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Festival bosses at Neverworld say they are "devastated" to cancel the event for a second year because of the pandemic.
The festival, held in Hever, and which used to be called Leefest, was due to take place this July with Groove Amanda and Travel among the artists playing.
Current government plans do allow for festivals after June 21, when it is aiming to remove all legal limits on social contact.
However, Neverworld organisers say the financial risk of continuing to go ahead with the event is too great.
A statement on the event website says: "After 15 years of overcoming all manner of adversities to keep the dream alive, we would never have entertained the idea of cancelling an event, let alone two in a row.
"Needless to say we are devastated, but we must be responsible in our decision making.
"We incurred eye watering losses due to last year's cancellation, and to continue past this point would require us to risk an overwhelming amount more.
"We are unable to access cancellation insurance that would cover an extension of restrictions on events due to COVID-19, and there is a very real possibility of that happening, especially for an event of this scale in July.
"We have worked with others in the festival industry to ask for a Government backed insurance scheme to allow events to restart (similar to the scheme they set up for film & television) but they have refused to provide any support.
"We have also been refused any financial support from the Government to help us through this time, despite contributing millions of pounds in tax revenues in our years of operation."
Automatic refunds will be given for the 2021 festival.
Neverworld's smaller events, a summer camp for adults, and a family summer camp, are still going ahead.
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