Memorandum submitted by the Department
for Culture, Media and Sport
This Memorandum responds to questions asked
by the Select Committee arising from the 1998 DCMS Annual Report.
The Report looks ahead no further than spending plans for 1998-99.
Future spend will be dependent on the priorities and objectives
set out in the Department's Spending Review, itself part of the
Government's Comprehensive Spending Review, due to be concluded
in the summer.
Annexed to the Memorandum are the draft objectives
to which DCMS is working at present, and which are being considered
in the context of the Departmental Spending Review.
Responses to the Questions from the Committee
GENERAL QUESTIONS
1. Could the Department provide the figures
for overall expenditure 1992-93 to 1998-99 on page 16 of the Departmental
Annual Report in real terms?
The real terms figures, including the expenditure
of the Office of the National Lottery, are as follows (at 1996-97
prices):
£ millions
|
| 1992-93 outturn | 1993-94 outturn
| 1994-95 outturn | 1995-96 outturn
| 1996-97 outturn | 1997-98 estimated outturn
| 1998-99 plans |
|
| 1,109 | 1,048 | 1,035
| 1,056 | 959 | 889
| 863 |
|
2. What is the expenditure of the Department of National
Heritage and the Department for Culture, Media and Sport in each
year from 1992-93 to 1998-99 as a percentage of the Control Total
for the same years?
The relative percentages for each year are as follows:
|
| 1992-93 outturn | 1993-94 outturn
| 1994-95 outturn | 1995-96 outturn
| 1996-97 outturn | 1997-98 estimated outturn
| 1998-99 plans |
|
| 0.44 | 0.41 | 0.40
| 0.40 | 0.37 | 0.35
| 0.33 |
|
3. What percentage of total expenditure by the Department
takes the form of grant-in-aid to public or other bodies?
For 1998-99, the relevant percentage is 95.
4. What percentage of expenditure by the Department takes
the form of grant-in-aid to public bodies whose principal responsibility
is the distribution of public funds?
For 1998-99, the relevant percentage is 29.
5. What percentage of expenditure in the following sectors
takes the form of grant-in-aid to public bodies whose principal
responsibility is the distribution of public funds; (i) museums
and galleries; (ii) libraries; (iii) arts;(iv) sport; (v) historic
buildings, monuments and sites; (vi) tourism?
For 1998-99, the relevant percentages are:
|
| Museums and galleries | 4.3
|
| Libraries | 7.7 |
| Arts | 99.7 |
| Sport | 97.3 |
| Historic buildings, monuments and sites |
1.4 |
| Tourism | Nil |
|
For museums and galleries and libraries the Department acts
as primary distributor. Of the Department's grant-in-aid to the
English Tourist Board (21.7 per cent of DCMS expenditure on tourism)
just under half is used to fund Regional Tourist Board delivery
of national programmes. The historic buildings, monuments and
sites funding is made up largely of grant-in-aid to English Heritage
(£102 million), of which some£40 million is distributed
as grants to repair historic buildings and archaeology grants.
6. What services does the Department provide directly
to the public and what is their cost?
The Department provides the following services directly to
the public (1998-99 provision shown):
|
| The Royal Parks | £20,950,000
|
| Apsley House | £159,000
|
| Trafalgar Square | £315,000
|
| Statues and monuments (including Marble Arch and Wellington Arch)
| £116,000 |
| Ceremonial works and services | £535,000
|
| Departmental costs | £272,000
|
| Listing of buildings of special architectural or historic interest and scheduling of monuments
| £682,000 |
| Export Licensing Unit | £293,000
|
| Public Enquiry Unit and DCMS Website | £57,000
|
|
7. What is the role, if any, of the Department for Culture,
Media and Sport in the allocation and distribution of the local
authority expenditure listed on page 148 of the Departmental Annual
Report?
Each year the Government forecasts approximately how much
local government as a whole will need to spend in the following
year to provide the level of service that is consistent with overall
public spending plans. As part of this process, DCMS is consulted
about spending on Environmental, Protective and Cultural Services
(formerly the Other Service Block). DCMS is represented on the
Settlement Working Group, the forum for discussions between the
local authority associations and central government departments
about the Local Government Finance Settlement, and on the Standard
Spending Assessment Sub-Group, which considers possible changes
in the formulae for SSAs. Spending in DCMS related services is
not however hypothecated, and it is up to local authorities to
determine how the money is spent.
8. What are the reasons for the reductions in expenditure
in 1998-99 on libraries and on historic buildings, monuments and
sites referred to on page 65 of the Departmental Annual Report?
In making the public expenditure allocations for 1998-99,
the Department's objective was generally to maintain settlements
at the level planned last year, and to ensure that bodies could
continue to deliver their existing services within the total provision
previously announced. Some adjustments were necessary to reflect
the costs to the UK of increases in European Community budget
programmes. Accordingly, small reductions had to be made in those
sectors best placed to accommodate them.
Libraries
The grant-in-aid to the British Library was reduced by £2.25
million, representing less than 2 per cent of the Library's total
resources. It is a major generator of income and raised some £36
million through its various commercial activities in 1997-98.
It is likely that there is scope for further development of income
generation through marketing opportunities and, given the Library's
size, scope for efficiency savings.
Historic Buildings, Monuments and Sites
A number of factors have contributed to the reduction in
the planned Departmental expenditure in 1998-99 on this area of
activity. The principal factors affecting this are as follows:
— a reduction of £2 million in planned grant-in-aid
to English Heritage. This reflects the success of English Heritage's
continuing programme of efficiency measures and is more than balanced
by an anticipated increase in income from other sources for the
respective years (up from £23.7 million anticipated in the
1997 Report to £28.3 million anticipated now).
— a reduction of £3.5 million in net grant
to the Historic Royal Palaces. This reflects the move of the HRP
towards a position where it is expected not to require any Government
subsidy (other than for the residual costs of establishing and
contributing to the funding of a new pensions scheme) from 1999-2000.
The decision to transfer HRP from Agency to NDPB status was in
part taken because it is anticipated that, as a NDPB with charitable
status, HRP will be able to attract funds from sources which would
have been unlikely to be available to a Government Agency.
— a reduction of £3 million in planned grant-in-aid
to the National Heritage Memorial Fund (NHMF). This reduction
in funding reflected the Secretary of State's view that, with
Heritage Lottery funds also at its disposal, the NHMF could not
have priority for the use of scarce resources in a particularly
tight funding year. He indicated however that he hoped that the
reduction would be for one year only.
9. Were there any additional costs to the Department arising
from the assumption of responsibility for the music industry?
The additional costs have been absorbed within current running
costs with the addition of a £25,000 annual PES transfer
from DTI.
10. Why has the Historic Royal Palaces Agency become a
Non-Department Public Body?
The Historic Royal Palaces Agency was established as one
of the first Next Steps Agencies on 1 October 1989. It was a major
success in improving the conservation of the historic palaces
and in the quality of the experience offered to visitors. Since
its establishment (and based on performance in 1996-97) the Agency
increased its commercial income from £12 million to £29
million and reduced the proportion of expenditure borne by the
taxpayer from 35 per cent to 17 per cent.
In the light of these developments we considered whether
there were other options for the management of the historic royal
palaces which would allow the organisation to build on these successes.
We concluded that a board of trustees, overseeing an NDPB
with charitable status and managing the palaces under contract
with the Secretary of State, would be the most appropriate and
cost-effective way of carrying out the Department's responsibilities.
The benefits of the new arrangements are:
— the board of trustees will bring more focused
direction to the management of the historic royal palaces;
— greater financial flexibility in developing the
business without the constraints of the usual arrangements for
annual funding and expenditure;
— new opportunities to develop sources of additional
income; and
— the opportunity to accelerate the elimination
of the subsidy from the taxpayer.
The status of the historic royal palaces remains unchanged.
They are owned by the Sovereign on behalf of the nation. The Secretary
of State for Culture, Media and Sport is ultimately responsible
for their care under the Crown Lands Act 1851 and is accountable
to Parliament.
THE CREATIVE
ECONOMY
11. What is the basis for the calculation that the annual
turnover of the arts and creative industries is of the order of
£50 billion a year? What are the comparable figures for previous
years? What estimates have been made about the likely trends in
future years, both as an overall figure and as a percentage of
GDP?
The basis for the calculation is a re-analysis of the economic
data held by the Office for National Statistics (ONS) and used
for the national accounts. ONS information was provided on the
value-added of individual industries in 1995 against a DCMS list
of the industries that the Department takes to make up "the
arts and creative industries". Data for 1995 are the latest
available from ONS's input-output balances. The definition of
"the arts and creative industries" is a crucial first
step in the analysis, and the list of relevant industries was
prepared after discussion within the Department and with officials
in the Arts Council of England, DTI and with academics researching
this field. We have taken the "creative industries"
to be: film; music; architecture; publishing (including electronic
publishing); computer games; radio and television; the content
industries (for example, museum collections on CD); software;
advertising; crafts; visual and performing arts; designer fashion
and art/antiques trade. These industries have been translated
into components of the Standard Industrial Classification (SIC).
The ONS data are not an exact match with the creative industries,
because some ONS categories contain more than the creative industries
(for example, architecture is included in a larger category of
architectural, engineering and technical consultancy). In such
cases we applied judgemental proportions to estimate the creative
industries component. These were derived independently for each
industry.
Comparable figures for previous years: The calculation
described above was also run on 1989 data. It shows that the percentage
contribution of the creative industries to GDP was very similar
to that in 1995, although this is partly constrained by some assumptions
that have had to be made in the calculation.
Annual figures of turnover and of GDP proportion can be derived
by a simpler analysis, using published turnover and GDP proportions
for three industry groups. Although this is even less good a match
for the creative industries, it gives a total 1995 figure that
is close to that obtained from the more detailed analysis, so
we take these at least as broadly indicative of the contribution
of the arts and creative industries. Annual figures for 1992-96
are as follows:
| 1992 | 1993
| 1994 | 1995 |
1996 |
|
| Turnover of arts and creative industries £bn (rounded)
| 35 | 35 | 35
| 45 | 50 |
| Percentage contribution to GDP | 3.8
| 3.7 | 3.7 | 3.8
| 3.9 |
| Value added £bn (rounded) | 19
| 20 | 22 | 23
| 25 |
|
Source: ONS and DTI data.
Likely future trends: we have made no such estimates.
TOURISM
12. Will the Department provide figures on overseas visitors
to the United Kingdom and their expenditure in 1997 comparable
to those for previous years in the table on page 57 of the 1997
Departmental Annual Report? Has the Department made any estimates
for future years and, if so, could these be provided?
The table below gives figures for overseas visitors to the
UK and their expenditure in 1997, as set out for previous years
on page 57 of the 1997 DNH Annual Report. It also sets out amended
figures for 1994-96 following revisions to the International Passenger
Survey data for those years. The Department does not make forecasts
for future years.
OVERSEAS VISITORS TO THE UK
|
| 1994 | 1995
| 1996 | 1997 |
|
| Visitors (million) | 20.8 |
23.5 | 25.3 | 26.2
|
| Expenditure (£billion) | 9.8
| 11.8 | 12.4 | 12.8
|
|
Source: International Passenger Survey.
EXPORT LICENCES
13. What are the targets for standards of service in the
control of the export of cultural goods? How does the performance
of 97 per cent of licences being issued within the deadlines set
compare with the previous five years?
The Export Licensing Unit aims to issue export licences within
five working days of receiving the application provided that:
(i) the information provided with the application is not
deficient is some way; and
(ii) the application is not one which needs to be referred
to an Expert Adviser in a museum or gallery to establish whether
they wish to object to the export on grounds of national importance.
In the case of applications where the information is deficient
the Licensing Unit aims to issue the licence within five working
days of receiving the information which was lacking.
For applications which need to be referred to an Expert Adviser,
the Unit aims to refer the application within five working days
of receipt. Our Advisers are requested to respond within 15 working
days, although they are not subject to the Code of Practice as
they are not officials of the Department.
Where there is particular urgency, DCMS officials and the
Expert Advisers try to process the application by the deadline
requested; and in many instances licences are issued before the
targets set out in the Code of Practice.
Performance has been measured for each year from 1994; in
each year licences have been issued according to the deadlines
set, as follows:
1994—97 per cent;
1995—96 per cent;
1996—94 per cent;
1997—97 per cent.
PARLIAMENTARY AND
MINISTERIAL WORK
14. What targets have been set for responding to correspondence
addressed to Ministers and what is the level of performance against
those targets?
The target set for Ministers responding to correspondence
is 18 days from receipt. The level of performance from 1 May to
31 December 1997 was 76 per cent on target.
15. How many Parliamentary questions for answer
on a named day tabled in the current Session have been answered
substantively on the day named?
Up to and including 23 April, 95 out of 313 questions were
answered substantively on the day named.
16. How many Parliamentary questions for ordinary written
answer tabled in the current Session have been answered within
a week of the notional day for answer?
Up to and including 23 April, 468 out of 621 questions were
answered within a week of the notional day for answer.
NDPB ADMINISTRATION COSTS17.
Why do the outturn figures for 1996-97, the provisional outturn
figure for 1997-98 and the planned figure for 1998-99 for the
administration costs of the Arts Council of England on page 145
of the Departmental Annual Report differ from the figures for
the same years in the table on page 162 of the 1997 report?
The entries for the Arts Council of England in the Tables
"Administration Costs of Larger DCMS NDPBs" on page
145 of the 1998 Report show those costs which are met from grant-in-aid
provided by the Department. Some additional operating costs are
incurred by the Arts Council and Regional Arts Boards in the administration
of National Lottery funds, and a part of these costs was included
in error in the figures published in the 1998 Departmental Report.
The Table published in the 1998 Departmental Report should read:
|
| 1996-97 Outturn | 1997-98 Provisional Outturn
| 1998-99 Plans |
|
| £12.8 million | £12.0 million
| £11.4 million |
|
The difference between these figures and those published
in the 1997 Departmental Report is explained in the case of 1996-97
and 1997-98 by the shift from planned to outturn figures and in
the case of 1998-99 by in-year amendment of priorities.
RESOURCE ACCOUNTING
AND BUDGETING
18. Will any of the Department's Non-Departmental Public
Bodies be included within the Department's Resource Accounts?
The Department has concluded that there are no good control
reasons why any of its Executive NDPBs should be included within
the boundary for the purposes of its Resources Accounts. Accordingly
the Department's Resource Accounts currently includes only the
Department, the Royal Parks Agency, the Royal Fine Art Commission
and the Royal Commission on Historic Manuscripts.
19. Has the Department produced "dry run" resource
accounts for 1997-98 and, if so, what lessons have been learnt
about the implementation of resource accounting and budgeting?
The Department has already produced a draft set of Resource
Accounts for 1996-97, although these accounts excluded both schedule
5 (Analysis of costs against Aims and Objectives) and the accounts
of the Royal Parks Agency. These draft accounts were reviewed
by the National Audit Office during 1997.
The NAO identified two areas for improvement in the accuracy
of these accounts, namely the capture of accruals and the recording
of the Department's fixed assets. Both these aspects have been
addressed by the Department, the former by the introduction of
a Purchase Order Processing System which went live from6 April
1998 and the latter by making improvements in the recording and
control of the Department's furniture and IT equipment.
The Department now intends to build on this experience by
producing a set of Resource Accounts for 1997-98 to include Schedule
5, following the agreement of its new aims and objectives. This
information will also be reviewed by the NAO later this year.
20. What valuation has been placed on the non-operational
heritage assets of the Department and the Royal Parks Agency,
including those listed on pages 313 and 316 of the Asset Register,
and will they be subject to capital charges following the introduction
of Resource Accounting and Budgeting?
No value has been placed on any of the non-operational heritage
assets of the Department or the Royal Parks Agency pending further
discussions between the Department, Treasury and the Financial
Reporting Advisory Board (FRAB) about the detailed interpretation
of the accounting policy for such assets.
If such assets were to be valued and these values then recorded
in the Balance Sheet of the body concerned, they would attract
a capital charge once resource accounting and budgeting is fully
implemented.
21. What valuation has been placed on the assets of the
Government Art Collection listed on page 317 of the Asset Register
and will they be subject to capital charges following the introduction
of Resource Accounting and Budgeting?
No valuation has been placed on the assets of the Government
Art Collection listed on page 317 of the Asset Register, pending
the outcome of discussions with Treasury and the FRAB mentioned
above.
However, should it be decided that the collection is to be
valued then it would attract the annual capital charge to be levied
by Treasury once resource accounting and budgeting is fully implemented.
22. Are Resource Accounting Systems now in operation within
the Department?
The Department introduced a new accounting system on 1 November
1996 which has enabled the production of concurrent cash and accruals
based information. Since that date, monthly management information
has been produced in cash terms mainly for reporting to Treasury
and in accruals terms for the management Board. These systems
have continued to be developed with the new purchase order processing
system, and the Department is currently dealing with the information
required to complete schedule 5, which provides an analysis of
costs and grant-in-aid against aims and objectives. As part of
the Comprehensive Spending Review, the Department is developing
the output measures required by the Output and Performance Manual.
23. What benefits particular to the Department are expected
to result from the introduction of Resource Accounting and Budgeting?
The Department anticipates that once resource accounting
and budgeting (RAB) is fully introduced it will make it easier
to quantify the delivery of its outputs and to relate resources
to the achievement of its objectives. It will also assist staff
to assess the effectiveness of the management of the Department's
own resources, as well as the delivery of policies through the
sponsored bodies which it supports.
24. Are any changes to the structure of Votes for the
Department expected as a result of the introduction of Resource
Accounting and Budgeting?
The structure and format of the resource-based estimates
are being considered as part of the Resource Accounting Project.
It is envisaged that under RAB the existing structure of Votes
will be replaced by Departmental Resource Estimates and Accounts:
one per Department. Individual Departments' Resource Estimates
will be underpinned by Requests for Resources set at broadly the
same level as existing Votes. The analysis below each Request
for Resources will be on functional lines (unless it can be done
by objective). Provision will be voted in both cash and resource
terms.
It has been agreed that the best way to establish the appropriate
format of the Estimate for individual Departments is for Departments
to prepare illustrative mock ups of their Estimates. We are waiting
for HM Treasury to initiate this exercise.
25. What consideration has been given to the objectives
and performance measures for the Department to be introduced as
part of Resource Accounting and Budgeting?
As mentioned in the response to question 22, the Comprehensive
Spending Review required the Department to produce a draft Output
and Performance analysis. This will in time be an annual exercise,
the results of which will be published. The Department has already
identified a large number of outputs which it generates direct
or which are generated by its sponsored bodies in support of its
aims and objectives. We shall develop these measures over the
next two years in time for the formal production and publication
of this annual report.
May 1998
| 
