UK film exhibitors have broadly welcomed business rates changes that the UK government claims will save the average cinema nearly £25,000 a year.
According to the government’s Spring Statement, the average cinema, with a rateable value of £95,500, will now save £24,000 through a new temporary 50% business rates relief. Meanwhile, the business rates multiplier will be frozen in 2022-23, which, the government suggested. represents a tax cut for all ratepayers worth £4.6 billion over the next five years.
However, industry figurese have pointed out the headline figures are misleading.
“We would be wrong not to welcome [the support]. However, the devil, as always with these things, is in the detail,” said Phil Clapp, chief executive of the UK Cinema Association (UCA). “It’s clear there is a limit on the benefits that each individual business can take from these changes.”
The Spring Statement news follows on from an earlier announcement made in December (as part of the government’s 2022/23 Retail, Hospitality and Leisure Relief Scheme: local authority guidance) in which the business rates changes were first mooted.
“There is a cap of £110,000 benefit cap per business on the rates relief,” said Clapp. “So while there may be a potential per venue benefit of an average of £24,000, no company can gain more than £110,000 from these changes, meaning that companies with 100 plus sites such as Odeon, Cineworld, Vue etc might have hoped to see something along the lines of 100 x £24,000 so £2.4m of benefit, they will in fact see a great deal less.”
The business rates change only apply to England but it is expected the other UK nations will introduce similar measures. This might provide extra benefit for cinemas chains with sites in Wales, Scotland and Northern Ireland as well as England.
“Optimistic”
In recent months, cinemas have benefitted from a discount on VAT. Next week, in what is a clear blow to the sector, that discount will disappear. Even so, Clapp said UK exhibitors are generally optimistic about prospects for 2022/2023.
“More broadly, I think people are very positive,” Clapp said of the mood among UK cinema exhibitors, both majors and independents. “Going into the New Year, we had a situation where Bond and Spider-Man had done extraordinary business but there was undoubtedly a concern that the mid-table films, the £30m-£50m box office films, weren’t quite hitting the numbers. What we have seen since then, with Sing 2, Uncharted and The Batman, is absolutely a return of a broader audience.”
Clapp predicted 2022 UK box office wouldn’t “get back to 2019 levels of business” but added there was “a confidence” that 2023 box office and admissions would be closer to pre-pandemic levels.
The UCA’s own audience surveys have confirmed the older, female audience has been slow to return to UK cinemas in the wake of Covid. “But that is not related to anything to do with cinema,” suggest Clapp. “It’s just a more general concern about where the pandemic is and levels of risks. That group has not been doing other things rather than going to cinema,”
Clapp pointed out there are actually more cinemas open in the UK now than at the start of the pandemic. He also said that exhibitors were very conscious about affordable admissions prices in a period of rising inflation in the UK.
Lack of freelance support
Caroline Norbury, chief executive of Creative UK, expressed disappointment the government’s Spring Statement did not do more to support UK freelances working in the creative industries or to drive creative Investment in the face of a looming cost of living crisis.
“The rise in inflation will have a debilitating impact on workers, particularly freelance workers, entrepreneurs and those early in their careers,” she said. “ Vital safety nets, such as sick pay, parental pay and pensions, will be essential to sustain and grow our freelance workforce, and demand urgent review.”
“We have to keep on pushing government to recognise that the creative industries take up a more significant proportion of the workforce now but we’ve got a tax and benefits system that is really rooted in the past,” Norbury said.
“We weren’t expecting anything [in the Spring Statement] but what we’re trying to do is to have a more informed discussion with government about the systemic challenges we are facing.”
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