Jamie Njoku-Goodwin argues without a government-backed insurance scheme a summer of music festivals could be cancelled.
For music lovers across the country, the absence of gigs and festivals has been one of the hardest things about the past year, and so the Government’s roadmap for reopening last month brought hope to many. It charted a cautious route back to normality, culminating in the restart of events without social distancing on June 21. But for those looking forward to a summer of large music festivals, there remains one major barrier: insurance.
The nature of the roadmap means that while there is more clarity about the months ahead, there is still a great deal of uncertainty. Each reopening stage will only be confirmed the week before, upon assessment of the latest epidemiological data. Therefore, we will not know if the June 21 date will definitely get the green light until the last moment – creating huge uncertainty for event organisers, who plan events months in advance. According to the Association of Independent Festivals, the average cost of staging a festival is over £6m – and for a festival taking place in early July, 40% of total costs will need to be paid before June 14.
The situation is made even more challenging by the fact that insurers are not offering pandemic cancellation insurance options – meaning that a Government decision not to go ahead with non-socially distanced events would result in huge losses for organisers. While sports events can rely on broadcast revenues if pandemic restrictions mean they have to play behind closed doors without spectators, music festivals rely on audiences for their income. Without insurance, delays to the return of full capacity audiences could mean bankruptcy for organisers.
As UK Music explained in our recent Save our Summer report, this is a classic case of market failure: the commercial insurance market isn’t offering viable pandemic-related cancellation policies for events, but the financial risk of planning a major event without proper insurance is too great for most organisers to bear. The consequences are already playing out – despite the huge success of the vaccine rollout, and the optimism from ministers about a ‘great British summer’, we’ve already seen major festivals that should have taken place this summer cancel. Without viable insurance options many more will follow.
And with scientific advisers warning that we could see a third wave later this year and the potential reintroduction of some restrictions, this is an issue that won’t go away. The lack of viable insurance options will affect the events industry for years to come – and if organisations don’t have a safety net, then we could see events cancelling in 2022 and beyond too.
The proposed solution is simple: a Government-backed insurance scheme that gives event organisers the confidence to start planning events now, without the fear of incurring huge losses in June. This solution has had support across the music industry and across Parliament too, with the chair of the DCMS Select Committee Julian Knight repeatedly calling for such a scheme.
Indeed, the Government has itself demonstrated how crucial the issue of insurance is for other industries. Its insurance scheme for the Film and TV sector has been a staggering success – since its introduction in October it has protected 24,000 jobs, enabled more than 200 productions, and according to the BFI has generated £1.19 billion for the economy. And that is before you take into the account the savings made on the 24,000 jobs which would otherwise have had to be supported by the furlough scheme.
The fact Chancellor extended this scheme at the Budget shows the Government recognises how important it has been for the Film and TV sector and for the economy. Introducing something similar for the music industry should be a no-brainer.
Without action from Government, the risks of operating without insurance will force many organisers to cancel events – meaning that not only will we lose the positive economic benefits live music brings to the economy, but also that tens of thousands of musicians and crews who could be supported by economic activity will instead be forced to rely on taxpayer support. Ironically, the failure to introduce an insurance scheme could end up costing the Exchequer more than it would actually cost to bring one in.
When it comes to helping power the post-pandemic economic recovery, music festivals and other live events should have a key role to play – they would be a much-needed shot in the arm for our communities and local economies. The live sector estimates that a summer of music festivals could unlock £2bn of economic activity. Glastonbury alone generates more than £100 million for the south-west, and on average every £10 spent on a live music ticket generates £17 of spending in the wider local economy.
But there’s a real danger that rather than supporting jobs and generating tax revenues through activity, festivals will be needing further economic support because a lack of insurance options means they can’t operate. This would be disaster for the Government, for the music industry, and for the country.
The prime minister has described the roadmap out of lockdown as “irreversible” – if this is the case, Government should have no fear in insuring events that it insists will be able to happen. Failure to do so doesn’t just risk jobs and economic prosperity – it also brings into question the assumptions underpinning the roadmap as a whole.