Source · Select Committees · Culture, Media and Sport Committee
Recommendation 8
8
Rejected
Paragraph: 59
Introduce a temporary, capacity-based VAT cut for grassroots music venues to stimulate activity.
Recommendation
A targeted and temporary cut to VAT for grassroots music venues on tickets would help to improve the immediate risk-profile of live music for promoters and in-house programmers, who take on the financial risk, and help get more shows into venues. The Government should introduce a temporary cut to VAT, based on venue capacity, to stimulate grassroots music activity and the wider economic benefits to local areas that grassroots music shows provide.
Government Response Summary
The government rejects the recommendation for a temporary VAT cut, citing economic and fiscal stability and the broad-based nature of VAT. It notes existing funding for the grassroots music sector.
Paragraph Reference:
59
Government Response
Rejected
HM Government
Rejected
In July 2024 the Government published an audit of public spending. This set out £22 billion of in-year pressures. These pressures were not limited to 2024–25, with the vast majority recurring in future years. The Government is now fixing the foundations by delivering economic and fiscal stability, supporting public services, boosting investment, and setting the public finances on a sustainable path. These are essential foundations for long-run economic growth, and require tough decisions on tax, spending and welfare. While the Government recognises the economic and cultural importance of the grassroots music sector to the UK, and keeps tax policy under review, we have no plans to introduce a temporary cut to VAT based on venue capacity or to undertake a bespoke economic analysis of the impact of a VAT cut to 10% on tickets. VAT is a broad-based tax on consumption, and the 20% standard rate applies to most goods and services. Any request for new reliefs must be considered within the context of the Government receiving numerous requests for VAT relief from different sectors every year. The temporary reduced VAT rate (5%) for the hospitality and tourism sectors, including grassroots venues, was introduced by the previous Government in July 2020. It was appropriate that as COVID-19 restrictions were lifted and demand for goods and services in these sectors increased, the temporary tax reliefs were first reduced and then removed in March 2022. Furthermore, VAT reliefs can add complexity and administrative cost to the tax system and create opportunities for non-compliance. From a broader economic perspective, using VAT reliefs to redirect economic activity into one area does not necessarily increase economic activity overall, but may only displace it from other areas, particularly when taking into account the need for raising tax revenue elsewhere to fund the relief. The Government is providing £5 million to Arts Council England’s Supporting Grassroots Music investment programme over 2023–25. This includes grants to recording and rehearsal studios, promoters, music festivals and live and electronic venues to grow their businesses, and develop their workforces and audiences in order to support musicians and others at the grassroots of England’s music sector. Following the 2024 Autumn Budget, the Government reaffirmed its commitment to strengthening England’s grassroots music sector by extending the Supporting Grassroots Music Fund for 2025–26, ensuring continued support for musicians, venues, and industry professionals.