We can't estimate the cost of removing charity music exemption, says Office of the Third Sector

But it says the original estimate was of a worst-case scenario that would never happen

The Office of the Third Sector says it cannot provide an accurate estimate of how much the removal of charities' exemption from the music licensing regime will cost the sector, but it has outlined why it thinks original estimates of about £20m were too high.

In Parliament on Wednesday, Angela Smith, Minister for the Third Sector, announced that the original Government estimate that the introduction of the requirement to buy licences from Phonographic Performance Limited would cost the sector £20m had been "overstated".

She did not, however, say what she thought the figure was, which led to the sector umbrella body the NCVO calling on her to provide an accurate estimate.

A spokesman for the OTS said the original estimate had actually been £18.7m, but that figure had been based on the assumption that 50 per cent of sector organisations would need licences.

"However, many third sector organisations have no need to play music as part of their activities, and many others do not occupy any property that would need licensing," he said. "For example, if a village hall had a premises licence, all the organisations that used it would not need one."

He also pointed out that PPL collected only £54m from all four million UK businesses in 2008."On that basis, the £18.7m figure from just the third sector looks high," he said. "It is based on a worst-case scenario that isn't going to happen."

Smith said it would be difficult to give an accurate figure for the impact of the new licensing regime on charities until negotiations between the music licensing bodies and charities were complete. "I remain concerned about the impact of the changes, but the total cost is still likely to be below the £18.7m estimate," she said.

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