Supply chain crisis, workforce shortage and Brexit impact mean it’s not back to business as usual for festival organisers
Call for continued VAT relief on tickets and Gov-backed loans for suppliers
Warning comes during AIF’s Festival Congress 2022
A live entertainment supply chain crisis, workforce shortages, and the effects of Brexit could create a ‘perfect storm’ as the 2022 festival season approaches.
That was the warning from the Association of Independent Festivals CEO Paul Reed this morning, during his opening remarks to indie festival promoters at the trade body’s 2022 Festival Congress event.
Reed said that, while there is widespread optimism about the return of a full festival season this year, it will not be a simple case of getting back to business with serious challenges still ahead for the live industry.
He warned that suppliers simply do not have cash reserves to invest further funds into inventory, in a year when there will be near unprecedented demand and event activity both across the commercial market and also from Government organised events such as Unboxed and the Jubilee celebrations.
Festivals are facing cost increases of 20-30% across operations and infrastructure. This is a result of real cost increases in labour, staffing, materials and transport being passed on by suppliers. It is an increase way beyond inflation in the UK, which hit a three decade high of 5.4% in December 2021 and is expected to exceed 7% in the spring. It can’t be simply passed on to the customer since 53% of festivals in the UK of 5,000 capacity and over did not take place in 2021, according to AIF data, many of which are honouring tickets purchased in 2019 and rolled over to 2022.
Furthermore, the Government’s Live Events Reinsurance scheme simply isn’t fit for purpose and festival organisers aren’t taking it out due to limited scope and excessive cost so isn’t enabling organisers to plan with confidence.
Reed called for ongoing support from Government to alleviate pressures in the form of continued VAT relief on festival tickets to maintain the current reduced 12.5% rate on tickets beyond the end of March; and to also look at some form of Government-backed loan scheme for suppliers to alleviate some of these pressures and encourage investment in the festival supply chain.
Reed also urged the Government to reconsider removing tax incentives to use certain biofuels, stating that this should be kept at the current rate to encourage use of greener fuels at festivals.
During his opening speech at the 2022 Festival Congress, which is being held in Bristol today (Tuesday, February 15) and has attracted more than 300 delegates from across the independent festival industry, Reed said: “The UK festival industry is a powerhouse, contributing £1.76bn in GVA to the UK economy and supporting 85,000 jobs. The cultural and wellbeing benefits of festivals cannot be measured. We know they are profound, and the absence of festivals has been felt keenly by artists, the wider supply chain and of course audiences.
“We are facing a perfect storm in many ways. I’ve spoken with many of you in the last few weeks about supply chains, loss of skilled workforce, 20-30% increase in costs across the board and a Government-backed insurance scheme that isn’t simply isn’t fit for purpose despite our best efforts.
“We may be emerging from the shadow of the pandemic in the UK, but this year will not be a case of ‘back to business as usual’ without critical support for festival organisers. That’s why we’re calling on the Government to aid our recovery and maintain the current reduced 12.5% rate on tickets beyond the end of March, as well as looking at some form of Government-backed loan scheme for suppliers to alleviate some of these pressures and encourage investment in the festival supply chain. We also urge Government to reconsider removing the tax relief for certain biofuels, which further increases cost and is completely counter-productive to promoting better environmental practice across the sector.
“AIF fought hard to represent the needs of independent festival operators during the course of the pandemic and made sure your voices were heard in the corridors of power. We will continue to do so during what is still a very challenging time.”