From today these businesses will be in for the fight of their lives, with the Government energy relief scheme due to end. The National Minimum Wage is also due to increase from the 1st April and with operating costs estimated to go up by over 100% over the coming months, the trading environment is becoming untenable.
It is now becoming very clear that the Government has spent the last 3 years intentionally trying to close nightclubs and venues, attempting to shut down dancefloors and stages across the country.
Nightclubs and venues across the UK have been one of the hardest hit by crises. With one nightclub lost every three days, just 870 Nightclubs remain in the UK today from 1446 in 2019.
When you step back and look at the journey and treatment of the industry, particularly nightclubs and venues across the UK, you have to question why they have been treated so harshly by the Government at such a critical time given our considerable contributions to UK Plc.
These businesses contribute billions in tax to HMRC and local authorities in taxation, but have seen very little support from the Government in return. Every one of these businesses has an important part in the recovery of the local economy and has a great importance within communities beyond the dance floor.
Michael Kill CEO NTIA Says:
“Nightclubs are a British institution, and are the bridge for many consumers to counter culture, a platform for artists new and old to perform and access audiences, for people to dance and socialize, supporting their physical, social and mental well being.”
“The current Government has never recognised the value of this sector, and will continue to undermine its importance, as it did in the late 80’s when the scene came together to fight for the “Freedom to Dance”.
“Our European counterparts work hard to recognise the value and importance of clubs and venues and lead the way in support and true collaboration. While the UK sees one of its greatest exports as a burden on Policing and local Government.”
“Over the coming months, we will see the impacts of Government inaction take hold, and many important night time economy businesses will be lost.”
“Intentionally shutting down our dancefloors, Ignoring the immediate issue and accepting the losses is not an acceptable approach, and will have a considerable impact on the future of the sector, but will not be forgotten.”
“It is inevitable that we will see a growing anger and frustration amongst the industry and supporters to take direct action, and we will be standing with them.”
How has the Government attempted to shut down Dancefloors across the UK?
- Cost Inflation Crisis – Budgetary Support
- Alcohol Duty Freeze has been welcomed for the short term, but the increase in duty this year will see Nightclubs impacting their wet sale margins by approx 5% due to having a higher spirits sales mix (Higher ABV), while pubs see the benefit of draught duty freeze.
- Current energy support scheme delivered between 2-300% over the previous bills, with a further reduction in support from the 1st April seeing a further increase of over 100% over the coming months with no control over service charges and no end to the crisis easing.
- Government hands businesses 75% rates reduction from April up to £110,000 Business Rates. Nightclubs and venues situated within major cities across the UK exceed the £110k cap in a huge majority of cases, as do many wet-led bars.
- The recent rates re-evaluation in particular for nightclubs saw valuations coming in on average at 10% higher, therefore reducing the 75% relief considerably when taking into account the re-evaluation and cap.
- The recent budget highlighted tax relief for classic culture, listing theatres, museums and galleries but with no consideration for counter culture which includes live and electronic music venues across the UK.
Post Pandemic and Cost Inflation Crisis:
- Authorities failed to recognise the correlation between Noise and Nuisance complaints and the post pandemic environments created as the night time economy reopened. Police used the period of closure to return to administer more control over businesses, through conditions and regulation placing, pressuring businesses into conceding position to be able to survive.
- Customer behaviour has changed since the NTE reopened and the increase in violence amongst people out at night and against staff has been reported widely. With over 850k new 18 year olds coming of age during the pandemic, many not being street savvy or understanding their limitations due to the lockdown periods. This has resulted in many licensed venues being vilified for these behaviours, with further regulatory controls being put in place by authorities, but with no accountability on the individual.
- With further challenges around Permitted Rights Developments allowing changes to be made to buildings and use of land without needing planning permission, in particular change of use. With landlords already nervous about the future and unpaid rents escalating, we saw a range of actions by landlords initially stopped by the moratorium, but with long term damages in confidence to the sector and many unwilling to invest.
Flashback to the Pandemic:
- Covid passports were enforced by the Government as a means of entry into Nightclubs and venues across the country, but pubs and bars were not required to do the same when they clearly displayed similar proximity and exposure environments without scientific backing.
- Electronic Music and Nightclubs were initially excluded from the Cultural Recovery Fund released by DCMS until the industry confronted the Government with the “LetUsDance” Campaign which changed that decision to allow for these businesses to actively apply for support.
- The main source of support for these businesses wa through commercial loans, of which many were still unable to access Bounce Back Loans or CBILS, which they are now still paying alongside the cost inflation crisis.
- At no point was there a scalable or accessible Government funding mechanism or grants scheme outside of Loans and Debt (Rateable Value Outside of Scope / One Off Payment Equivalent of Pub Operating Costs not Clubs). i.e. Deltic (The biggest Nightclub Operator in the UK pre pandemic) were burning cash at 1.6 million a month between rent and base costs and received £156K in support each month before going bust and being bought for an ⅛ of the value pre covid.
- HMRC excluded commercial nightclubs door admission fees from the 5% VAT Reduction, leaving them outside of the relief, and wet-led pubs, bars and nightclubs suffered as they didn’t sell food or had limited sales on soft drinks.
- When businesses were allowed to trade under Covid Restrictions, the only way these businesses could trade during Covid was to use their dancefloor as a table service area, but strictly no dancing, and or loud music to encourage dancing.
- Efforts to suffocate nightlife businesses including the 22:00pm curfew, which had no relevance or scientific reason, which was operationally counterproductive where customers were pushed onto the street to congregate in close proximity.
