Tax Reliefs: Theatre, Orchestra and Museums and Galleries Exhibition

(Limited Text - Ministerial Extracts only)

Tuesday 15th October 2024 Lords Chamber

[Lord Parkinson of Whitley Bay]

To ask His Majesty’s Government whether they plan to maintain the current rates of Theatre Tax Relief, Orchestra Tax Relief, and Museums and Galleries Exhibition Tax Relief, as announced in the Budget on 6 March, beyond the current Spending Review period.

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

My Lords, the Government are committed to supporting the creative industries, which play a key role in driving economic growth. As part of the Government’s industrial strategy, a creative industries sector plan will be developed, working with business, local leaders and sector experts. I am unable to comment on any specific taxes ahead of the Budget; any tax changes will be confirmed in the Budget on 30 October.

[Lord Parkinson of Whitley Bay (Con)]

My Lords, I understand that the Minister is limited in what he can say ahead of the Budget later this month, but the Government were willing last week to provide certainty for one part of our brilliant creative industries by confirming that they would continue the support we announced in March for independent film production. Does he acknowledge that brilliant organisations in theatres, orchestras, museums and galleries are already planning their programmes for 2026 and beyond, and need certainty too? If the Minister cannot give them that today, will he press that point on his colleagues at the Treasury and urge them to confirm the permanent uplift of the tax reliefs we announced in March, particularly in a week when the Government are enlisting the help of cultural icons to promote investment in the UK?

[Lord Livermore (Lab)]

I know that the noble Lord has genuine concern for, and a great deal of expertise and experience in, the arts and culture sector. As I said, the Government are committed to supporting the creative industries, and to creating good jobs and accelerating growth in film, music, gaming and the other creative sectors that the noble Lord mentioned. That is why we have ensured that the creative sector is a key part of our industrial strategy. As the noble Lord said, I cannot comment on any specific taxes, but he will know that the Government face a very challenging fiscal situation. He will know that the previous Government left a £22 billion black hole in the public finances, which they concealed from the public, Parliament and the OBR. Addressing that will involve very difficult decisions on spending, welfare and tax.

[The Earl of Clancarty (CB)]

My Lords, given that there are regional museums that are currently facing insolvency, does the Minister agree with me that, while tax relief is useful—indeed, necessary—the real concern for the arts is the wider one of inadequate funding levels?

[Lord Livermore (Lab)]

Clearly, the Government recognise the importance of the arts to our public life and support the funding of the arts at the appropriate level. Unfortunately, I will have to say that the Government will set out their plans for supporting the arts in the coming spending review.

[Lord Razzall (LD)]

My Lords, I am absolutely delighted to join in a Question from the noble Lord, Lord Parkinson, because it gives me the opportunity to thank him from our Benches for the collegiate way in which he conducted himself as a DCMS Minister.

Bearing in mind the Minister’s commitment earlier, will he give any indication as to whether at yesterday’s investment conference there were any more commitments to put money into the film industry, or indeed the arts, apart from M&G’s investment in a new film project? Does he recognise that there remains an issue around the visual effects tax relief, which was announced in 2023 but for which implementation was stalled by the election? What is the status of this important tax relief? It is obviously vital to ensure that as much post-production work as possible stays in the United Kingdom.

[Lord Livermore (Lab)]

I am grateful to the noble Lord for mentioning the investment summit yesterday, when the Government were able to announce a total of £64 billion of investment into the UK economy. That was a vote of confidence in this Government’s handling of the economy and the fact that our economy is now open for business. On the specific tax relief that the noble Lord mentioned, I am afraid that I cannot comment on speculation about any specific taxes ahead of the Budget.

[The Lord Bishop of Guildford]

My Lords, the current relief offered to instrumental groups of 12 or more players does not extend to choirs, a situation that is logically indefensible, especially given the growing popularity of choirs across the nation. Can the Minister say whether the Government have formed a view on extending the relief to choirs, as requested by musical organisations all around the country, not least given the recent questions over the future of the BBC Singers?

[Lord Livermore (Lab)]

Orchestra concerts with a vocal element are not excluded from the orchestra tax relief. Concerts with a vocal element, such as a choir, may be eligible if the instrumentalists are the primary focus of the concert. The current rules ensure that the orchestra tax relief meets its objective of supporting and incentivising orchestra concerts specifically.

[Baroness Keeley (Lab)]

My Lords, on the benefits of the orchestra tax relief, the permanent 45% rate has been transformative. It enables UK orchestras to build new audiences, support new productions, generate employment and develop future talent. The cost of the orchestra tax relief was only 1.5% of the total creative tax reliefs in 2022-23. Does my noble friend the Minister agree that keeping this tax relief is consistent with the Labour Government’s mission for economic growth?

[Lord Livermore (Lab)]

I am grateful to my noble friend for her question. The creative industries are absolutely a major driver of economic growth in this country. She will be aware that I am unable to comment on speculation about specific taxes. In the coming Budget, we must rebuild our public finances to ensure economic stability, including by addressing the £22 billion black hole inherited from the previous Government, which will involve difficult decisions on spending, welfare and tax.

[Lord Leigh of Hurley (Con)]

The Minister again raises the alleged £22 billion tax hole. He was asked, this time last week, to explain what was in the £22 billion tax hole. He could identify only two items, which amounted to £9 billion—that is all he could find. It now transpires that HM Treasury’s policy paper of 2 August 2024 reveals that £9.4 billion of the so-called black hole has been created by Labour’s political decision to give public sector workers above-inflation pay grades. Does the Minister not agree with most of the House that this is a fictious black hole, created by Labour?

[Lord Livermore (Lab)]

I am extremely grateful to the noble Lord for giving me an opportunity to talk about the £22 billion black hole in the public finances, which was concealed from this Parliament and the public, and, most importantly, from the Office for Budget Responsibility, which has confirmed that it exists and set up an inquiry to establish how it happened and to ensure that it does not happen again. The noble Lord asked me to list what went into the black hole. He knows, for example, of the £6 billion overspend on the asylum system, including the failed Rwanda scheme; of the £3 billion of uncosted commitments on road and rail projects; that the reserve was overspent, three times over, just three months into the financial year; and that there was a black hole in the spending plans for the public sector pay rises because the previous Government did not hold a spending review and did not give any affordability criteria to the pay review bodies. That is why it has happened and that is what we will ensure does not happen again.

[Viscount Colville of Culross (CB)]

My Lords, I declare an interest as a trustee of the Museum of the Home. A recent survey by civic museums has shown that there is a backlog of hundreds of millions of pounds of urgent maintenance outstanding for our great cultural institutions, including the British Museum. Roofs are leaking, threating the museum building structures and the collections within them. Is the Minister aware of the importance of continuing the museums tax relief to ensure that this backlog is addressed?

[Lord Livermore (Lab)]

I am grateful to the noble Viscount for his question. We of course recognise the important role that the arts play in our lives. The Government will set out their plans to support the arts at the forthcoming spending review.

[Baroness McIntosh of Hudnall (Lab)]

My Lords, I think that everybody has heard loud and clear from my noble friend that he cannot make commitments that are waiting on decisions in the Budget. However, when he is talking to his colleagues at the Treasury, will he please stress the interdependency of all aspects of the cultural industries? Some generate more income than others but none is less important than any of the others, and without a proper sense of how they connect, all aspects of the cultural industries will suffer. Will he take that back to the Treasury and do the best he can to get the point across?

[Lord Livermore (Lab)]

I am very grateful to my noble friend. To be honest, I think that the point has already been registered; that is why we have made the creative industries a key part of our industrial strategy. The Government are committed to supporting the creative industries, including all the sectors that have been mentioned today, and that is why they will form a key part of the industrial strategy that was announced yesterday.

[Baroness Fleet (Con)]

My Lords, can the Minister tell us whether he recognises the vital role that the orchestra tax relief plays in the performing arts sector?

[Lord Livermore (Lab)]

I am afraid I cannot comment on any specific tax.

[Baroness Quin (Lab)]

My Lords, having not had the opportunity before, I warmly welcome my noble friend to his role. I very much endorse the comments that have been made about the importance of tax relief for museums. Will the Government, as I hope they are already committed to do, consult with museums—including in my own region of the north-east, where this has been particularly helpful—before any further measures are considered?

[Lord Livermore (Lab)]

In drawing up future tax policy the Government will of course consult with all interested stakeholders.