finance

The show must go on but it needs insurance


A bank holiday weekend might have been the perfect time to watch a play or, for the brave, camp at a music festival. But audiences’ choices are slim: a dearth of insurance means just a third of London theatres have decided to open after a partial easing of rules. For festivals the statistics are even more stark. The UK government has guaranteed Covid-related cancellation cover to the tune of £500m when it comes to the film and television industry. It is time it extended its largesse within the performing arts.

It is an industry worth backing. By the government’s own reckoning, the sector in 2019 generated £7.9bn of gross value added and employed 250,000 full-time equivalent jobs. It is also not the preserve of London’s chattering classes: in 2019 theatres attracted audiences of 34m, the majority outside the capital. 

Private cancellation insurance is unavailable: event insurers reckon it will take a decade to recover from losses caused by Covid-related claims. Premiums for other insurance have meanwhile spiked. The theatre lobby forecasts that in the worst-case scenario of another three-month lockdown, indemnified losses would stand at £180m, which it is now asking the Treasury to guarantee. That seems a fair risk to shoulder for a sector whose box office and bar revenues stand at about £1.5bn a year, and where every pound spent generates another spent in hotels and restaurants.

To be fair, the government has done much to support the arts. It bolstered a £1.6bn culture recovery fund, and slashed VAT to 5 per cent for tourism and hospitality entities, on top of wider measures like the jobs retention and self-employed support schemes. But the sector is staffed overwhelmingly by freelancers and the self employed. The Institute for Fiscal Studies estimates that 38 per cent of workers with some self-employed income are ineligible for support schemes. 

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The Treasury’s film scheme also showed the net benefits of guaranteeing insurance: it brought projects to the UK and saved jobs. Oliver Dowden, the culture secretary, has said the government will only “contemplate” guaranteeing insurance more widely, and only if restrictions are fully lifted on June 21. The government should go further and commit to backing insurance for the performing arts, starting from when the road map for full easing is confirmed.

Even that may be too late. Certain events like music festivals are typically held over the summer. The concern is that government procrastination runs down the clock. Events take at least three months to plan, and the British weather means September is the latest when an outdoor event makes sense. Unsurprisingly, 92.5 per cent of organisers say they do not plan on staging events this year without some government-backed cover.

Theatres have less pressing time constraints but are more limited by existing restrictions. Few have opened since rules relaxed because social-distancing restrictions limit capacity to 50 per cent; a half-empty theatre is financially unviable where productions cost an average £130,000 a week to stage, not to mention the lack of ambience a half-empty theatre suffers.

Venues cannot attract external investors essential to survival without events cover. With a new variant threatening plans for June 21, the Treasury seems unwilling to guarantee insurance if it is more likely that it will pay out, particularly when many other deserving sectors also need help. The concern is understandable. The greater risk, however, is pulling the curtain down on one of the UK’s biggest draws.

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