UK Biz Threatened By Energy Costs

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Fuel Crisis Background on digital display

The UK live biz, as well as the wider hospitality sector, is seriously threatened by the steep price increases for energy. The UK government has announced an energy price guarantee to help consumers and business face the steep price increases for energy, but it’s insufficient in light of the sector’s needs .

As opposed to the energy price guarantees for private households, which will remain in place for two years starting Oct. 1, the guarantees for businesses are limited to six months, at which point the scheme will be replaced be focused support for vulnerable industries.

The UK government promises, that “this will protect them from soaring energy costs and provide them with the certainty they need to plan their business.”

Music Venue Properties: MVT’s Plan To Purchase Venue Freeholds

The businesses aren’t so sure. The UK’s Music Venue Trust (MVT) has been warning, that “the financial impact of the energy price rises on the Grassroots Music Venue sector presents an existential challenge.

“For a sector with a total gross turnover of £399 million [$459 million], the current rise equates to an additional £90 million ($103 million) in costs.”

Based on a survey of 941 MVT members, the organization has found that venues face an average 316% rise in fuel bills – taking the average fuel bill cost to £5,179 per month per venue, up from the current average of £1,245.

MVT has warned that the surge in energy bills means that around 30% of the entire network of venues face the threat of permanent closure.

One venue has been quoted £42,000 ($48,000) a year for fuel, which more than triple its previous bill of £13,200 ($15,100) – with the energy supplier saying they would only accept full payment in advance.

It’s not just affecting the live space, of course. As UK trade body UK Music has pointed out, “one major London recording studio expects its gas bill to rise by 600% and its electricity charge to rise by 80%, according to the Music Producers Guild (MPG).”

Faced with such numbers, it may be questioned why the government wants to limit its price guarantee for businesses to six months.

As Clara Cullen, Venue Support Manager at MVT, pointed out, “The policy announced today only goes some way in alleviating the challenge, in the very short-term, by creating an energy price cap for businesses that will be in place for an initial six months. The Government has committed to reviewing this policy in conjunction with the hospitality sector. Music Venue Trust will contribute to this review to ensure the perspective of Grassroots Music Venues are included in this decision-making process.

“As the policy announced today is only a temporary short-term measure, Music Venue Trust urges the Government to take further action to ensure a long-term solution for energy provision for Grassroots Music Venues providing an energy supply which is affordable, reliable and sustainable. We need this action to take place as soon as possible to protect, secure and improve our Grassroots Music Venues.”

Before the energy price guarantees had been announced by the UK government on Sept. 8, the UK’s live entertainment trade body LIVE had warned that the unfolding energy crisis may mark. “the end of the UK’s live music scene as we know it.”

As both LIVE and UK Music point a VAT cut, bringing the current rate of 20% down to 5%, would be the quickest way to get money back into the bottom line of struggling businesses.

The UK’s live sector, as well as the country’s wider hospitality sector, all of whom are still dealing with significant debts incurred during the pandemic, are calling “for a direct intervention in the energy market to ensure supply and controlled cost increases,” according to LIVE, which is also supporting calls for: a business rates holiday for all hospitality premises with no caps applied; COVID style grants to businesses in severe hardship; measures to help businesses reduce their energy usage e.g., free/cheap energy audits for venues; a reversal of the introduction of the April 2022 VAT rate increase for hospitality; the reintroduction of a trade credit insurance scheme for energy.

If you’re faced with soaring energy costs in an already crippled supply chain, the only option for many is closure. This has ripple effects on dozens of smaller businesses and sole traders. “The cancellation of a single festival would have implications for dozens of suppliers and hundreds of individuals, from musicians to bar staff, AV technicians to stewards,” LIVE points out.

LIVE CEO Jon Collins said, “The triple threat of a cost-of-living crisis, the post-pandemic hangover, and skyrocketing energy prices could spell the end of the UK’s live music scene as we know it.

“Millions of people have just enjoyed a spectacular summer of live music, but this is now under threat. We face cuts to programming, venue closures and an unbearable strain on an already fragile industry. Government must act to protect this world-leading and uniquely British endeavor before it is too late.”

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