Both Sides Now

Government is experiencing a financial bonanza from the work of the live music industry. It's time to put more than a little back.

There are now two music industries in Britain and they barely speak to each other. They share a core product and sometimes the same postcode, but they operate on different planets. One provides essential local access to culture, keeps live music affordable, and pays its bills with beer. The other sells extraordinary experiences, scarcity, nostalgia, and bills the experience to your credit card. You can tell which one you’re in by the ticket price.

At one end is the grassroots circuit, the 800-odd venues that still switch the lights on every night for a few hundred people and a few hopeful artists. The average ticket there cost £11.48 in 2024. It was £11.42 in 2023, £8.74 in 2019. Look back through the ticket stubs and the same show would have been about £6.50 in 2005. The median full-time hourly wage then was £10.77; in 2024 it’s £18.72. The ticket that once cost 0.6 hours of work still costs 0.6 hours. In real terms, grassroots live music is as affordable as it was when people queued outside HMV at midnight for the latest release.

The price looks heroic until you see what it hides. Ticket income now makes up just 21.6 per cent of grassroots revenue. The rest comes from the bar, the kitchen, or room hire for things other than music. The entire sector, thirty thousand people delivering 162 thousand events to nearly twenty million audience visits, made a combined profit margin of 0.48 per cent in 2024. The total combined profit across every grassroots venue in the UK in pure cash terms was around £2.5 million. You could lose that down the back of a budget for a ministerial sofa.

At the other end the numbers are, politely, unhinged. In 2005 an Oasis ticket in Manchester cost £32.50. In 2025 it’s £148.50. Beyoncé rose from £52.50 to £224.85. Billy Joel from £51 to £213. The average increase across those 20 years is 237 per cent, three times faster than inflation. The hours of work needed to pay for those tickets have doubled or tripled. A night that once cost three hours of pay now eats a working day.

And there aren’t fewer big shows. There are more - a lot more; the arena and stadium slate is fuller than at any time in history. Every major promoter is reporting record sales and attendance, with Pollstar’s year-end figures describing a “golden age” of grosses. Each summer looks increasingly like an arms race in confetti cannons and fireworks, and no one is stopping to consider whether music fans have bottomless pockets. Any payday that vanishes into a stadium event is a potential month of small gigs foregone. The cash that used to circulate through local rooms, keeping new artists alive, is now vacuumed into pricing algorithms and multi-night residencies. The top of the market has soaked up every drop of disposable income and sent a positive story to governments that we can call this growth.

And The UK Treasury absolutely loves it. VAT on concert tickets was 17.5 per cent in 2005; it’s 20 per cent now. An average £35 ticket then carried about £5 of VAT. An average £105.60 ticket now delivers £17.60. With roughly 25 million arena and stadium tickets on sale each year, that’s a potential of £528 million in VAT before the first encore. Add booking fees, bar sales and hospitality and the public purse is likely taking somewhere over a billion pounds annually from the big-show boom. The State has never made so much money from live music. If gigs were crude oil, HMRC would be shouting ‘drill, baby, drill’.

Meanwhile, small venues are hit by that same 20 per cent VAT on tickets that already lose money. In 2024 the sector staged about 91 thousand ticketed live shows with an average audience of 122 people. That’s £127 million of ticket spend, about £21 million of it straight to the Treasury in VAT - from a sector that made half a percent profit. There is no logic in taxing an activity that is already a public good. The fix is to, and you may have already heard me saying this, simply stop doing it.

Run the numbers. The extra VAT yield on each big-show ticket compared with 2005 is roughly £12.50. To make the Treasury tax position neutral in total take from the live music sector, 2005 to 2025, you’d need to sell about 1.7 million big-show tickets a year. But we aren’t selling 1.7 million tickets a year. The UK sells fifteen times that. Even if every ticket under 800 capacity were VAT-free, the Government would still be making an astronomical amount more from live music than it did twenty years ago. The concept of zero-rating sub-800 tickets isn’t a subsidy; it’s a market tax correction. It keeps grassroots music venues solvent and recognises that the State doesn’t need to squeeze the bottom when it’s swimming in tax from the top.

The same logic applies to PRS for Music. The live tariff, Tariff LP, was raised from three to four per cent of gross box office in 2017. Since then PRS has reported record collections and distributions - £943 million in 2023, over a billion in 2024 - with live revenue surging. The growth is driven almost entirely by the mega-tours charging those three-digit tickets, leaving ample room for PRS to create a grassroots tariff without harming overall songwriter income. Sub-800 rooms aren’t the reason PRS can post billion-pound distributions; they’re the reason there will still be songwriters to distribute to in the future. A special LP pathway for small venues - lower minimums, rebates for loss-making shows, recognition for reinvestment in new artists - would cost PRS almost nothing in income, hugely boost their credibility and would finally align licensing with cultural reality. You don’t strengthen the music economy by billing the R&D department at the same rate as Wembley.

The Government’s own committees have already said it: grassroots venues are the backbone of the music ecosystem. They’re where experimentation happens, where new genres are born, where artists learn to play and audiences learn to listen. Every extra pound of VAT the Government collects from the top should create a golden opportunity to invest in the base that makes it possible, or at the very least stop taking money out of it.

The Government has the tools to fix this and it has the opportunity to do it in the budget on 26 November. It just needs to start by understanding that the music industry isn’t one thing. It’s two interconnected economies, one cash-rich and one cash-starved. At the top, its own income, the money the government is generating from VAT alone, is up at least fourfold since 2005. At the bottom, gross profit has stayed flat. The Treasury could introduce a VAT exemption for sub-800 shows tomorrow and still make more money from live music than when the Arctic Monkeys released their first album. It could ensure we actually deliver the Levy to the grassroots by getting serious with the companies still reluctant to lead on it. It could use cultural tax policy to stabilise the ecosystem instead of draining it. For a government that loves the phrase “world-leading”, this would be the first world-leading tax cut designed to increase tax revenue.

And the fans know it. The experience of live music has split in two. On one side: algorithmic queues, dynamic pricing, platinum tiers and VIP upgrades that cost more than the guitars on stage. On the other: a volunteer at the door and a card reader that freezes every other tap. The same culture, different universes. The fans who still choose the small rooms are the ones keeping access alive. They’re also the ones least able to subsidise the system through tax. That’s why VAT reform matters. That’s why Business Rate reform matters. That’s why the Grassroots Levy matters. These are the levers that keep participation open while the market price of culture disappears into the upper atmosphere.

The Government’s own numbers already prove the argument. The VAT take from live music, the corporation tax from promoters, the employment tax from event staff, the rates from arenas and the duties from alcohol together dwarf the cost of every support scheme ever proposed for the grassroots. Even if the Chancellor wrote off every penny of VAT on small-venue tickets the Treasury would still be hundreds of millions of pounds better off than it was in 2005. The music economy has grown faster than inflation, faster than GDP and far faster than the wages of the people who make it. The State’s share has grown with it. We don’t need subsidies; we just need the system to recognise that its own success funds the solution.

So let’s be blunt. The top end of live music has never been more economically successful and one of the biggest winners in that success is the government itself. The grassroots are providing access, community and culture at prices that haven’t budged in twenty years. The Government is sitting on a huge tax windfall that didn’t exist when Oasis tickets were thirty-five quid.

Two industries, one ecosystem. One sells incredible spectacles and dewy-eyed nostalgia at £200 a night, the other sells the act you might or might not fall in love with at £11.48. One generates tax receipts, the other generates talent. The Government has unconsciously picked which side it prefers for the last twenty years; it just hasn’t noticed yet. The Levy starts to balance the equation, zero VAT would lock it in.

The only real question is whether Britain wants music to be a living culture or an expensive souvenir. One future smells like lager, chips and possibility. The other smells like VIP lanyards and dry ice.

The government should choose its fragrance carefully, because music fans will all be wearing it for decades.