EXCLUSIVE: UK Music boss rails against business rates, makes proposals to save studios and venues

CEO Michael Dugher tells PSNEurope why he fears next week’s budget could prove disastrous for studios and venues.
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Michael Dugher has slammed proposed business rate hikes

Michael Dugher has slammed proposed business rate hikes

UK Music CEO Michael Dugher has spoken exclusively to PSNEurope about his fears for the UK’s recording studios and grassroots venues ahead of next week’s Budget (November 22), identifying key areas for revision and proposing measures that could safeguard the sector for years to come.

Chancellor Philip Hammond is already under intense pressure to drop a planned 4% rise in business rates next year when he unveils his Budget next week, with Dugher yesterday describing the increase as “woefully unjust”. One small venue, The Lexington in north London, has seen a rise of 118% in its rateable value this year, compared to Arsenal FC’s 60,000-capacity Emirates Stadium nearby, which benefitted from a 7% cut in its rateable value. In the past decade, around 35% of music venues have closed, according to the Music Venue Trust charity.

In addition, new research from UK Music has revealed that recording studios have faced similarly substantial increases throughout 2017. The rateable value of legendary Abbey Road Studios increased by 32% this year, while Air Studios, where the soundtrack to Kenneth Branagh’s Murder On The Orient Express was recently recorded, has also been met with a rise of 32%.

Today, speaking exclusively to PSNEurope, Dugher outlined the areas he believes require the most urgent attention, what UK Music can do to change the current financial issues facing the industry and what he thinks of the Government’s approach to the arts…

What are the most crucial areas of the budget that need to be revised?

This year has seen the first revaluation for business rates in 7 years. This resulted in huge increases in the rateable value for many music venues and studios, meaning they are facing huge hikes in bills. The rateable value of the O2 Arena increased by 141% and Abbey Road studios 32%. It is not just confined to the capital however. Studios and venues in places like Liverpool, Manchester, Norwich and Portsmouth, are also being hit. At the last Budget the Chancellor attempted to introduce some measures to assist those hit by increases, but these have had limited impact on music businesses. The Chancellor needs to address the issue of business rates, particularly in light of further likely increases in payable business rates in the new year as a result of rising inflation.

What can UK Music do to help reduce the huge costs facing live music venues and studios?

UK Music is calling on the Government to review the impact of the recent revaluation on music businesses. We are also calling on the Valuation Office Agency, the body that conducts revaluations, to work with us to agree an approved guide on business rating for music companies. This already exists for public houses so I see no reason why there should not be an equivalent document to support music venues and recording studios.

Of course, this is not the only thing the Government can do to relieve pressure on venues which is why we are supporting John Spellar’s cross-party attempt to change in legislation in the new year and put Agent of Change on a statutory footing. And personally I still think it’s worth the Treasury investigating potential tax credits for parts of the music industry, like for studios or A&R.

What does the current budget mean for the future of grassroots music venues?

Grassroots music venues are particularly badly hit by the recent revaluation. Originally the rateable value for the Lexington in North London increased by 234% this year. This was challenged yet the rateable value for this venue is still 118% greater than it was at the beginning of the year. Why should a venue that has helped the likes of George Ezra launch their career be hit by such a huge increase whilst the Emirates Stadium down the road saw a decrease of 7% in its rateable value?

What is your prediction for the UK’s live scene and studio market if they continue to be hit with such heavy rates?

The music industry is strong. It contributes £4.4 billion to the UK economy and employs over 140,000 people. However there are some real challenges to both sustain these figures, and make them grow further. The music industry needs an infrastructure that can support talent development and grow audiences. This is put at risk when even the slightest increase in business rates can have a crippling impact on those who operate with small margins. The live sector now makes a contribution of over £1 billion to the economy, but as the fantastic Music Venues Trust have highlighted, we’ve lost 35% of music venues in the UK in the last decade.

Equally, given the strength of British music globally, including in the export market, the Government needs to do everything it can to support recording studios and listen to experts at the Music Producers Guild.

Is there a lack of understanding and consideration for the arts within the current Government?

No. The Government has done well to put sectors like the music industry at the heart of its industrial strategy. This is important, particularly given Brexit. Matt Hancock in particular has been extremely willing to engage with us and work with industry.

We are hoping that there can be real progress on a sector deal for the creative industries in the forthcoming Budget. We are working closely with Ministers and officials on a number of issues to enhance their understanding of the sector, including business rates, the need for an ‘agent of change’ principle in planning law, visas for international touring and the protection of copyright to support creators and those who invest in them.

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