Typically, theatre folk are far from being expert when it comes to economics, while many would not profess themselves to be well versed in financial matters either.
Frequently, it doesn’t matter. You earn as much as you can, spend as little as you can, meet any tax that is required and enjoy a happy, fulfilled life. However, that isn’t necessarily the case when your industry has been wrecked by a pandemic that threatened your livelihood and, no sooner than that quietened down, an unfriendly cost of living crisis resulting in part from a war in a faraway land threatens to make life intolerable.
There must be many people working in and on the periphery of theatres who are genuinely concerned about whether they will be able to heat their homes and feed themselves this winter. That is not a nice place to be. Nor is it a good recipe for you to perform at your peak, whether in a critical audition, onstage or in a backstage role.
The stress has been drawn out as we had to wait through the summer to discover who was going to replace Boris Johnson, aware of the threat that the hot favourite did not believe in providing any support for those in fuel poverty.
Then, literally stopping Liz Truss in her tracks, the Queen passed away putting the country on hold for a further 10 days.
Finally, a week ago today, the latest Chancellor of the Exchequer (and they do seem to come along every few minutes like London buses) stood up in Parliament proclaiming that the new administration had solved the country’s economic problems overnight. Even those who shelter from news whenever possible will have discovered that crazy Kwasi Kwarteng’s pride precipitated the kind of fall even Boris Johnson would have noticed. The financial markets blew a big raspberry at his plans to cut the highest rate of tax and eliminate the cap on bankers’ bonuses.
Over the next month or two, we will discover the extent to which he (or his successor) will be forced to back down to rescue the economy and prevent millions from being evicted as mortgages become unaffordable, adding millions to the numbers already in financial difficulty due to more basic cost of living issues.
Where does this leave the theatre community?
As a starting point, the Prime Minister and Chancellor are already beginning to mutter about cutting costs. You can bet your bottom dollar that they will not feel inclined to exempt the culture sector, which neither of them seems to value.
On an individual level, there is some relatively good news in that for the next two years, energy prices are capped. The “relatively” in the last sentence is because the level at which they have been capped is an average £2,500. This represents roughly twice the amount that people were paying a year ago. However, since the number might otherwise have hit £5,000 or £6,000 next year, we should be grateful for small mercies.
In addition, those who earn enough to pay income tax and National Insurance contributions will benefit from small reductions in each. Anyone reading this and earning in excess of £150,000 a year will be laughing all the way to the bank thanks to a 5% cut in their top marginal rate of income tax.
From a business perspective, the news is also mixed. If you had asked those running theatres or companies the things that they would most like from the government, the answers might have been in no particular order a business rates holiday, a reduction in the VAT rate and a cap on energy costs. The first two failed to materialise, while the third is being offered for only a six-month period, which is good as far as it goes.
Additionally, there have been leaks from government suggesting that certain struggling industries would get an extension to the six-month period. Whether this stretches to theatres is currently unknown, primarily because it became increasingly clear that Liz Truss’s government has not formulated any policies beyond those that it needed to announce immediately after the mourning period for the Queen ended.
The reversal of third Chancellor ago Rishi Sunak’s plan to increase corporation tax rates is great in theory, although with all of the disruption of the last few years, it is hard to imagine that many theatre companies are paying significant amounts of corporation tax. They will at least benefit from the small cut in employer’s National Insurance contributions.
Less apparent but potentially equally important relates to both angels and theatregoers.
In principle, the ultra-rich who find themselves receiving uncapped bonuses and paying less tax might pass some of their unexpected wealth to theatres. To the extent that recipients are charities, there will be a big incentive to get the money out of the door by 5 April 2023, thus maximising income tax relief.
On the other hand, the cost-of-living crisis will also have a significant impact on many of those who previously considered themselves wealthy. Many may find themselves with less disposable income to spare and the marginal spends are those that will be hit hardest e.g. the arts.
Similar considerations could apply to theatregoers, most of whom will have feel poorer and therefore may cut down on visits. More positively, since the pound and the dollar are currently close to parity, visitors from overseas and particularly the United States could well flock to our shores and find the West End to be a real bargain.
Where does this take us? It is hard to say, but business is likely to be tricky to say the least for some time to come.