Hospitality sector warns of 'devastating' impact of PPL tariff

Hospitality sector warns of 'devastating' impact of PPL tariff

Trade body UKHospitality has hit out at PPL’s decision to introduce a new tariff for hospitality businesses.

It follows a consultation process on the Specially Featured Entertainment (SFE) tariff, which will come into effect on July 1. 

The tariff covers recorded music at events and applies to nightclubs, pubs, bars, cafes, restaurants and hotels. The current tariff has been in place for around 30 years. 

UKHospitality chief executive Kate Nicholls said: “The decision to introduce a new tax for music venues could be potentially devastating. This new tax will see venues hit with an average 130% increase, which we estimate will cost the hospitality sector upwards of £49 million.

“Hospitality businesses are already being bombarded with constantly increasing costs and only today a report highlighted the pressures being faced by music venues. The report stated that increasing costs were a major factor in the closure of venues. This additional massive cost is not going to help, it is only going to force more and more venues out of business.

“It is not just nightclubs and large venues that will be hit, either. Village pubs that host weekly discos will be strangled by the charge and there is every chance that such events, upon which many pubs might rely, will be forced out altogether.”

The consultation between July and October 2018 covered the scope, structure, fees and implementation of a new SFE tariff. PPL argued that the previous tariff fees were too low to be an appropriate reflection of the value to businesses of using recorded music from its members at SFE events.

It is only going to force more and more venues out of business

Kate Nicholls

PPL also stated that a structural reform will make the tariff clearer and fairer, suggesting that small SFE events will initially pay less than they are paying under the current tariff. However, fees are set to increase by 2023.

The changes include:

Measuring the audience at an SFE event by using the total number of admissions to the event.

A change so that the fee will increase in direct proportion to the size of the audience (measured in bands of 25 persons). 

The introduction of two new smaller tariff bands, for SFE events with attendances of 1-25 and 26-50 persons. 

The phased introduction of increased fees over a five-year period from July 2019, based on an initial rate of 4 pence per person per hour. This will move to fees based on a rate of 9 pence per person per hour by 2023. 

Peter Leathem, PPL CEO, said: “I would like to thank our licensees for engaging with PPL’s Specially Featured Entertainment (SFE) consultation. We have listened to their views as part of finalising our new SFE tariff. Recorded music forms a very significant part of SFE events and we believe that the new SFE tariff delivers a fairer return for our members who create that music. We look forward to working with our licensees and their representatives to ensure as smooth a transition as possible to the new SFE tariff.”

UKHospitality had already voiced its concerns over the SFE tariff last summer.

 “The UK’s music venues are some of the hospitality sector’s most exciting businesses," said Nicholls. "Music plays an enormous role in our lives culturally and socially as well as economically, but extra fees such as PPL’s will only wring the last life out of venues."

UKHospitality took part in the consultation but remains unhappy with the final tariff.

“We had some success in avoiding proposed structural changes but it is disappointing to see them ignore our warnings and push ahead with a hike,” added Nicholls. “Unless PPL rethinks this charge then they are only going to put the businesses they want to charge out of business.” 

PPL has also been implmenting music recognition technology as part of its licensing of clubs - a move welcomed by the dance music sector.

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