Scrapping of energy price cap 'a hammer blow to theatres'

Government plans to scrap a cap on energy prices for businesses and replace it with "transitional support" have been criticised by the theatre industry.

Under the new scheme, announced today, businesses will get a discount on high energy costs for a 12-month period rather than having their prices capped at a certain level.

The government has said the move will limit taxpayers’ exposure to volatile energy markets. Financial support under the new measures will be limited to £5.5bn in 2023/24 compared with a predicted cost of £18.4bn for the existing price cap over the six-month period up to the end of March.

READ MORE:

• Energy prices could force closures, venues warn
• Government delays decision on further energy support for businesses

Responding to the announcement, Society of London Theatre (SOLT) and UK Theatre said the decision means that theatre venues and productions will lose vital support in a "challenging and inflated market".

The organisations warned that many theatre businesses seeking renewals of their energy supply in autumn 2022 were faced with quotes more than five times their previous contract rate, adding that it is now likely businesses renewing in 2023 will face similar price inflation.

'Hammer blow'

SOLT member David Hutchinson, Chief Executive of theatre production company Selladoor Worldwide, said: "The reversal of the cap on business energy prices is a hammer blow to the theatre sector, which has only just reopened and is rebuilding audience, product and commerce after years of closure. 

"The industry is suffering already from considerably higher commodity costs, labour shortages and cost of sale to reach audiences. We cannot pass on this cost to the consumer, who is already struggling with the cost of living. 

"This puts the theatre sector in a crisis as costs across the board increase, yet revenue remains stable. The government needs to come up with more ideas to protect buildings keeping the lights on, and businesses across the country viable – and this move has done nothing but add further pressure on a very difficult situation."

Under the government plans businesses in sectors with particularly high levels of energy use and trade intensity - mainly manufacturing industries - will receive a higher level of support.

It said the reason for this is that these firms are "often less able to pass through cost to their customers due to international competition".

Director of Theatres Trust, Jon Morgan, sayid that while energy use by theatres does not match that of other industries, it still accounts for a high proportion of overall costs.

"It is now vital that theatres are supported to invest in energy reduction measures before next winter, so they can reduce their overall energy usage and contribute to Net Zero. 

"While there is a great awareness and commitment to carbon reduction in the sector alongside fantastic guidance in the Theatre Green Book, which we are a lead partner on, post-Covid, most theatres do not have the resources to implement the changes that are needed."

Alongside manufacturing industries, museums and libraries have also been placed in the category of businesses that will receive a higher level of support..

Sharon Heal, Director of the Museums Association, said: “We very much welcome the extension of this support over the next year and the recognition that not only are museums a vulnerable sector but that they are also playing a key role in supporting their local communities through this crisis.

“But even with this much needed support museums are still facing significant funding challenges. Local authorities are having to make tough decisions about spending priorities and this is putting museums and collections at risk throughout the UK.

"We need a strategic approach to funding from central government that puts local museums on a firm financial footing and secures their future beyond this current crisis.”

Difficult decisions

Chancellor Jeremy Hunt said: "My top priority is tackling the rising cost of living – something that both families and businesses are struggling with. That means taking difficult decisions to bring down inflation while giving as much support to families and business as we are able.

"Wholesale energy prices are falling and have now gone back to levels just before Putin’s invasion of Ukraine. But to provide reassurance against the risk of prices rising again we are launching the new Energy Bills Discount Scheme, giving businesses the certainty they need to plan ahead."

Hunt added that even though prices are falling, he is concerned that this is not being passed on to businesses, and has written to Ofgem asking for an update on whether further action is needed.

Mark Davyd, Chief Executive and Founder of Music Venue Trust, criticised the lack of specific support for grassroots music venues, labelling the decision as "bizarre".

"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," he said.

"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. 

Mr Hunt has told Ofgem he would like to see the results of the investigation he has asked for by the budget. 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."