THEATRE TICKETS AND VAT (Hansard, 21 February 1980)

§ The Earl of KINNOULL
My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.

§ Lord COCKFIELD
My Lords, the Government recognise the contribution which the theatre makes to our national life and are aware of the situation which it is facing at present. I am afraid, however, that it would be invidious to single out the theatre from the numerous other claimants for especially favourable VAT treatment. Our support for the theatre, as for other deserving causes, must be limited to what the country can afford.

§ The Earl of KINNOULL
My Lords, I thank my noble friend for that reply. Would he place on record, again, what it would cost the Treasury to zero-rate theatre tickets?

§ Lord COCKFIELD
My Lords, the cost of zero-rating theatre tickets would be of the order of £20 million per annum; but the real point is that if a concession of this kind were made to the theatre—and, incidentally, there are, of course, EEC problems in relation to the extension of zero-rating—it would be quite impossible not to extend it to all sorts of other deserving causes where very strong representations are also made.

§ Lord ELWYN-JONES
My Lords, is the noble Lord aware that our theatres are being pauperised by the increase in VAT—and I will be precise in the particulars—from 8 per cent. to 15 per cent., and also by the cuts in the Arts Council grant, and that an increasing number of theatres are in peril of being lost? Is 901 there not a powerful case in regard to this great national institution—our theatres are acknowledged to be the best in the world—for zero-rating theatres for the purposes of VAT or, at the very least, doing what most European countries do now, allowing them to be preferentially treated?—otherwise this fine national institution will go to the wall.

§ Lord COCKFIELD
My Lords, I join the noble and learned Lord in his tribute to the national theatre but I do not share his gloomy prognostications for the future. The fact of the matter is that the theatre has been hit much harder by declining audiences due to the spread of television than it has ever been hit by the VAT. As far as the Arts Council is concerned, the grant-in-aid this year is £61 million, which is substantially greater than the £49 million actually issued last year. About two-thirds of the total of the grant goes to the performing arts. It is the view of the Government, as it was the view of the previous Government, that this is the best way in which assistance to the performing arts can be given.

§ Lord GLADWYN
My Lords, will the Government agree that the maintenance of VAT on theatres at its present high rate will certainly result in a considerable diminution in the numbers of plays and their performances in London, and consequently in a considerable reduction in the number of tourists visiting this country; and, therefore, that the Treasury are likely to lose more on the swings than they gain on the roundabouts?

§ Lord COCKFIELD
My Lords, I do not accept these arguments. We agree that the theatre is going through a difficult time at present. But we believe that it will show great resilience in the future as it has in the past. It is also a very valid point that, at the time the VAT was put up, income tax was reduced substantially. People have therefore more money in their pockets to spend. I hope that the noble Lord is not suggesting that because they now have more control over their own expenditure they are less willing to spend it on going to the theatre.

§ Lord NUGENT of GUILDFORD
My Lords, is my noble friend aware that, in regard to his concern not to set a precedent, 902 the live theatre has a special case to argue because the live theatre is the source of all entertainment across the board, television as well; and if he made a concession on the VAT rate for the live theatre only he would be making a concession in a field which nothing else could match?

§ Lord COCKFIELD
s: My Lords, I have said that we recognise the immense importance of the live theatre, but we take the view that it would be quite impossible to hold the relief at the live theatre, if it were given.

§ Lord MILES
My Lords, is the noble Lord aware that the opinion of those in, I think, all fields of artistic endeavour would be that, in general, for the past 50 years we have been governed by barbarians? is he further aware that the British theatre particularly, and ballet and opera, are activities different from anything else which is taxed? This is the cutting edge of England and Great Britain as provided by Shakespeare and by Purcell and by the Royal Ballet. Would he agree that there is something confused about this situation, and that the theatre provides a very different kind of spectrum for the whole argument that we are honoured throughout the world, not for motor cars and Rolls-Royces but by our theatre having a unique and imperishable place in the English heritage? It is part of our real and unquestionable heritage. Is it not quite outrageous that the theatre should not be zero-rated? Should not every effort be made by this House, and the other place, to see that it becomes zero-rated, in order to relieve it of this intolerable burden and so that it may expand to greater efforts, which would do honour to this country, honour which can be done in no other way?

§ Lord COCKFIELD
My Lords, the noble Lord occupies a unique position in this field and he puts his case with immense persuasiveness. We recognise the unique position of the British theatre. If I did not have noble Lords continually to draw my attention to it, my attention to it is so drawn at home as well. Nevertheless, the position remains that we believe the right way to channel help to the arts is through the grants to the Arts Council. Over the last decade these grants have increased very substantially indeed in real terms.

§ Lord KALDOR
My Lords, the noble Lord's case against exempting the living theatre is that it will be impossible to hold the line there without extending the concession to a wider class of cases. I wonder whether the noble Lord is aware that there were some other taxes on the statute book, within living memory, from which at some stage the live theatre was exempted without thereby opening the floodgates to other exemptions?

§ Lord COCKFIELD
My Lords, I do not think that the noble Lord's historical recollection is entirely correct. It is true that the living theatre was at one time charged half-rate on entertainment tax and then relieved altogether from it. Shortly afterwards the cinema was relieved on the same argument, and a few years afterwards the whole of the tax collapsed.

§ Lord KALDOR
My Lords, I was referring to selective employment tax.

§ Lord MISHCON
My Lords, in suggesting that the arts, in the form of David, seem to be facing in the Minister a Goliath, will he take it for granted that I am not necessarily calling him a philistine? Will the Minister not agree that a very special case exists with the subsidised theatre as against the theatre as a whole? Is he aware—and here I declare an interest as a member of the board of the National Theatre—that the subsidised theatre is contributing so much to our national, cultural heritage and is being severely handicapped at the moment by this heavy VAT?

§ Lord COCKFIELD
My Lords, we recognise the unique contribution that the subsidised theatre makes to the cultural life of this country. This is why it is the subject of considerable grants from the Arts Council, and this, we believe, is the correct channel for providing support rather than through tax relief.

Earl FERRERS
My Lords, I wonder whether we might move on. It seems hours ago when my noble friend Lord Dement said that we had spent 16 minutes on the first two Questions. If one looks at the digital clock, we see we spent only four minutes on the second two, but I think the digital clock has got stuck. While this is a not unimportant issue, if 904 noble Lords feel strongly about it we might have an Unstarred Question on it; but I would suggest that we move on.