A new economic analysis shows that the impact of COVID-19 could see Gross Value Added (GVA) of the West End’s arts and culture sector fall by 97% by 2024 to just £100m compared to £4.9bn GVA in 2019 in the worst-case scenario, which involves repeated strict lockdowns, venues and offices remaining largely unoccupied, essential travel only recommended by the government and the digitalisation of entertainment becoming the default alternative to in-person live experiences.

The detailed analysis is contained in a new report called Cultural Heart of London: The economic benefits of the West End and Heart of London Arts & Culture sector to the wider economy and the case for COVID-19 support. Commissioned by the Heart of London Business Alliance and undertaken by Arup, the report provides the first detailed projections of how COVID-19 restrictions could impact the cultural sector.

Forecasting the long-term impact on the cultural sector

The report provides projections for the economic performance the West End’s arts and culture sector to 2024 based on different scenarios for London’s recovery from the pandemic.

Under the worst-case scenario, where London experiences repeated, strict lockdowns, similar to those in place in April, there could be a total loss of £18.5bn in the period from 2020 to 2024, 73% lower than what would have likely been generated had the pandemic not happened.

If London continues to be impacted by ‘seasonal outbreaks’ of COVID-19, it could cost the West End’s economy £15bn between 2020 and 2024, a loss of 59% compared to what would have happened in the No-COVID scenario.

Arup’s analysis finds that even in a return to ‘normality of sorts’, the pandemic would result in total GVA generated between 2020 and 2024 that is 21% below the figures if the pandemic had not occurred, which is a total loss of £5.4bn to the output of the West End arts and culture sector over the five-year period.

The case for COVID-19 support for the cultural sector

The report finds that London’s arts and cultural sector requires immediate help if it is to survive. In particular, Government support is needed now to sustain the West End’s rich cultural offer during a period in which significant restrictions still apply.

Arup’s recommended survival measures include sustaining the sector’s workforce through continuation of the Job Retention Scheme until mass gatherings are permitted under government COVID-19 guidelines (in line with DCMS Select Committee recommendations); a business rates holiday for all venues until March 2022; and providing grant funding to help make venues COVID-19 secure (see Society of London Theatre proposals).

As soon as it is safe to do so, and government guidelines allow, Arup recommends a focus on driving footfall, with efforts to re-introducing visitors to the West End. Additional workers and tourist visitors appear to significantly mitigate the loss to many businesses, with the impact being particularly pronounced in the early years.

Using the ‘seasonal outbreaks’ of COVID-19 scenario as a base, Arup’s model suggests that a 10% improvement in local, domestic and international footfall as a result of implementing certain recovery measures would lead to an improvement of 2% annual GVA in the West End, or an improvement of around £0.2bn above the seasonal COVID scenario by 2024.

A more substantial increase in footfall of 20% and 30% above the base level, would lead to an increase of 5% or 7% (£0.5bn or 0.7bn) respectively by 2024.

Arup makes these recommendations on the basis that it is safe and acceptable to do so, and in line with contemporary government guidelines.

Ros Morgan, Chief Executive of Heart of London Business Alliance said:
“Central London has so much to offer in terms of culture, retail and leisure. But for it to be there for us in the good times, we need to be there for it the bad times. Central London’s dynamic businesses and rich culture and experiences are not merely job creators: they make the West End unique and special place, and they are critical to the UK’s global competitiveness.

“The most recent lockdown measures announced by the Government will further hit the businesses in the centre of London, including the cultural sector, which relies on tourists and commuters more than any other part of the country. And the business support measures announced by the Chancellor, though welcome in themselves, do not reflect the reality of what London’s cultural sector is going through. If you cannot get anybody through your door then you are realistically not going to be in the market for a part-time job support scheme.”

Author of the Foreword to the report, Professor Tony Travers, said:
“Although it is desirable for many other reasons, social distancing is the enemy of agglomeration in London and other major cities. Until people can once again feel confident about meeting others in public, using trains and socialising in public, city centres face a bleak future. And if the core of the West End fails, it will have a series of knock-on effects for the whole of the UK.

“The United Kingdom’s soft power depends on the heart of London. People from all over the world feel they know the sights and sounds of the West End. The damage caused by an unmitigated assault from COVID-19 would not simply mean that a few theatres, cinemas and restaurants had closed. Britain’s glorious remarkable and unique culture would be damaged forever.”

Matt Dillon, of Arup, said:
“This report was written during the summer of 2020, in a period when the West End was recovering as the original COVID-19 restrictions were being slowly eased. As such, the analysis and the recommendations predate the further restrictions on social gatherings and workplaces that were put into place in September 2020.

“Given the wider uncertainties on the spread of the virus, and the range of scenarios that we investigated, it is our view that the analysis and conclusions of this report remain broadly valid in the light of the emerging restrictions that are being put in place to mitigate a second wave.
“We would like to emphasise that recommendations that would encourage more workers and visitors to the West End should only be undertaken once it is safe and acceptable to do so, and in-line with contemporary government guidelines.”

For more information, please contact HOLBA@fticonsulting.com