Asked by
To ask His Majesty’s Government what plans they have to maintain
Theatre Tax Relief at the higher rate of 45 per cent/50 per cent
for the next three years; and what assessment they have made on
the impact of that relief in facilitating growth and investment
in the sector.
The Parliamentary Secretary, HM Treasury () (Con)
My Lords, at the Autumn Budget 2021, the Government temporarily
increased the headline rates of theatre tax relief to 45% and 50%
in recognition of the impact of the Covid-19 pandemic on the
sector. The Government acknowledge the concerns of the industry
about the upcoming taper of the rates in April, and we will keep
this matter under review.
(Lab)
My Lords, when I tabled this Question, I hoped that I would be
helping the noble Lord, , in his annual debate with
the Treasury over tax levels. The theatre tax sector generates
nearly £2 billion extra value added to local economies. Does the
Minister agree that reducing theatre tax relief at this stage
would be premature and harm the sector’s recovery? What other
forms of support does she envisage providing, given that
audiences to theatres have recovered to only 73% of pre-Covid
levels?
(Con)
My Lords, I should remind noble Lords that the level of tax
relief will remain enhanced from April at an elevated rate of 30%
or 35%. I know that my noble friend and the Secretary of State
have been engaging with the sector carefully to hear about its
ongoing challenges and, as the noble Lord has said, they have fed
that back across Whitehall and to the Treasury.
(Con)
My Lords, the theatre tax relief has been a resounding success,
and the higher rate has resulted in one US producer increasing
their investment in UK theatre by 250%. We all have a duty to
make my noble friend as happy as possible, so
will the Minister acknowledge that administering the tax relief
costs a great deal of money? Will she either provide a special
grant to the British Film Institute, which administers the film,
TV and audio-visual tax credit, or introduce a levy on the film
tax credit—a very small levy—to cover the institute’s
significantly increased cost in administering it so well? She
will make our noble friend extremely happy if she agrees to
that.
(Con)
My Lords, there are two different tax credit systems, as I
understand it: one for film and audio-visual and the other for
theatres. Both have huge value to the sector and also to the
sector’s contribution to our economy. We are committed to
ensuring that they continue to be able to contribute in that way.
We want to make the system as simple to operate as possible, and
all suggestions for doing that are gratefully received.
(CB)
My Lords, the creative future report from the Communications and
Digital Committee of your Lordships’ House, on which I sat until
recently, called on the Government to benchmark the UK’s creative
industry tax-relief schemes against those of other countries that
are now offering similar schemes but with more attractive rates.
This includes a new theatre production tax credit from New York,
which is a direct competitor. What assessment have the Government
made of the threat that this kind of international competition
presents to the UK’s continued pre-eminence in the creative
industries?
(Con)
The noble Baroness is right that we should think about our
international competitiveness. Tax reliefs for the cultural
sector are not actually that common, but she has identified one
in New York. We have looked at our scheme against that and,
overall, our scheme is more generous than the New York one. We
are confident that it provides great support for our theatres,
not just within the UK but as international competitors as
well.
(LD)
My Lords, given that the Minister has mentioned it, may I extend
the Question to cover the Government’s attempt to modify HETV tax
relief for all audio-visual productions? I appreciate that this
is out for consultation, but does she agree that it would be a
mistake to increase the minimum expenditure threshold for HETV
relief to above the current £1 million per hour, as to do so
would threaten the production of many low-budget domestic British
dramas, comedies and documentaries? Does she acknowledge that, on
this basis, even “Happy Valley” might never have been made? Will
she either confirm that the Government have no intention of
making this change or, if they are proposing to do so, agree to
have an impact assessment before the decision is made?
(Con)
My Lords, as the noble Lord has noted, that proposal is out for
consultation. As part of a package of reforms, we are looking at
reviewing the £1 million per hour minimum expenditure threshold
and considering whether it should be increased to reflect current
production costs. However, I assure the noble Lord that, in
considering these different reforms, the Government remain
committed to ensuring that the final package of reforms best
serves the need of our audio-visual industry.
of Hudnall (Lab)
My noble friend Lord Bassam referred in his question to changes
in audience behaviour since the pandemic, which has had a very
serious impact on the ability of performing arts in particular to
plan confidently. Audiences appear to respond to strong, novel
programming, which is where the highest initial risk tends to
lie. Has the Treasury made any assessment of the potential loss
to the Treasury if performing arts organisations and others start
to decrease their investment, thereby damaging the potential they
have to draw audiences, which would then impact Treasury
revenue?
(Con)
My Lords, the points that the noble Baroness makes are entirely
those that we would want to consider in looking at the issue. She
is absolutely right about the value and the costs when it comes
to the production of these shows, which is why the tax relief is
focused there. She is also right that they can bring huge
economic benefit, including through exports, attracting visitors
to the UK and productions going on the road. Those are the kinds
of things that the DCMS and the Treasury will consider when
looking at the tax relief.
The (CB)
My Lords, there are concerns similar to those of the theatres in
the visual arts sector concerning the museums and galleries
exhibition tax relief. The Treasury and the noble Lord, , will be aware of this,
having received the letter signed by many museums’ and galleries’
organisations which asks for that relief to be extended. It has
been not just helpful, but vital to the sector, not only for the
larger museums, but smaller galleries and emerging artists
outside London. If the Government want to see this sector grow
across the whole country, they should seriously consider
maintaining this tax relief, and at the current level.
(Con)
The noble Lord is right that the theatre tax relief is not the
only cultural tax relief that we have. The Covid support that was
put in place to extend the levels of that relief cover those
areas as well. I know that my noble friend has been listening very
carefully to the representations made by that sector and passing
them on to the Treasury.
(Con)
My Lords, my noble friend will be aware of the value in present
circumstances of tax measures that can boost growth and enhance
tax receipts. In that respect, will she and her Treasury
colleagues look positively at representations from the video
games industry on the extension of the video games tax relief,
which is estimated to enhance growth to the extent that tax
receipts would rise by more than £200 million a year?
(Con)
My Lords, the Government keep all taxes and tax reliefs under
review. My noble friend is right about the value that the video
games industry brings to the UK. The Chancellor has identified
our creative industries as a key driver to our future growth,
which is what we have heard in the range of different questions
from noble Lords today.
(Lab)
My Lords, the creative industries are one of the most successful
industries in the UK. Is there not a lesson in that the more
support the Government give them, the more successful they are?
Do we need a cross-party approach to this, so that all
departments contribute in the way that they do, for example, in
Ireland?
(Con)
I absolutely agree with the noble Lord about the contribution
made by the creative industries to our economy and society. That
is why the Government put such world-leading support into them. I
am sure that we welcome the cross-party approach of Labour
supporting the Government in this area.
(Con)
My Lords, is not my noble friend much encouraged by the great
consensus that we have seen this morning that cutting taxes
results in increased investment and growth?
(Con)
I am greatly encouraged by the support that this House has
offered to the creative industries sector. When we look at tax
rates, we need to look at individual sectors and the individual
response that those sectors have. I can reassure my noble friend
that we are committed to having a competitive tax regime that
stimulates growth and attracts businesses to the UK.
(Non-Afl)
My Lords, it is the case that theatres and all artistic venues
need artists. One group that has some support from taxpayers is
the BBC. Will the Minister condemn the decision by the BBC to cut
the BBC Singers, which is such a tragedy for the arts world? I
would like to support them here, just before the end.
(Con)
My Lords, I believe that is one for the BBC to comment on, rather
than me.
