Music Venue Trust hits out at government over new energy support scheme


January 11, 2023

The Music Venue Trust has joined other organisations representing the live music and night-time sectors in criticising the UK government’s newly announced plans for providing support to businesses that are facing surging energy costs.

A new support programme will get going in April, replacing the existing scheme that was launched last October which introduced a government subsidised energy price cap covering business usage. The new programme offers significantly less support, replacing the price cap with a government subsidised discount for businesses.

There is, however, a version of that new programme which provides what the government calls a “substantially higher level of support” to businesses operating in certain specific sectors

Those are mainly industrial and manufacturing businesses that consume particularly high levels of energy in their operations, although libraries, museums, historical sites, and botanical and zoological gardens are also included. But not venues or hospitality businesses.

Alongside the announcement of the new scheme, Chancellor Of The Exchequer Jeremy Hunt has also written to energy sector regulator Ofgem summarising concerns that have been raised about how the business energy market in the UK operates, specifically mentioning the challenges faced by smaller businesses and hospitality businesses.

Noting that OfGem has already instigated a review of the market and the issues within in, Hunt urges the regulator to undertake that review with some urgency.

In his response to the new support programme, Music Venue Trust boss Mark Davyd expresses considerable frustration that Hunt acknowledges key issues in his letter to Ofgem but has basically ignored those issues in devising the new support scheme.

So, Hunt’s letter to Ofgem references the issues that have been raised with the way the business energy market works in the UK – and the specific impact that has on smaller and hospitality businesses – but then at the same time he has excluded smaller hospitality businesses from the higher level of support the government will provide from April.

Davyd writes: “The challenges caused by energy bills to grassroots music venues is understood by Jeremy Hunt and the government to be so bad that he has been compelled to write to Ofgem asking that they take action and do something about it”.

“That’s good, something does need to be done, because the charges and conditions being forced upon the sector are absurd”, Davyd adds. “The average increase in the sector is 278%. Demands are being made for excessive deposits, suppliers don’t actually want to supply and frankly, there is no market. There is simply an expensive monopoly with extraordinary prices and conditions”.

“However”, he goes on, “apparently the same evidence that has caused Jeremy Hunt to send the letter to Ofgem laying out these issues was considered insufficient that it would cause him to include grassroots music venues within the specific support he subsequently announced”.

“Venues, alongside the whole of hospitality, have been dumped into a general category of support that is so insufficient that it must inevitably result in permanent closures of venues. And we don’t mean that the current venue operator will not be able to survive. We mean that whole buildings currently used for live music will become economically impossible to stage live music in, purely on the basis of the cost of the energy required”.

“These two things appear to be in direct conflict”, he continues, “creating a ‘Schroedinger’s Venue’ which apparently cannot possibly afford these bills but also doesn’t need help with them. We are therefore forced to conclude that whilst Jeremy Hunt fully accepts that these energy bills will close music venues, he is not prepared to do anything concrete about it… except send letters”.

“Meanwhile, the package of supported industries includes libraries and museums, who have neither comparatively high energy bills nor a non-functioning energy market and the basis on which he seems to have made the decisions on what would and would not be included in a package of support from 1 Apr are, at best, highly unusual”.

Davyd then notes Hunt’s request that Ofgem complete its review of the business energy sector as soon as possible – and in time for the government’s next budget statement – concluding that “we would strongly urge them to complete that work with sufficient expediency that the Chancellor can revisit the support in that budget and recognise that grassroots music venues should have been included within the exceptional support he has offered to libraries and museums”.

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