In the event that a financial package can be provided to prevent hundreds of closure, the sector will require longer term beneficial conditions to effectively manage its own recovery.
● HM Government should establish a Cultural Renewal Scheme to a value of at least £50 million that Grassroots Music Venues can easily apply to
● To support the sector to recover, we suggest that VAT on Live Music Event Tickets be suspended for a period from 20% to an amount agreed between HMG and MVT – for example; 50% reduction from 20% to 10%
● Grassroots Music Venues to adopt a sector wide policy of temporary closure for live events until October 2020 allowing MVT and DCMS to continue to engage to seek methods of reopening the sector safely and economically
● GMVS to be able to make social outcome based responsible decisions during this period to support their communities – for example, hosting loss making events for community purposes, alternative usages of their venues as community hubs – and to make any other alternative commercial use of their venue which might reduce their need for financial support
● Grassroots Music Venues and the artists, managers, agents and promoters who work within them to internally manage sector finances when the sector reopens so that Grassroots Music Venues are able to fully recover based upon the tax incentive the margin in ticket income created by the agreed tax incentive
3.2 POLICY SUPPORT
93% of our Music Venues Alliance network of over 800 grassroots music venues are in a traditional tenancy-freehold agreement where the venue operator leases the venue space from a private or commercial landlord. This traditional model of venue ownership does not recognise the cultural importance of the space as a grassroots music venue and maintains the status quo perspective that a venue is merely a commercial entity.
As a result of this position, the sector’s sustainability, particularly within this crisis but more generally across the last two decades, is severely compromised. Music Venue Trust has a plan to implement a Community Ownership Model that would place the GMVS sector into cultural protection by removing them from commercial ownership.
The crisis presents a specific opportunity to do this, with many landlords now finding themselves with tenants who are simply unable to meet rent demands. It also presents an urgent need to undertake this work, as many of these premises may otherwise be lost to residential development.
● HM Government to encourage a Community Ownership Model by
● HM Government to ensure that the Community Ownership Fund announced at the 2019 election includes the possibility to support the acquisition of cultural premises
● Music Venue Trust has over the last 6 year encouraged venues to restructure their businesses as not for profit entities, typically Community Interest Companies (CIC) or Community Share Businesses
● We have seen a resulting increase of venues registering as not-for-profit entities from 3% (2014) to 31% (2019)
● The strength of CIC recognition is that it allows the cultural status of grassroots music venues to be a core component of the activity taking place in GMVs.
● Removing the commercial pressures associated with the traditional freehold tenancy agreement model by encouraging community ownership of freeholds removes a core threat to the GMV sector which is the need to pay commercial rates of rent.
● 86% of venues during the pandemic have informed Music Venue Trust that their core threat pushing them towards permanent closure is their inability to meet commercial rent demands.
● MVT plans to establish a Community Benefit Society, permitting individuals and communities to invest in the ownership of the freehold of grassroots music venues
● The MVT Community Benefit Society would spearhead a drive for public investment into buying the freeholds of GMVs in order to place them within cultural protection.
● If HM Government adopts the recommendations, Music Venue Trust would be able to partner with community ownership schemes to unlock support from the Community Ownership Fund.
● Taking venues out of the commercial sphere and into community ownership by removing them from the commercial pressures of rent arrangements would future proof venues to protect them in any further crisis, and remove them as a potential strain on the public purse