The theatre sector’s survival comes down to money – and government help
OPINION
October 8, 2020
BY SEAN EGAN
So far, many arts organisations have weathered the Covid storm despite being forced to make redundancies. With the Culture Recovery Fund allocations due to be announced, theatre lawyer Sean Egan explains the challenges that lie ahead.
Socially distanced reopenings, clockwise from top left: Six at the Lyric Theatre in November; Sleepless at Troubadour Wembley Park Theatre; the National Theatre’s Olivier; Talking Heads at London's Bridge Theatre. Socially distanced reopenings, clockwise from top left: Six at the Lyric Theatre in November; Sleepless at Troubadour Wembley Park Theatre; the National Theatre’s Olivier; Talking Heads at London's Bridge Theatre.
I want to celebrate the huge efforts of theatre organisations throughout the UK to overcome the ravages of the virus by creating work, helping colleagues and trying to get the theatre sector back on its feet. But no matter how much energy is put in, what happens next is all down to money and government help. The government has many calls on its resources, but it would be a tragedy if a world-leading industry, which is growing faster than most others in the UK and creating substantial tax receipts and jobs, is allowed to shrink to a shadow of its former glories.
It was great to hear that Nimax Theatres plans to open in the West End in October, that shows at the Bridge Theatre and National Theatre were going ahead as well as numerous other socially distanced and outdoor work. As encouraging as it is, the reality is that these are carefully picked shows generally with smaller casts, and are unlikely to come near to break-even.
Nica Burns of Nimax is clear that her shows will be loss-making but the decision was a choice between bearing redundancy costs or using those funds as a contribution towards shows. This is a great gesture but not a basis on which the industry can move forward.
By the end of October, we will start to see how many of these shows have worked and whether there are additional health measures in place as a result of increasing numbers of new cases. We will also know which organisations will have been successful in their applications to the Culture Recovery Fund, of which £500 million is available as grants and £270 million as repayable loans.
‘Recent live shows have smaller casts, and are unlikely to come near to break-even’
The two glaring omissions in the support so far announced are for commercial producers and freelancers. For different reasons they fall between the cracks of most of the various government initiatives. Most independent commercial producers raise finance on a show-by-show basis and won’t qualify for CRF funds and didn’t receive part of the Arts Council Emergency funds announced in March – in total £65 million, of which £21 million went to freelancers.
Investors will not fund commercial productions unless there is certainty that the show is financially viable and will take place. The absence of insurance available in the event of lockdown or illness is a huge current issue as the Society of London Theatre has emphasised. The government put in place a scheme to support film and television production – why not theatre too?
Trusts and foundations have responded to the crisis wonderfully – being flexible and providing rapid and informed decisions that have helped many organisations and individuals, but they are running down their reserves and cannot sustain this effort indefinitely.
The decisions made to allocate CRF resources will have a profound impact in different ways. From the eligibility criteria, it seems unlikely that many commercial organisations will receive grants so the £500 million will mostly support subsidised cultural institutions across a wide range of art forms (including museums). This is a large figure but it seems likely to fall far short of the total applications submitted. Many unsuccessful organisations will go out of business, but even those that are successful will only have additional funding to help them through to the end of March. But what happens then?
The government’s Winter Economic Plan is welcome, particularly by extending the VAT reduction on tickets until March but there is no sector-specific help. Though the wage subsidy measure is good news, and will help, it is substantially less generous than the furlough scheme. When an employer might look at reducing staff hours, the new scheme has a financial incentive for the employer to move to having fewer staff who are full time. There is no help for freelancers except for extending the existing scheme, which has been of little use for most freelancers in the arts. So it looks like being a winter of more redundancies and little opportunity for freelance workers.
The government spending review setting spending from April 2021 has started and the expectation is that the Department for Digital, Culture, Media and Sport’s share will be comparable to past years. So without additional crisis funding or moving to Stage Five of the government roadmap by March the outlook is bleak.
It is also worth looking at the effects of the CRF repayable loans. These are open to the same sorts of cultural institutions as the CRF grants but must be for a minimum of £3 million. It seems that organisations such as the National Theatre and the Royal Shakespeare Company will have no option but to apply to this fund given their huge overheads and may be applying for sums of £20-30 million. An interest rate of 2% over 20 years may sound fine but it equates to £500,000 every year, which will need to be funded out of cuts to programming, additional donations or higher ticket prices. The problem is that it is hardly attractive to ask donors for money to pay back a government loan, especially when the interest rate is well above bank base rates. It is perhaps no surprise that relatively few organisations seem likely to apply.
‘The cost of keeping people in the industry will be less than the cost of training people to replace them’
As for freelancers, by next March they may have had precious little work for a year with the lucky ones receiving £2,500 from Arts Council England’s emergency fund. It will be no surprise that many actors, musicians, dancers, production and creative teams (and many others) will have moved out of the industry and be reluctant to return any time soon. The much vaunted ‘trickle-down’ effect doesn’t work when organisations are focused on their own existence. Apart from creating a talent vacuum for years to come, the cost of keeping people in the industry will be less than the cost of training people to replace them.
A handful of dance and theatre organisations are in good financial shape – for instance, the largest touring companies that are continuing to receive Arts Council grants but are unable to stage the large-scale work they are funded to make. Most companies are really struggling but are managing to do plenty of great work and some of these better-off companies may have reserves well above the benchmark level allowed in the CRF eligibility criteria. These organisations are all doing some work but the question is whether they are doing enough, given the urgent need within the industry. I would urge these organisations to review whether there is more they can do now rather than wait until it is clearer how and when venues will reopen. Even if they all act, it won’t drastically help the sector as a whole, but it could provide respite for some freelancers.
- This article was published in the Stage Newspaper on October 8, 2020 -
About the author
Sean Egan is an independent lawyer with over 25 years’ experience providing legal and business advisory services to theatre, film, arts and creative industries.
Share this article: