A group of MPs are calling for a ticket levy on concerts at UK arenas and stadiums to raise funds for grassroots venues that are struggling with rising costs and the risk of closure.

A VAT break for smaller venues has also been recommended in an inquiry report signed by MPs in the culture, media and sport committee, which emphasises the importance of these venues to the wider music ecosystem.

Dame Caroline Dinenage MP, chair of the cross-party select committee, said: “If the grassroots, where musicians, technicians, tour managers and promoters hone their craft, are allowed to wither and die, the UK’s position as a music powerhouse faces a bleak future.

“It is time that the government brought together everyone with a stake in the industry’s success, including music fans, to address the long-term challenges and ensure live music can thrive into the future.”

The report proposes an initial voluntary levy on tickets for gigs at arenas and stadiums – which would be used to establish a support fund for venues, artists and promoters.

If by September there is not enough financial support for this fund, then the committee suggests the government should step in and introduce a statutory levy.

It also emphasises that the costs should not be passed on to music fans, and that it should be built within the existing price of a ticket.

The proposals mark a turnaround from last year, when John Whittingdale, Conservative MP and former culture secretary, said in November during a discussion on aid for the sector: “We have no plans to impose a ticket levy.”

David Martin, chief executive of Featured Artists Coalition, and Annabella Coldrick, chief executive of Music Managers Forum, commended the proposals but reiterated the urgency of the situation.

They said: “The entire ecosystem needs support. While we still believe this mechanism should be mandatory, the clock is now ticking to get a process in place before September 2024.”

The inquiry was launched by grassroots venue charity Music Venue Trust (MVT) in October. MVT has been lobbying for a stadium and arena levy, something which was highlighted in December 2023 when the historic small venue Moles in Bath was forced to close – one of 125 such venues that closed last year.

Anecdotal evidence from two roundtable consultations with independent venues across the UK, partnered with data provided by industry bodies such as the MVT and live music umbrella body Live, was used as evidence in the report. Some of the venues that were consulted include Suki10c in Birmingham, The Old Abbey Taphouse in Manchester, Dryad Works in Sheffield, Colour Factory in London, and Brudenell Social Club in Leeds.

Mark Davyd, chief executive of MVT, said that while venues faced particular challenges depending on size, there are some shared challenges such as rent, energy prices, and making minimal profit from tickets. “That’s why proposing solutions such as a targeted temporary VAT cuts will benefit the ecosystem as a whole,” he said.

Davyd, alongside Jon Collins, chief executive of Live, commended the select committee for its support. The government must respond to the report within two months of its publication.

Collins said: “It’s clear that the committee has recognised the many challenges faced by venues, promoters, events and artists at the grassroots level, and the steps required to address them.”

With a prospective general election looming, Davyd hopes these recommendations will be manifesto points for all the parties. He said: “The report was cross-party. This is not a political issue, this is an issue about maintaining access to culture and creativity in our communities … these are inspiring spaces and I don’t think that’s leftwing or rightwing wanting to preserve them.”

• This article was amended on 13 May 2024. An earlier version said that the Music Venue Trust had been lobbying for a levy since December 2023. To clarify: MVT has been campaigning for the music industry to financially support the grassroots sector since 2018, including discussions relating to a levy on tickets. Following the closure of Bath’s Moles venue in December 2023, MVT’s lobbying for a compulsory levy reached a wider audience.