Live music venues warn of 'devastating consequences' of budget tax changes in letter to Sir Keir Starmer

Tax changes announced in the budget could have "devastating, unintended consequences" on live music venues, including widespread closures and job losses, trade bodies have warned.

The bodies, representing nearly 1,000 live music venues, including grassroots sites as well as arenas such as the OVO Wembley Arena, The O2, and Co-op Live, are calling for an urgent rethink on the chancellor's changes to the business rates system.

If not, they warn that hundreds of venues could close, ticket prices could increase, and thousands could lose their jobs across the country.

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Business rates, which are a tax on commercial properties in England and Wales, are calculated through a complex formula of the value of the property, assessed by a government agency every three years. That is then combined with a national "multiplier" set by the Treasury, giving a final cash amount.

The chancellor declared in her budget speech that although she is removing the business rates discount for small hospitality businesses, they would benefit from "permanently lower tax rates". The burden, she said, would instead be shifted onto large companies with big spaces, such as Amazon.

But both small and large companies have seen the assessed values of their properties shoot up, which more than wipes out any discount on the tax rate for small businesses, and will see the bills of arena spaces increase dramatically.

In the letter, coordinated by Live, the trade bodies write that the effect of Rachel Reeves's changes are "chilling", saying: "Hundreds of grassroots music venues will close in the coming years as revaluations drive costs up. This will deprive communities of valuable cultural spaces and limit the UK creative sector's potential. These venues are where artists like Ed Sheeran began their career.

"Ticket prices for consumers attending arena shows will increase as the dramatic rise in arena's tax costs will likely trickle through to ticket prices, undermining the government's own efforts to combat the cost of living crisis. Many of these arenas are seeing 100%+ increases in their business rates liability.

"Smaller arenas in towns and cities across the UK will teeter on the edge of closure, potentially resulting in thousands of jobs losses and hollowing out the cultural spaces that keep places thriving."

They go on to warn that the government will "undermine its own Industrial Strategy and Creative Sector Plan which committed to reducing barriers to growth for live events", and will also reduce spending in hotels, bars, restaurants and other high street businesses across the country.

To mitigate the impact of the tax changes, they are calling for an immediate 40% discount on business rates for live venues, in line with film studios, as well as "fundamental reform" to the system used to value commercial properties in the UK, and a "rapid inquiry" into how events spaces are valued.

In response, a Treasury spokesperson told Sky News: "With Covid support ending and valuations rising, some music venues may face higher costs - so we have stepped in to cap bills with a £4.3bn support package and by keeping corporation tax at 25% - the lowest rate in the G7.

"For the music sector, we are also relaxing temporary admission rules to cut the cost of bringing in equipment for gigs, providing 40% orchestra tax relief for live concerts, and investing up to £10m to support venues and live music."

But Conservative shadow business secretary Andrew Griffith told Sky News: "The government has failed to deliver the reform to business rates they promised, and need to change course before more jobs and venues are lost forever."

The warning from the live music industry comes after small retail, hospitality and leisure businesses warned of the potential for widespread closures due to the changes to the business rates system.

Sky News reported after the budget that the increase in business rates over the next three years following vast increases in the assessed values of commercial properties has left small retail, hospitality and leisure businesses questioning whether their businesses will be viable beyond April next year.

Analysis by UK Hospitality, the trade body that represents hospitality businesses, has found that over the next three years, the average pub will pay an extra £12,900 in business rates, even with the transitional arrangements, while an average hotel will see its bill soar by £205,200.

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A Treasury spokesperson said their cap for small businesses will see "a typical independent pub pay around £4,800 less next year than they otherwise would have".

"This comes on top of cutting licensing costs to help more venues offer pavement drinks and al fresco dining, maintaining our cut to alcohol duty on draught pints, and capping corporation tax," they added.

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