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Black Sky Thinking

Stop The Music: How Rocketing Business Rates Will Kill Small Venues
Patrick Clarke , March 3rd, 2017 11:25

The Government's recent review of business rates will almost certainly put grassroots and independent venues across the country out of business. Patrick Clarke speaks to venue owners to explore the very serious repercussions.

The Lexington's Stacey Thomas (far left) and other independent business owners protest rising business rates

To run an independent venue in Britain has for many years been a stressful proposition. From astronomic rent rises and noise complaints from neighbours to draconian licensing laws, the people behind these breeding grounds for new music have been kicked from all sides for decades. Though many venues have been forced to close, somehow the industry has struggled on, but now there's a new threat to grassroots music that might prove even more deadly, putting the future of even the hardiest of survivors in jeopardy.

The threat this time around is the Government's recent review of business' rateable value, their first since 2008. This threatens to land music venues, along with many other small, independent operations, with a sudden and astronomical increase in their business rates. A business' rateable value is calculated in relation to a number of factors, primarily to reflect changes in the property market. This value is multiplied according to a myriad of reasons – for live venues usually by between 0.46% and 0.48% - and the resultant figure, the company's business rate, is paid annually to the local council. The value of property has increased dramatically in the inner city areas where many live venues are situated, particularly in London, meaning that in some cases the rateable value of independent venues is increasing by as much as 200%. To those who run these venues – usually for minuscule financial profit as it is – this news is nothing short of devastating.

One of the sites facing the most severe of increases is The Lexington in the heart of the London borough of Islington. The venue's rateable value is currently £59,500. When I meet with owner Stacey Thomas she shows me the new figure on the government's online rate calculator: £199,000. Transitional relief means they won't be paying the full new rates of £95,520 a year right away, but they will be forced to pay an extra £14,000. "£14,000 is more than half a salary for one of our managers," Thomas says. "As a business of cultural importance to the community we can't contribute to grassroots music properly if we keep getting penalised."

Because they're classified specifically as a pub, The Lexington's increases are calculated slightly differently, by taking into account 'fair maintainable trade'. However as a music venue, The Lexington is not your average boozer. "They think we're trading really high, yet we're getting penalised for it," says Thomas. "We don't have a lot of footfall, we're a destination venue. We make that trade by who we know and our contacts. We're what's termed an extraordinary operator. If Mr and Mrs Joe Publican were to run it, what turnover would they have? That's what fair maintainable trade is, and the fact that we trade a lot higher than that is due to us being extraordinary."

The 100 Club in Oxford Street, meanwhile, is one of the most famous independent venues still standing in Britain, aside from perhaps the now significantly more tourist-friendly Cavern Club. Their rates have risen by £18,000 a year. "And that's on top of rent of over £200,000," says owner Jeff Horton. "It's getting to the point now where independence of any kind is at a crossroads. You've either got to be massive and corporate or you're going to be left in the gutter."

The only way The 100 Club can continue to stay afloat is to continue to search for commercial partners. A partnership with Converse that saved the venue from closure in 2011 came to an end last year, and debts have already begun to mount while Horton fixes up a replacement to the shoemakers, yet not all venues can be blessed with the historic status necessary to attract such sponsors. "I'm exceptionally lucky," he says, "but it's a very different story up and down the country. What on earth are they going to do? Whether you're a live music venue or a café its becoming more and more impossible to be independent now, and that's where you get stuff that's a little left field. If you go to most high streets up and down the country now it's like corporate terrorism. There has to be some help from somewhere, even it means just not whacking the business rates up. You can't continue to keep taking and taking and taking."

Were it not for his partnership income, the founder and CEO of the Music Venue Trust Mark Davyd points out, Horton would have to take an extra £120,000 in ticket money to spare the expense of his new business rates. He's already somewhat reliant on tribute acts as it is, mostly those rehashing the spirit of those original punk progenitors that helped form the reputation on which the club now survives. "They help keep the wolf from the door. You could get up yourself and purist but you've got to pay bills. Whether you like it or not, if it's gonna fill your club, you've got to do it. We're a long way from being able to pick and choose what they do," he says.

All manner of small businesses will suffer from the rates rise. High streets throughout Britain will lose what small semblance of individuality they still hold once independent businesses surely fold under the pressure; this is far more than simply a music industry issue. However it's worth pointing out that the role grassroots music venues play – on a purely economic level – goes beyond your average inner city fixture.

As Mark Davyd says, "We've researched this and every visit to these music venues spends on average £17 on food and transport in other businesses around it. If you've got 100 people going to a gig, that's £1700 out of the local economy. It's not difficult to plot the line. Why do you leave your house on a given evening? If there's no gig people won't go out. They're not going to walk into town, stand there for four hours then go home, are they?"

On an even wider level, as Horton points out of The 100 Club, "I've always said London is the most sought after holiday destination in the world for one reason, its music and arts heritage. Especially the younger holidaymakers, they're here for our music and arts heritage, and we're destroying it."

The British live music economy is worth around £4.1 billion. The vast majority, of course, does not come from grassroots venues, but from sell-out stadium tours by the likes of Ed Sheeran and Adele, yet it's hard to see how a British act would even reach such heights were the vital stepping stone of smaller venues taken out of the live music model. "All of our biggest exports performed in one of these clubs as almost the first thing they did," Davyd says. "You take Adele out of the British music economy and we're not looking anywhere near as clever. You take out Ed Sheeran, he played 380 gigs at this level before he broke. These aren't just cultural issues, it's not just that I really like live music, there's a whole bunch of cultural and social stuff that results in economic activity."

I ask Davyd a blunt question; could this rise in business rates this be the death of truly independent live music venues? "I'll give you quite a blunt answer," he says. "Yes. It may be possible to manage not closing, but the way that they will manage that will be to not put on as many new and emerging bands, to retreat into more commercial activities, and if they only put on things that were going to be commercially successful, British music will be shit. It would be ABBA tribute nights in every venue. We need them to take risks. When you slap a £20 grand bill on a live music venue, they stop doing the programming we need them to do, what the whole industry needs them to do. You can't even blame them, [but] that's almost worse than them closing."

Perhaps surprisingly, this isn't merely the result of austerity, with cash-strapped councils having to raise taxes to make up for a shortfall in funding from central government. Incompetence seems to be the greater culprit. The rates review had been coming for years, its appearance was no surprise, but when it came to the execution almost no consideration seems to have been taken of the fact that since the last review, property value has immeasurably inflated in inner cities. "There was going to be a rate review, this isn't something the government has called to cover anything else up, but what we need is something that's much better designed for the specifics," says Davyd.

Furthermore, the idea that the social, economic and cultural impact of the grassroots live music industry might be lent the particular recognition it sorely needs from the government is frankly laughable, for Horton at least. "I have always felt that there's a number of people in authority that think we're doing the devil's work – with late nights, alcohol, girls and boys mixing together, they think there must be something bad going on. I kind of get that vibe all the time."

Older cultural institutions are not treated as such. As Thomas points out: "I do know that theatres and comedy clubs get rates relief and funding from the Arts Council, but music venues aren't considered to have cultural significance. Theatre, opera and dance goes back hundreds of years, live pop music only goes back a few decades. It takes a long time for big government bodies to instil some sort of change. The funding that can be provided if music venues were recognised as having cultural significance, would make a real change. If we were recognised in that sense we could apply for funding as an asset of community value, but we can't."

That this is an issue born of clumsiness, of overlooking the simple details, means that the upside is that there can be realistic aims to the fightback. "This isn't a lost cause, it's just that the government wasn't aware how bad this would be," says Davyd. "This can all be managed, what we want to say to central government is 'here's the information you haven't taken account of'. It's not gonna be at huge cost to the treasury.' We're only talking about 450 or so of these venues across the UK, but we are talking some of the most iconic."

This news comes, awkwardly, at a point where London's live music economy seemed finally to be on the up. In January, the Mayor Of London Sadiq Khan was keen to make clear his delight that for the first time since 2007, the number of grassroots live music venues had remained stable. "Grassroots venues are the foundation of our successful music industry. We've taken positive steps to address some of the challenges facing grassroots music venues, but there's still much to be done. That's why I've recently appointed Night Czar Amy Lamé to act as a champion for live music venues and the night time economy and will ensure that the Agent of Change principle is implemented across the capital – delivering real change for Londoners," he said.

These words were echoed at the time by Lamé, yet it cannot be stressed how much the time is now to put those platitudes into practice. In a statement, Lamé has said of the business rates: "The Mayor has warned the Chancellor that the scale and suddenness of the planned business rates hikes in London will have a negative impact on businesses across the capital, with the possibility of some having to close down. In my first few months as Night Czar, I've met many venue owners who tell me that this is an area of major concern for them."

She continued: "It is of utmost importance to the Mayor and me that London's venues are given the support they need so they can continue the significant contribution they make to London's economy and its reputation as a world-leading destination for live music." However Lamé was unavailable to answer requests from The Quietus to expand on what this "support" might entail.

The Mayor's Press Office did, however, make the point that it is the Government that sets business rates, not City Hall, and that the Mayor has been lobbying the Chancellor for more generous transitional arrangements that will phase the impact of this increase slowly. We're also assured by them that they'll be looking specifically into grassroots music venues in the near future.

In a void of a clear response from the Government to their concerns, leadership of this urgent, crucial fight must for now lie in the hands of the small business owners themselves. With The Government's latest budget to be published in only 6 days, at time of writing, protests and petitions are underway. There is action local councils can take too - by raising council tax, for example, or authorising special rates relief for sites deemed as having cultural importance.

Music fans too are urged to take action themselves. As Davyd says, "The main thing anyone can do is go to gigs. If everyone went to one extra gig a month, you'd be amazed at the difference it could make. People might not take risks with music even though they want their local venue to. That's the main practical thing. If people find themselves more wound up than that, write to your local authority. If you live in Hackney, write to Hackney councillors and say 'I'm very concerned about the impact of the rate review on my local music venue that I like to go to. What are you going to do?'"

Unless councils across the country have a change of heart, we risk another swathe of venue closures. With the imperative to maximise revenues at all costs, whatever independent live music scene survives today will offer fewer opportunities to the more leftfield artists that The Quietus tends to cover, and for more mainstream acts to find their feet. Venues will need to sell out as often as humanly possible to cover astronomical new costs, in which case you can say goodbye to the thrill of live discovery, and say hello to the tribute acts, the only truly reliable floor-fillers. That's a vision of Brexit Britain we really do not want to see.