In the week since prime minister Boris Johnson indicated events without social distancing could potentially run from 21 June, there has been frenzied activity with many festivals re-scheduled and/or sold out, meanwhile the industry’s call for a Government-backed insurance scheme have increased in volume.
Following the DCMS Committee’s plea to chancellor Rishi Sunak for him to announce support in the 3 March budget for an insurance scheme to help encourage more festival operators to go ahead this summer, industry bodies including the Association of Independent Festivals and UK Music have added their voices to the call.
John Glen, the economic secretary to the Treasury, suggested that the publication of a roadmap for the reopening of the events sector could be the ‘right point’ to consider potential support, including insurance-based options.
According to a report in The Times, Downing Street is considering the issue. It said, “We are looking at a range of support options to help the sector get going again, and we have heard these calls for an insurance scheme.”
Many of the UK’s biggest summer festivals sold out last week, including Live Nation’s 105,000-capacity Reading, Leeds (75,000) and Creamfields (70,000), and large independents such as Boomtown (pictured) – which usually has a 70,000-capacity but will operate with a reduced audience limit this year.
Meanwhile, Pride in London, Parklife, Black Deer, Red Rooster, Wide Awake, GALA and Liverpool’s Sound City are among the many festivals to have been rescheduled to later in the summer. With the Isle of Wight Festival scheduled for 17-20 June, Live Nation is expected to announce revised plans this week.
Despite the excitement among consumers, in the national press and many corners of the events industry, the AIF said there remain many challenges and an insurance scheme is a vitally important factor behind the sector’s ability to bounce back this summer.
It said that even if festivals sell out well ahead of time, many organisers cannot draw down revenue from ticketing companies, as it remains ringfenced to be paid out post-event or refunded to customers if necessary. It therefore remains an enormous risk for any event organiser to proceed and incur such costs without insurance.
The organisation said that if the Government did not follow countries such as Germany, Austria, Norway and the Netherlands, to introduce a scheme by the end of the month, there will be event cancellations.
In an AIF member survey 92.5% of respondents confirmed they cannot stage events without insurance and described insurance measures as vital not optional.
Its analysis suggested that for a festival taking place in early July, an estimated 40% of total costs will need to be paid before June 14 – the date when Government will make a decision on Step 4 of the roadmap.
The AIF said 20% of these costs are payable in April and include not only artist, production and infrastructure deposits but costs that are essential to events being allowed to go ahead, such as policing, medical provision and licensing.
The expected total cost of staging a festival, based on an AIF member survey, ranges from £130,000 to £12.4m, with an average cost of over £6m (£6,350,000).
The organisation also reiterated its call for a three-year extension to the reduced 5% VAT rate on ticket sales, which was introduced in July.
AIF CEO Paul Reed said, “The Prime Minister has set out a roadmap and a ‘no earlier than’ date for festivals, and audiences have responded, demonstrating a huge appetite to be back in the fields this summer. But we need Government interventions on insurance and VAT before the end of this month when festivals will need to decide whether they can commit to serious amounts of upfront capital.
“Now that we have a ‘no earlier than’ date, insurance is the last remaining barrier to planning. We know that Government is aware of the insurance issue and AIF has provided evidence and data to support the case. Having injected huge consumer confidence, Government should intervene at this stage and ensure that our culture-defining independent festivals can mobilise and plan for this summer. With the cut-off point for many organisers at the end of the month, this really is the final countdown for many businesses.”
Tim Thornhill, director of Tysers Entertainment and Sport Division and live entertainment insurance industry veterans Bob Taylor and John Silcock, said they are working closely with live music industry umbrella organisation LIVE and insurance industry colleagues to urge the government to work with industry to find a solution.
Thornhill said, “The government has successfully created a scheme that has enabled the film and television industries to get back to work. Now they need to do the same for the live events industry. But the window of opportunity for this summer will slam shut very shortly. The government needs to act now.”
LIVE CEO Greg Parmley said, “Governments in Germany, Austria, Norway, the Netherlands and elsewhere are already backing schemes to allow production companies and their staff to plan for a safe return to live events. The UK rollout of the vaccine is cause for optimism in creating events that are safe but the industry will be significantly hampered without Covid event cancellation insurance.”