UK Live Music Business Looks to New Prime Minister Rishi Sunak to Cut Taxes Affecting Concert Tickets
Written by djfrosty on October 24, 2022
LONDON — For live music executives, Monday’s (Oct. 24) appointment of Rishi Sunak as Liz Truss’ successor as U.K.’s prime minister brings a sense of urgency as the sector struggles to recover to full health after the devastating impact of the pandemic.
They are calling for Sunak, who served in Boris Johnson’s government as Chancellor of the Exchequer and will become the U.K.’s first British-Asian prime minister, to swiftly cut the sales tax rate charged on U.K. ticket purchases from the current 20% VAT to 5%.
At the height of the pandemic, Sunak lowered VAT rates to 5% to try and help boost advance sales. The tax cut lasted for eight months, before rising to 12.5% last October and then returning to its pre-pandemic level of 20% on April 1.
Live execs say that cutting VAT back to 5% will encourage ticket sales at a time when many people in the U.K. are experiencing a drastic reduction in disposable income due to soaring food and energy prices. Last month, inflation hit a 40-year high of 10.1% in the United Kingdom.
Jon Collins, CEO of U.K. live music industry association LIVE, says he hopes Sunak’s experience in the Treasury office “leaves him well placed to recognize the economic stimulus that would follow” a reduction in VAT on ticket sales. “Safeguarding gigs, festivals and venues while encouraging additional activity will bring benefits to town and city centers across the U.K.,” says Collins.
An immediate priority for the new prime minister — who officially takes up his post on Tuesday, following a meeting with King Charles III — will be restoring confidence in the financial markets, following Truss’ disastrously brief reign.
Last month, the pound fell to a record low against the U.S. dollar in the aftermath of Kwasi Kwarteng’s Sept. 23 mini budget, which spooked investors with its unfunded tax cuts — something Sunak warned about when he unsuccessfully competed in an earlier Conservative Party leadership contest this summer. Truss sacked Kwarteng as Chancellor on Oct. 14, precipitating her downfall. Almost all the tax measures he introduced have since been scrapped.
Sunak, a former hedge fund partner who married the daughter of an Indian billionaire, won the prime minister role after Johnson announced on Sunday he would not be running for the position. On Monday, Sunak’s only other rival, Penny Mordaunt, pulled out of the contest shortly before votes from members of Parliament (MPs) were due to be announced.
The markets calmed Monday with sterling broadly unchanged against the dollar and government borrowing costs falling as the interest rate on bonds dropped to 3.8%. (The rate was 5.17% in late September.)
“There is no doubt we face a profound economic challenge,” Sunak, one of Westminster’s wealthiest politicians, said in a televised address. “We now need stability and unity, and I will make it my utmost priority to bring our party and our country together.”
Michael Kill CEO of The Night Time Industries Association (NTIA), which represents more than 1,400 U.K. nightclubs and venues, says he will judge the incoming prime minister on his “actions not words.”
Kill says he hoped Sunak can “can address the current instability, uncertainty and begin a journey to build back consumer confidence for nighttime economy and hospitality businesses.” He echoed live executives’ demands for a cut to VAT and called for an extension on business rates relief (taxes payable on business premises, such as record shops and music venues). “Independent businesses will not survive without it,” Kill says.