Covid-19: Economic Recovery

Earl of Clancarty Excerpts

Tuesday 20th April 2021 Grand Committee

[The Earl of Clancarty (CB)]

My Lords, I will focus my remarks on the creative industries, particularly music, but with some detours along the way. I am grateful to UK Music and the Incorporated Society of Musicians for briefings.

In addressing jobs and livelihoods, I will also touch on the experience of the self-employed, in terms of both employment and unemployment. In this sense, the music industry is particularly relevant because, alongside others in the performing and visual arts, 88% of the workforce is self-employed, compared with 30% in the creative industries and 15% in the UK workforce as a whole at the end of 2019, according to ONS figures. This represents a trend towards greater self-employment in the economy during normal times. This trend has significantly stalled due to Covid.

The creative industries normally employ about 2 million people and are worth over £116 billion a year. As a whole, the sector is of course grateful for the support provided over the last year in the form of the JRS, the Self-employment Income Support Scheme, the Culture Recovery Fund and more, but more still needs to be done to support individuals who have fallen through the gaps in support and to provide schemes that will facilitate recovery.

The Government are now concentrating on a road map to recovery, yet, as UK Music points out, it will be necessary to continue support beyond the end of restrictions for individuals, organisations and industry as a whole to get our arts and creative industries back on track after such a devastating year. They will need to pay off debts, build up capital and get their businesses going again. Of course, that depends on the road map itself not significantly changing.

Music, like all the performing arts, has suffered particularly badly, yet it is hugely valuable to the economy and was worth £5.8 billion in 2019. Of course, it is part of the wider cultural landscape that, in normal times, encourages tourism to the UK and is a driver for the local economy. It will also be significant in restoring a sense of community. These are roles that it and so many of the other arts need to be playing again.

However, it is important to point out the damage: 70% of musicians got less than a quarter of their usual work in 2020, grass-roots music venues lost 75% of their income and technical supply companies lost 95% of theirs. The Government have listened to some of the requests from industry, but outstanding concerns include the need for a Government-backed insurance scheme for live events. Austria, Norway and the Netherlands have such schemes, and the UK has done this for film and TV.

Festivals are already starting to cancel since they cannot afford to take the risk. This potentially represents huge economic losses, not just for the businesses concerned but for the local community. Boomtown, in my area of Hampshire, is the latest to cancel. Will the Government also extend the VAT reduction on cultural tickets to the end of the year? This would considerably help the next festive season. Also, 100% rate relief should be extended to the end of 2021-22 for qualifying businesses in England, as is the case in Wales and Scotland.

Last month, the University of Leeds’s Centre for Cultural Value analysed data from the ONS’s Labour Force Survey, concluding that the current crisis for freelancers in the creative industries is hitting different demographic groups in markedly different ways. Women freelancers have been hit badly in certain areas, such as publishing and the film industry. Workers under the age of 30 have been more detrimentally affected than more established, older freelancers.

The self-employed do not have the traditional structures of protection afforded by established unions or even companies, and this possible loss of talent is hugely worrying. In this light, we need to rethink how the self-employed in the arts should be treated in crises such as this. The Minister will recall the reaction to blithe assumptions about retraining; this is not about the removal of dead wood. The loss to society of young people’s hard-won, and often innovative, skills would be substantial.

Therefore, I am glad that support for individual freelancers will be continued until at least September, but support is also needed for those estimated 3 million who have still received nothing for the last year for a variety of reasons, including being on PAYE or newly self-employed. Many of them work in the creative industries. Those problems have been laid out in detail in the excellent report by the Gaps in Support All-Party Group in late February. The Minister should take a look at it if she has not seen it because it contains recommendations that remain relevant this side of the spring Budget.

The problems ahead are wider in at least a couple of ways than the terms of the debate imply. First, it is not just Covid but, of course, Brexit which is having a negative economic effect. For many small businesses and the self-employed it will be less a recovery than a nightmare which has hardly begun. I will not make detailed points in this debate about Brexit, but it is worth saying that we cannot talk about economic recovery or otherwise unless we include Brexit in the equation.

Industries should also be trusted to know the difference between the effect of the pandemic and the effect of Brexit on their businesses. Many musicians, and others in the performing arts, depend on touring in Europe for their livelihoods. Tours are already being cancelled because of Brexit. In a new survey by the ISM, 94% of music businesses say that the Brexit trade deal has already had a negative effect on them, while 79% say that they are concerned about the future of their business in the next year or so, with particular regard to Brexit. These are not teething problems but the permanent result of the restrictions and red tape written into the TCA, unless the Government act to mitigate these effects most urgently through a separate, bespoke visa waiver agreement, which is strongly supported across the performing arts.

Secondly, the protection of jobs or indeed the creation of new ones is only part of the story of survival. As the Government themselves say, not all businesses can survive, but if this is the case we must do everything to help those who have lost work to prepare for a return to work. This is something we are signally fundamentally failing to do. As the noble Baroness, Lady Lister of Burtersett, pointed out in her debate on the inclusive society last week, a Heriot-Watt University-led study for the Joseph Rowntree Foundation, which the noble Baroness, Lady Humphreys, has already referred to, reported in December last year that 2.4 million people experienced destitution in 2019, before the pandemic even began—a 54% increase since 2017, including more than half a million children.

It needs to be said that £20 a week for many people in well-paid jobs is neither here nor there, yet such is the inadequacy of universal credit to provide, alongside other deficiencies in the system such as the delay in payment, that you may be in a reasonably paid job one moment and visiting a food bank the next. As ExcludedUK has pointed out, the self-employed, among others, are now losing their homes as a result of losing work during the Covid pandemic.

We urgently require a new way of looking at support for the unemployed. I am in favour of a basic income but, at the very least, people need to be properly supported whether in work or not. For too long we have had a system where so-called discomfort as a policy is built in to encourage people off benefits. It does not work. This policy needs to be recognised for what it is. It is, quite simply, cruel, and the only effect it has is towards greater poverty, as we can see from the huge rise in the use of food banks experienced by nine out of 10 councils, according to the recent survey by the District Councils’ Network. In the case of vocational careers the result will be a sad and avoidable loss of talent, which should be an investment for this country. Support for the unemployed needs to be significantly increased, and that should be part of an overall plan for recovery.