West End theatre producers can put on a happy face.
In a rare move, the United Kingdom’s Chancellor of the Exchequer, Jeremy Hunt, has confirmed that the government will reverse its rule raising the thresholds for high-net worth individuals allowed to invest in British theatrical productions and start-up companies. “The government will legislate to reinstate the previous eligibility criteria to qualify as a high net worth … investor,” wrote Hunt in the spring budget.
The rule went into effect last month, and it now requires investors to earn at least £170,000 (about $217,821) instead of £100,000 (about $128,130) in the last year or have net assets of at least £430,000 (about $550,959) instead of £250,000 (about $320,325) to qualify as high-net worth individuals. “These thresholds have not been updated since this exemption was introduced in 2001, while inflation has eroded their value,” explained the legislators.
However, West End producers feared that the change would clip their angels’ wings.
Due to rising production costs on Broadway, many American producers and investors have recently decided to redirect their efforts and their money across the pond. One industry insider estimated that the same show could cost three to five times less to produce in London than in New York.
For example, one musical, which was mounted on the West End for £2.9 million (about $3,718,090), cost $11.5 million when it came to Broadway.
“It’s so obvious now that the Broadway model, the American model, is broken,” complained one Broadway producer. “It’s a given that everybody is thinking about London or Europe to develop work,” the producer continued.
But, once the requirements were tightened, some interested investors were no longer allowed to contribute capital to West End productions.
“The changes would have significantly reduced the potential pool of investors eligible to invest in new commercial theatre, and disproportionately impacted new and emerging producers,” observed Patrick Gracey, an Olivier Award-winning producer, who serves as the chair of the joint policy, research, and advocacy committee of the Society of London Theatre and UK Theatres trade associations. “The changes would have markedly diminished the diversity amongst both producers and investors, as well,” he continued.
According to research from Marla Shapiro at HERmesa Angel Syndicate and Roxane Sanguinetti at Alma Angels, the rule resulted in 69 percent fewer women being eligible to invest in England. There was also a 90 percent drop among eligible female investors in Wales, and not a single woman in Northern Ireland satisfied the new requirements.
Alongside advocates from other sectors, British theatre producers called for change, and the government actually listened.
“It speaks to a government that is engaged in a positive manner with business,” commented Gracey. “It is exactly what you want to see,” he said.
The news comes on the heels of Hunt’s announcement that the current program providing tax rebates equal to 40 percent of British shows’ production costs would be made permanent. “This is a once in a generation transformational change that will ensure Britain remains the global capital of creativity,” stated composer and producer Andrew Lloyd Webber.