The festival industry has reacted to the lack of announcement on festivals and business rates as part of the Comprehensive Spending Review yesterday.
The business rates review will now revert to back to March 2016, which gives the industry more chance to drive its case home to the Treasury.
Festivals and events have concerns about recent changes by the Valuation Office Agency to their business rates liability. Many festivals and events have started receiving business rates bills backdated by five years for land which has previously been exempt from business rates.
Paul Reed, general manager of Association of Independent Festivals (AIF), said events and festival organisers are hoping that the Government will use this as an opportunity to take action on business rates for our sector.
“The recent imposition of business rates on festival land by the Valuation Office Agency is already having far-reaching consequences, not only on the viability of festival and events but also on the rural landowners and communities that host them, and has the potential to reduce significantly the economic benefits festivals and events bring to rural areas,” he said.
“We have responded to the Business Rates Review consultation with an industry-wide coalition of 720 events and festival organisers, and demonstrated to Government how the VOA’s actions are endangering the significant contribution our sector makes to the UK economy and rural communities, but festivals and rural landowners will continue to suffer from the VOA’s unfair and inconsistent application of business rates unless action is taken.”
Support was also voiced by Melvin Benn, managing director, Festival Republic, who said he looked forward to continuing to engage with the Government ahead of the Business Rates Review announcement in March next year.
“The success of the UK festival and events industry is testament to the Government’s commitment to promoting the UK as a global investment destination, and festivals are a Great British success story unrivalled around the world,” Benn said. “However, the Valuation Office Agency’s change in approach, meaning that now business rates are being applied to festival sites, could have serious consequences for the sector and for the rural communities that benefit economically from festivals and events. We hope that the Government will seek to take action on this issue in the coming months.”
Independent research conducted by Optimity Advisors has demonstrated the significant economic contribution festivals make to the rural economy, and highlighted the risks of these benefits being lost should festival and events land continue to be classed as rateable by the VOA.
The research indicates that the application of business rates has the potential to impact festival viability, cause festivals to cease to operate or even move abroad, with the resulting loss of economic benefit to the UK and our rural communities.
The impact on rural landowners and farmers hosting festivals is also potentially significant. For two of the five festivals examined by Optimity’s research, business rates represent nearly 75 per cent of the profit made, or up to 370 per cent if backdated by five years.
This additional cost pressure would mean that rural landowners could be forced to stop hosting festivals entirely, or look for alternative land uses, which could lead to a significant loss of income to the local economy.
The industry has expressed concerns to David Gauke, financial secretary to the Treasury, and officials at HM Treasury in recent months.
The Business Rates Review announcement is now expected in March 2016.