APPENDIX 1
REORGANISING THE ARTS FUNDING SYSTEM TRYING
TO BE BUSINESSLIKE—WITHOUT REALLY SUCCEEDING
Memorandum submitted by Mr Charles Morgan
Reducing the costs of bureaucracy in the arts
funding system in England has been a popular topic amongst politicians
and arts bureaucrats for more than 10 years.
On 8 December 1988 Richard Luce, Minister for
the Arts, commissioned Richard Wilding to review the structure
and organisation for the support of the arts and to pay special
attention to four objectives: accountability, coherence of funding
policy, improved structure and procedures, administrative economy.
In 1993, responding to continuing concerns about
bureaucracy, the Department of National Heritage ordered a further
review of the Arts Council by Price Waterhouse consultants at
a cost of £53,000. On the day of publication, Peter Brooke,
then Minister for the Arts, said:
"I am convinced that priority must be given
to increased economy, efficiency and effectiveness in public funding
for the arts, in order to find the best way of channelling funding
to the artists.."
Announcing his response to the report on 21
July 1993, the Secretary of State decided to ignore the Price
Waterhouse recommendations and invited the Arts Council to spend
another three months to develop its own proposals for reorganisation.
This led to the announcement of a package of staff cuts designed
to save £566,000, which was not seen until the financial
year 1994-95.
Gerry Robinson was appointed to the Arts Council
in January 1998 and became Chairman on 1 May of that year. Most
commentators believed that he had been appointed to bring his
business skills to the Council; Richard Morrison wrote in The
Times on 22 May 1998: "The Government has appointed Gerry
Robinson not only to chair the Arts Council but apparently to
shake it up and clear it out". In an interview with the new
Chairman in The Sunday Times on 10 May 1998, Bryan Appleyard
commented:
". . . Robinson must be the council's last
chance. If it is to succeed it needs to show more than just management
class—it must demonstrate belief. Robinson has the first:
what matters is whether he has the second".
Peter Hewitt joined the Arts Council as Chief
Executive on 9 March 1998 and within weeks announced another review
of the Arts Council's operation:
"Redundancy fears at the Arts Council intensified
this week, after new secretary-general Peter Hewitt promised a
major review into the way the organisation operates".
The Stage, 16 April 1998
In October 1998 the Arts Council published further
details of its reorganisation plans and promised "a new kind
of Arts Council...which will be leaner but more effective."
"At present the Arts Council's full complement
of staff is 322. When plans are finalised, a staff of around 150
is expected...Overall, net financial savings from restructuring—including
those extra costs in RABs—should free up at least £2
million per year for frontline arts activity".
Arts Council News, October 1998
Experience has shown that reorganisations of the
arts funding system always take longer than planned and it is
only now, with the publication of The Arts Council and Regional
Arts Board accounts for 2000-01, that it is possible to assess
how far these objectives have been achieved.
ARTS COUNCIL
Accounts for the years following the arrival
of Robinson and Hewitt show that:
1. Staff have been reduced from 273 in 1997-8
(197 grant-in-aid and 76 lottery staff to 200 in 2000-01 (163
grant-in-aid and 37 lottery staff).
Table 1
ARTS COUNCIL—STAFFING NUMBERS
| |
1993-94 | 1994-95
| 1995-96 | 1996-97
| 1997-98 | 1998-99
| 1999-2000 | 2000-01
|
| Arts Council | 156
| 132 | 144
| 166 | 197
| 198 | 152
| 163 |
| Lottery Unit | 0
| 8.5 | 18
| 40 | 76
| 81 | 49
| 37 |
| TOTAL ACE | 155
| 140.5 | 162
| 206 | 273
| 279 | 201
| 200 |
| Source: Arts Council Annual Reports.
|
2. The costs of redundancy and early retirement for the
Arts Council's earlier reorganisations between 1991-92 and 1994-95
amounted to £673,000. This time it was rather more expensive.
The costs of redundancy and outplacement costs arising from the
restructuring at the Arts Council over the two years 1999-2000
and 2000-01 were £1,419 million.
Table 2
REDUNDANCY AND OUTPLACEMENT COSTS
£000
| Grant-in-Aid
| Lottery | Total
|
| Provision in 1998-99 | 542
| 893 | 1,435
|
| Charged to IE in 1999-2000 | 9
| 0 | 9
|
| Released in 1999-2000 | 0
| (7) | (7)
|
| TOTAL | 551
| 886 | 1,437
|
| Utilised in 1999-2000 | (460)
| (778) | (1,238)
|
| Utilised in 2000-01 | (84)
| (97) | (181)
|
| Balance at 31 March 2001 | 7
| 11 | 18
|
| Cost of Restructuring |
| | 1,419
|
| Source: Arts Council Annual Reports.
|
3. Despite the reduction in Arts Council grant-in-aid
staff, their total salary costs have risen from £4,915 million
in 1997-98 to £6,282 million in 2000-01—an increase
of 27.8 per cent in three years.
Table 3
ARTS COUNCIL—SALARIES AND FEES
| £000 | 1993-94
| 1994-95 | 1995-96
| 1996-97 | 1997-98
| 1998-99 | 1999-2000
| 2000-01 |
| Arts Council |
| Staff Salaries | 4,1081
| 3,6342 | 3,731
| 3,873 | 4,915
| 5,8393 | 4,9734
| 6,282 |
| Agency Staff | 41
| 143 | 295
| 389 | 673
| 890 | 1,213
| 1,036 |
| Professional Fees | 109
| 228 | 141
| 1,402 | 1,230
| 1,871 | 1,879
| 584 |
| TOTAL ACE | 4,258
| 4,005 | 4,167
| 5,664 | 6,818
| 8,600 | 8,065
| 7,902 |
| Lottery Unit |
| Staff Salaries | —
| 188 | 568
| 1,036 | 2,075
| 2,9945 | 1,626
| 1,646 |
| Agency Staff | —
| 15 | 61
| 323 | 847
| 527 | 882
| 468 |
| Professional Fees | —
| 96 | 557
| 1,626 | 1,633
| 942 | 991
| 655 |
| TOTAL LU | —
| 299 | 1,186
| 2,985 | 4,555
| 4,463 | 3,499
| 2,769 |
| External Assessment | —
| 89 | 1,673
| 5,504 | 8,428
| 7,311 | 7,820
| 7,694 |
| TOTAL | 4,258
| 4,393 | 7,026
| 14,153 | 19,801
| 20,374 | 19,384
| 18,365 |
Notes:
1 Excludes redundancy and early retirement costs of £57,000.
2 Excludes redundancy costs of £261,000.
3 Includes provision for redundancy costs of £516,749 arising from the reorganisation.
4 Includes charge for redundancy costs of £9,000 arising from the reorganisation.
5 Includes provision for redundancy costs of £851,297 arising from the reorganisation.
Source: Arts Council Annual Reports.
|
4. While the following table is admittedly based on a
fairly crude calculation—total salaries (excluding redundancy
costs) divided by numbers of staff—it indicates that average
salary levels at the Arts Council have increased by more than
50 per cent in three years.
Table 4
ARTS COUNCIL—AVERAGE SALARIES
| £000 | 1993-94
| 1994-95 | 1995-96
| 1996-97 | 1997-98
| 1998-99 | 1999-2000
| 2000-01 |
| Arts Council |
| Staff Salaries | 4,108
| 3,634 | 3,731
| 3,873 | 4,915
| 5,3221 | 4,9642
| 6,282 |
| Staff Numbers | 155
| 132 | 144
| 166 | 197
| 198 | 152
| 163 |
| Average Salary | 26.5
| 27.5 | 25.9
| 23.3 | 24.9
| 26.9 | 32.7
| 38.5 |
| Increase since 1997-98 |
| |
| |
| |
| 55% |
| Lottery Unit |
| Staff Salaries | 0
| 188 | 568
| 1,036 | 2,075
| 2,1433 | 1,626
| 1,646 |
| Staff Numbers | 0
| 8.5 | 18
| 40 | 76
| 81 | 49
| 37 |
| Average Salary | 0
| 22.1 | 31.6
| 25.9 | 27.3
| 26.5 | 33.2
| 44.5 |
| Increase since 1997-98 |
| |
| |
| |
| 63% |
| TOTAL ACE |
| Salaries | 4,108
| 3,822 | 4,299
| 4,909 | 6,990
| 7,4654 | 6,5904
| 7,928 |
| Staff Numbers | 155
| 140.5 | 162
| 206 | 273
| 279 | 201
| 200 |
| Average Salary | 26.5
| 27.2 | 26.5
| 23.8 | 25.6
| 26.8 | 32.8
| 39.6 |
| Increase since 1997-98 |
| |
| |
| |
| 55% |
Notes:
1 Excludes provision for redundancy costs of £516,749 arising from the reorganisation.
2 Excludes charge for redundancy costs of £9,000 arising from the reorganisation.
3 Excludes provision for redundancy costs of £851,297 arising from the reorganisation.
4 Excludes provision for redundancy costs.
Source: Arts Council Annual Reports.
|
Some increase in average salary levels was to be expected
with the Arts Council wishing to present itself in a more strategic
role—gathering all the chiefs into the Great Peter Street
wigwam while despatching the braves to the regions. However, these
figures suggest that the extraordinarly large pay increases awarded
to the senior executive team at Great Peter Street have set the
tone for large increases across the board.
Total remuneration for the Chief Executive has risen from
£78,581 in 1998-99, his first full year in office, to £141,000
in 2000-01 (although £15,000 of this sum was salary pension
backdated to 1999-2000—in which year he had received £90,000).
Even allowing for that adjustment, this amounts to an increase
of 60 per cent in just two years. It still leaves the Chief Executive
£19,000 behind the top earner.
Total remuneration to the Executive Director of Arts, who
joined the Arts Council on 11 October 1999, was £145,000
in 2000-01, her first full year in post.
Total remuneration to the five directors of the executive
team amounted to £540,000 in 2000-01 compared with less than
£350,000 to the top six earners in the year leading up to
the arrival of Robinson and Hewitt.
Table 5
REMUNERATION TO SENIOR ARTS COUNCIL EMPLOYEES
| | 1993-94
| 1994-95 | 1995-96
| 1996-97 | 1997-98
| 1998-99 | 1999-2000
| 2000-01 |
| £40-49,999 | 3
| 6 | 4
| 6 | 5
| 8 | —
| — |
| £50-59,999 | —
| 1 | 1
| 1 | 0
| 1 | —
| — |
| £60-69,999 | 11
| 11 | 1
| 11 | 0
| 1 | —
| — |
| £70-79,999 | —
| — | 11
| — | —
| 11 | 3
| — |
| £80-89,999 | —
| — | —
| — | —
| — | —
| 3 |
| £90-99,999 | —
| — | —
| — | 12
| — | 1
| — |
| £100-109,999 | —
| — | —
| — | —
| — | 11
| — |
| £110-119,999 | —
| — | —
| — | —
| — | —
| — |
| £120-129,999 | —
| — | —
| — | —
| — | 1
| 11 |
| £130-139,999 | —
| — | —
| — | —
| — | —
| — |
| £140-149,999 | —
| — | —
| — | —
| — | —
| 1 |
Notes:
1 Chief Executive.
2 Mary Allen resigned as Chief Executive in May 1997. Graham Devlin was Acting Chief Executive from 23 May 1997 to 6 March 1998. Peter Hewitt commenced as Chief Executive on 9 March 1998.
Source: Arts Council Annual Reports.
|
5. The costs of permanent staff are not the only area
which demand attention. Despite the Chief Executive's assurance
that the new structure "will deliver for the Arts Council
without the need for temporary staff" (letter from Peter
Hewitt, 26 November 1999), the Arts Council has spent more than
£5 million on Agency Staff over the past three years.
Table 6
ARTS COUNCIL—AGENCY STAFF COSTS
| £000 | 1993-94
| 1994-95 | 1995-96
| 1996-97 | 1997-98
| 1998-99 | 1999-2000
| 2000-01 |
| Arts Council |
| Agency Staff | 41
| 143 | 295
| 389 | 673
| 890 | 1,213
| 1,036 |
| Lottery Unit |
| Agency Staff | —
| 15 | 61
| 323 | 847
| 527 | 882
| 468 |
| TOTAL ACE | 41
| 158 | 356
| 712 | 1,520
| 1,417 | 2,095
| 1,504 |
| Source: Arts Council Annual Reports.
|
6. Professional fees have been reduced in the last year
but nearly £7 million has been spent over the past three
years.
Table 7
ARTS COUNCIL—PROFESSIONAL FEES/ADVICE/CONSULTANCY
| £000 | 1993-94
| 1994-95 | 1995-96
| 1996-97 | 1997-98
| 1998-99 | 1999-2000
| 2000-01 |
| Arts Council |
| Professional Fees | 109
| 228 | 141
| 1,402 | 1,230
| 1,871 | 1,879
| 584 |
| Lottery Unit |
| Professional Fees | —
| 96 | 557
| 1,626 | 1,633
| 942 | 991
| 655 |
| TOTAL ACE | 109
| 324 | 698
| 3,028 | 2,863
| 2,813 | 2,870
| 1,239 |
| Source: Arts Council Annual Reports.
|
7. Lottery grants for the last three years put together
are less than the £455.8 million awarded at the peak in 1997-(8
(although some of those "hard commitments" were reversed
in 1998-99). However, the reduction in lottery expenditure has
not led to lower External Assessment costs. No further information
is given to show how this significant sum of money, around £7.5
million each year, has been spent. Annually it is greater than
all but the grants to the five largest companies—the Royal
Opera House, Royal National Theatre, Royal Shakespeare Company,
English National Opera and South Bank Board—and greater
than the grants passed on by the Arts Council to five of the regional
arts boards. Further details of how those grants are spent can
be obtained from the organisations' own accounts but no information
is published to show where the £38.5 million spent on external
assessment since 1994-95 has gone. Does the Arts Council keep
a record? Shouldn't it be made public?
Table 8
ARTS COUNCIL—EXTERNAL ASSESSMENT COSTS
| £000 | 1993-94
| 1994-95 | 1995-96
| 1996-97 | 1997-98
| 1998-99 | 1999-2000
| 2000-01 |
| Lottery Grants | 0
| 0 | 229.9
| 344.4 | 455.8
| 143.2 | 182.3
| 131.3 |
| Reversal of Hard Commitments |
| |
| |
| (85.3) |
| |
| External Assessment | 0
| 89 | 1,673
| 5,504 | 8,428
| 7,311 | 7,820
| 7,694 |
| Cumulative Total to 2000-01 |
| |
| |
| |
| 38,519 |
| Source: Arts Council Annual Reports.
|
8. It is also remarkable that Arts Council costs apportioned
to the lottery have continued to increase while lottery grants
have fallen. Costs apportioned to the lottery in 2000-01 amount
to 65.3 per cent of the support costs and management and administration
declared in the Arts Council's accounts. According to the relevant
note in the accounts: "Directions issued by the Secretary
of State require that costs incurred which relate to both grant-in-aid
and lottery activities should be apportioned between the two in
accordance with good accounting practice. Such costs are apportioned
between the Arts Council's grant-in-aid and lottery accounts,
based on an assessment of time spent on each activity". Does
this mean that Arts Council officers only spend a third of their
time on non-lottery arts activity?
Table 9
ARTS COUNCIL COSTS APPORTIONED TO LOTTERY
| £ millions | 1993-94
| 1994-95 | 1995-96
| 1996-97 | 1997-98
| 1998-99 | 1999-2000
| 2000-01 |
| Lottery Grants | 0
| 0 | 229.9
| 344.4 | 455.8
| 143.2 | 182.3
| 131.3 |
| Arts Council Support Costs and Management |
0 | 11.150
| 11.193 | 9.077
| 11.983 | 14.552
| 14.273 |
|
| and administration |
| |
| |
| | 12.5171
| 13.957 |
| Arts Council Support Costs and Management and Administration Apportioned to Lottery
| 0 | 0.515
| 3.052 | 3.914
| 6.566 | 7.144
| 8.709 | 9.109
|
| Arts Council Support Costs | 0.0%
| 4.6% | 27.3%
| 43.1% | 54.8%
| 49.1% | 61.0%
| |
| and Management and Administration Apportioned to Lottery
| |
| |
| |
| 69.6%1 | 65.3%
|
Note:
1 As restated in 2000-01 accounts.
Source: Arts Council Annual Reports.
|
REGIONAL ARTS
BOARDS
9. As the Arts Council commented when announcing their
reorganisation plans: ". . .some (Arts Council staff) may
be able to find jobs in the regions if and when RABs decide to
take on extra staff".
Table 10
REGIONAL ARTS BOARD—STAFFING NUMBERS
| | 1993-94
| 1994-95 | 1995-96
| 1996-97 | 1997-98
| 1998-99 | 1999-2000
| 2000-01 |
| EA | 37 |
40 | 36
| 35 | 41
| 41 | 41
| 38 |
| EMA | 29 |
28 | 29(40)1
| 31(42)1 | 36
| 33 | 40
| 44 |
| LAB | 34 |
38 | 37
| 41 | 44
| 42 | 45
| 65 |
| NA | 34 |
32 | 32
| 35 | 36
| 37 | 37
| 38 |
| NWA | 37 |
37 | 35
| 48 | 46
| 46 | 51
| 53 |
| SA | 26 |
26 | 27
| 27 | 33
| 33 | 38
| 38 |
| SEA | 24 |
24 | 24
| 23 | 30
| 31 | 40
| 43 |
| SWA | 30 |
30 | 31(21)1
| 32.5 | 33
| 33 | 42
| 43 |
| WMA | 40 |
39 | 36
| 36 | 42
| 42 | 46
| 45 |
| YHA | 35 |
39 | 34.5
| 38.5 | 38.5
| 45 | 44
| 44 |
| TOTAL RABs | 326
| 333 | 321.5
| 347 | 379.5
| 383 | 424
| 451 |
Increase since
1997-98 |
| |
| |
| |
| 18.8% |
Note:
1 Unexplained restatements.
Source: Regional Arts Board Accounts.
|
Table 11
REGIONAL ARTS BOARD—SALARIES AND FEES
| £ | 1993-94
| 1994-95 | 1995-96
| 1996-97 | 1997-98
| 1998-99 | 1999-2000
| 2000-01 |
| EA | 762,745
| 782,519 | 833,149
| 807,942 | 908,331
| 992,060 | 1,146,055
| 1,125,998 |
| EMA | 510,890
| 510,391 | 528,506
| 753,553 | 715,999
| 725,153 | 928,169
| 1,043,467 |
| LAB | 860,173
| 972,028 | 976,973
| 1,105,745 | 1,288,960
| 1,251,771 | 1,430,902
| 1,980,127 |
| NA | 701,966
| 646,102 | 644,503
| 717,458 | 831,749
| 845,136 | 932,376
| 984,456 |
| NWA | 767,987
| 828,674 | 826,597
| 824,845 | 933,757
| 1,007,910 | 1,100,443
| 1,215,298 |
| SA | 625,884
| 625,031 | 644,363
| 692,942 | 825,751
| 865,136 | 955,265
| 1,119,967 |
| SEA | 568,236
| 536,142 | 513,110
| 546,501 | 707,582
| 760,132 | 995,501
| 1,119,207 |
| SWA | 632,895
| 849,266 | 380,883
| 630,557 | 665,597
| 675,165 | 865,865
| 986,718 |
| WMA | 795,055
| 804,824 | 774,322
| 779,630 | 894,352
| 895,723 | 1,025,663
| 1,122,211 |
| YHA | 726,272
| 720,304 | 703,064
| 799,092 | 885,370
| 948,554 | 1,027,526
| 1,108,738 |
| TOTAL RABs | 6,952,103
| 7,275,281 | 6,825,470
| 7,657,965 | 8,657,448
| 8,966,740 | 10,407,765
| 11,806,187 |
Increase since
1997-98 |
| |
| |
| |
| 36.4% |
| Source: Regional Arts Board Accounts.
|
Staff numbers at the Regional Arts Boards have increased
by 18.8 per cent since 1997-98. The total salaries bill for the
Regional Arts Boards has increased by 36.4 per cent over those
three years. There are wide variations between individual arts
boards. For example, the staff at East of England Arts is now
fewer in number than it was three years ago while London Arts
has increased its staff numbers by nearly a half over three years.
Northern Arts has increased its salaries bill by 18.4 per cent
with the addition of two members of staff since 1997-98 while
Southern Arts, with no increase in staff numbers, managed a 17.2
per cent increase in its salaries bill in the last year alone.
10. When North West Arts Board advertised for a new Chief
Executive in October 2000 a salary of "not less than £60,000"
was offered, compared with the salary of their outgoing Chief
Executive which was in the range of £40-50,000 in 2000-01.
That amounts to an increase of at least 20 per cent.
The following table, although incomplete, gives a further
indication of how the salaries of Regional Arts Board Chief Executives
have increased in recent years.
Table 12
SALARY LEVELS FOR RAB CHIEF EXECUTIVES
| | 1993-94
| 1994-95 | 1995-96
| 1996-97 | 1997-98
| 1998-99 | 1999-2000
| 2000-01 |
| Not shown—less than £40,000 | 10
| 10 | 2
| 2 | 2
| 1 | 1
| — |
| £30-39,999 | —
| — | 6
| 4 | 2
| 1 | —
| — |
| £40-49,999 | —
| — | 2
| 3 | 6
| 7 | 7
| 5 |
| £50-59,999 | —
| — | —
| — | —
| 1 | 2
| 3 |
| £60-69,999 | —
| — | —
| — | —
| — | —
| 2 |
| £90-99,999 | —
| — | —
| 11 | —
| — | —
| — |
Notes:
1 According to Northern Arts accounts the extraordinary payment of between £90 and £100,000 in 1996-97 was "a one off payment arising from contractual arrangements made at the time of Northern Arts' restructuring in 1992".
Source: Regional Arts Board Accounts.
|
10. In addition to the salary costs shown in the Regional
Arts Boards accounts, there are increasing amounts of other staff
related costs which have to be taken into account. These include
expenditure on recruitment, training, redundancy costs and fees
paid for additional consultancy.
These figures are not necessarily directly comparable from
year to year because of the different ways RABs have chosen to
present information in their accounts. For example, LAB have only
separated out Recruitment and Training in their 1999-2000 accounts
so it is previously unidentifiable. However, the point needs to
be made that while the Arts Council were spending £1.4 million
on redundancy costs to reduce staff, the RABs were allocating
a similar amount to staff related costs for their own restructuring.
Table 13
REGIONAL ARTS BOARDS—OTHER STAFF COSTS/FEES
| £ | 1993-94
| 1994-95 | 1995-96
| 1996-97 | 1997-98
| 1998-99 | 1999-2000
| 2000-01 |
| EEA | n/s |
n/s | n/s
| n/s | n/s
| n/s | n/s
| n/s |
| EMA | n/s |
n/s | n/s
| n/s | n/s
| n/s | 53,278
| 33,200 |
| LAB | 18,712
| 13,895 | 10,342
| 3,056 | 23,625
| 76,4761 | 168,402
| 202,398 |
| NA | 18,004 |
14,047 | 22,835
| 28,167 | 23,983
| 18,340 | 29,378
| 24,154 |
| NWA | n/s |
n/s | n/s
| n/s | n/s
| n/s | n/s
| n/s |
| SA | n/s |
n/s | n/s
| 9,426 | n/s
| n/s | n/s
| n/s |
| SEA | 2,189 |
3,543 | 69,189
| 32,622 | 26,764
| 5,588 | 14,539
| n/s |
| SWA | n/s |
n/s | n/s
| n/s | n/s
| n/s | 78,632
| 89,607 |
| WMA | 37,886
| 137,635 | 88,090
| 160,737 | 107,765
| 166,023 | 230,099
| 206,714 |
| YA | n/s |
n/s | n/s
| n/s | n/s
| n/s | n/s
| n/s |
| TOTAL RABs | 81,944
| 169,120 | 190,456
| 234,008 | 182,137
| 266,427 | 574,328
| 556,073 |
Notes:
n/s = none shown.
1 As restated in 2000-01 accounts.
Source: Regional Arts Board Accounts.
|
ARTS FUNDING
SYSTEM
Putting the figures for the Arts Council and Regional Arts
Boards together, it becomes clear that the number of staff employed
by the arts funding system as a whole is almost exactly the same
as it was when Gerry Robinson and Peter Hewitt arrived at Great
Peter Street.
Table 14
ARTS FUNDING SYSTEM—STAFF NUMBERS
| | 1993-94
| 1994-95 | 1995-96
| 1996-97 | 1997-98
| 1998-99 | 1999-2000
| 2000-01 |
| Arts Council | 155
| 132 | 144
| 166 | 197
| 198 | 152
| 163 |
| Lottery Unit | 0
| 8.5 | 18
| 40 | 76
| 81 | 49
| 37 |
| TOTAL ACE | 155
| 140.5 | 162
| 206 | 273
| 279 | 201
| 200 |
| TOTAL RABs | 326
| 333 | 321.5
| 347 | 379.5
| 383 | 424
| 451 |
| TOTAL ARTS FUNDING SYSTEM | 481
| 473.5 | 473.5
| 564 | 652.5
| 662 | 625
| 651 |
| Source: Arts Council/RAB Annual Reports.
|
The lower salary levels in the regions should have provided
savings but increases at both the Arts Council and at the Regional
Arts Boards mean that the total salary costs for the arts funding
system as a whole have increased by 26.1 per cent since 1997-98.
Table 15
ARTS FUNDING SYSTEM SALARIES AND FEES
| £000 | 1993-94
| 1994-95 | 1995-96
| 1996-97 | 1997-98
| 1998-99 | 1999-2000
| 2000-01 |
| Staff Salaries |
| Arts Council | 4,108
| 3,634 | 3,731
| 3,873 | 4,915
| 5,839 | 4,973
| 6,282 |
| Lottery Unit | —
| 188 | 568
| 1,036 | 2,075
| 2,994 | 1,626
| 1,646 |
| RABs | 6,952
| 7,275 | 6,825
| 7,658 | 8,657
| 8,967 | 10,408
| 11,806 |
| Total Salaries Arts Funding System | 11,060
| 11,097 | 11,124
| 12,567 | 15,647
| 17,800 | 17,007
| 19,734 |
| Other Employment Costs |
| Arts Council |
| Agency Staff | 41
| 143 | 295
| 389 | 673
| 890 | 1,213
| 1,036 |
| Professional Fees | 109
| 228 | 141
| 1,402 | 1,230
| 1,871 | 1,879
| 584 |
| Lottery Unit |
| Agency Staff | —
| 15 | 61
| 323 | 847
| 527 | 882
| 468 |
| Professional Fees | —
| 96 | 557
| 1,626 | 1,633
| 942 | 991
| 655 |
| External Assessment | —
| 89 | 1,673
| 5,504 | 8,428
| 7,311 | 7,820
| 7,694 |
| RABs | 82 | 169
| 190 | 234 | 182
| 266 | 574 | 556
|
| TOTAL | 11,292 | 11,837
| 14,041 | 22,045 | 28,607
| 29,607 | 30,366 | 30,727
|
| Source: Arts Council/RAB Annual Reports.
|
Far from saving £2 million per annum, the costs of staffing
the arts funding system have increased by more than £2 million
since 1997-98.
THE FUTURE
On 15 March 2001 the Arts Council announced plans for another
reorganisation, "to unite with the 10 Regional Arts Boards
to create a single arts funding and development organisation for
all the arts in all parts of England . . . The structure for the
new Arts Council will be published in July 2001. The new organisation
will be established by December 2001. It will employ fewer people
than the 660 currently employed by the Arts Council and the RABs
together. The Arts Council believes that it is important to carry
out the proposals swiftly". The staffing figure given here
by the Arts Council is even higher than the 651 revealed by the
accounts. As with all previous reorganisations, these plans are
taking longer to implement than promised. Meanwhile, both the
Arts Council and the Regional Arts Boards have continued to make
new appointments since the new reorganisation proposals were first
announced.
The original plans published in the Prospectus for Change
were followed on 16 July by the Arts Council's revised proposals,
in a document entitled Working Together for the Arts. This says
that "The Council intends that the changes should yield administrative
savings of £8-£10 million a year, once transitional
costs have been met". There is no detail of how these savings
are to be made and even the Arts Council's partners in the arts
funding system are sceptical.
We are extremely concerned at the proposed savings target.
North West Arts Board
We are also concerned that the cost, time and energy involved
in the implementation of the proposals may outweigh any benefits
that accrue. No information is given on how savings of £8
to £10 million would be made or the extent to which savings
could still be achieved without the cost of creating a single
organisation.
London Arts, 18 July 2001
The changes which the Arts Council is proposing will inevitably
be costly and disruptive . . . West Midlands Arts Board is disappointed
that the proposals contain little analysis of areas where the
current structure is ineffective and no detail as to how the Arts
Council's ambitious target of £8-£10 million savings
per annum will be achieved.
West Midlands Arts Board, 19 July 2001
The Board regrets that the £8-£10 million savings
target has been introduced into the process. No evidence has been
offered to demonstrate that this target is achievable. We do not
feel that the cost benefit equation has been explored with sufficient
rigour.
South East Arts, 17 September 2001
The Board has written to the Arts Council expressing their
strong concerns. These include the costs of the reorganisation.
South West Arts Board, 12 October 2001
When will a detailed plan and budget for the new organisation
be produced for the next three years showing the full extent of
the costs and savings involved in the change process?
Southern Arts, 18 October 2001
Regional Arts Boards have also responded by saying that more
staff and salary increases to establish parity with ACE officers
will be needed.
We are concerned to ensure that the new organisation has
the necessary structures to deliver at national and regional level.
With increased responsibility, and geographical area, this is
likely to mean an increased staffing allocation in the North West.
North West Arts Board response to Working Together for
the Arts
Since the prospectus suggests that the new organisation should
be fair and consistent in its treatment of staff, there will be
an inevitable tendency (even after allowing for London weighting)
for the considerably lower salary levels of the RABs to converge
with the higher scales of existing members of staff. Thus, within
a few years, there will be considerable salary inflation, and
many of the anticipated savings will, in reality, be eroded.
Working Together for the Arts: Southern Arts' response
Not even Peter Hewitt seems entirely convinced that the claimed
savings will materialise. The promise to save £8-£10
million per annum from administrative costs already seems to be
slipping. At a London Arts consultation meeting, Peter Hewitt
was reported to have said:
"I completely accept the detail wasn't and isn't there.
But how can you judge it? . . . You can come back to us in one
or two years' time." Hewitt appeared to stall on the commitment
that the move will provide an extra £8 million to £10
million across ACE to spend on the arts. He told delegates: "This
was a target set by ACE when the regional arts boards and ACE
weren't talking in a way that we are now. We do need to reaffirm
what the target is and deliver it."
The Stage, 27 September 2001
CONCLUSIONS
1. Although the Arts Council has reduced its own staff
numbers, the arts funding system as a whole employs as many (if
not more) people now as it did in 1997-98 when Gerry Robinson
and Peter Hewitt arrived.
2. The cost of reducing staff at the Arts Council was
more than £1.4 million and Regional Arts Boards have spent
a similar sum on recruitment and training of new staff.
3. Any potential savings offered by lower salary levels
in the regions have been more than offset by extraordinary salary
increases at the Arts Council, where the average salary per employee
has increased by more than 50 per cent in three years, and at
some Regional Arts Boards.
4. There is no evidence that the Arts Council has made
any serious attempt to control expenditure on temporary staff
and professional advice and consultancy.
5. Although lottery grants and activity have decreased
substantially, the proportion of costs charged to the lottery
has continued to grow.
6. There has been no reduction in the very significant
amounts spent on external assessment. The Arts Council should
be called upon to account fully for this expenditure.
7. It is impossible to conclude that the arts funding
system is delivering the promised savings of "at least £2
million per year for frontline arts activity" from the last
reorganisation. The official response is that "we were making
good progress towards these savings but this has now been subsumed
within the current reorganisation".
8. By moving towards a further reorganisation of the
arts funding system, the Arts Council have admitted the failure
of their earlier attempts to produce "a new Arts Council
which will be leaner but more effective".
9. There seems little reason to believe Peter Hewitt's
unsubstantiated assertions that the Arts Council's plans for further
reorganisation will produce savings of £8-£10 million
per year for artists.
"If you are prepared to accept change, then I am prepared
to make a commitment to deliver the savings." He also conceded
that ACE "needed to rediscover a sense of trust" between
itself and the arts community.
The Stage, 27 September 2001
10. On the evidence produced here, it is hard to understand
how the Arts Council can expect to re-establish a sense of trust
between itself and the arts community.
POSTSCRIPT
I wonder why the Arts Council is being so shy about its Annual
Review this year? No press conference, not even a press release.
In the November issue of Arts Now, which I received on 3 November,
it was announced that printed copies were available from Marston
Book Services, who were to be the distributor for all Arts Council
publications. I telephoned them on 5 November, to be told that
"we have no knowledge of this book and no information that
we will ever be stocking it". The following day I wrote to
the Arts Council's Director of Communications and on 14 November
at last received a copy of the Annual Review from the Arts Council.
Two days later, I received an advice note from Marston Book Services,
also dated 14 November, informing me that they regretted that
they were unable to supply the Annual Review because it was "not
yet published".
I telephoned Marston Book Services again on 6 December and
according to the information they have been given, it has still
not been published!
SUPPORTING THE
ARTS: A REVIEW
OF THE
STRUCTURE OF
ARTS FUNDING
BY RICHARD
WILDING, SEPTEMBER
1989
On 8 December 1988 Richard Luce commissioned Richard Wilding
to review the structure and organisation for the support of the
arts. In his brief he asked the outgoing head of the Office of
Arts and Libraries to pay special attention to four objectives:
— coherence of funding policy
— improved structure and procedures
— administrative economy.
Wilding delivered his report and recommendations on 4 October
1989 and it was published by the Minister two weeks later.
6.18 I conclude that a gross saving of some 60-70 posts
should be feasible, offset by an increase of 10-15 to cope with
the additional work which will also result from the changes proposed.
I recommend accordingly that the Minister for the Arts should
set the Arts Council a target of reducing its staff to 130 (leaving
the staff now employed by the Crafts Council out of the account).
7.62 . . . I conclude that it would be reasonable to
set the RABs an overall staffing target of 270.
10.17 My specific recommendations are as follows:
— 34. The Minister should set the Arts Council a
target of reducing its staff to 130 (excluding staff now employed
by the Crafts Council).
— 55. The RABs should be set a staffing target of
270 staff.
— 72. The Minister should set a target for the Arts
Council to achieve a saving of £2 million per annum in the
administrative costs of the whole system by 1 April 1993.
10 weeks later on 13 March 1990, Luce announced his response
in a Parliamentary statement and a letter to Peter Palumbo. But
it was already clear that the savings proposed by Wilding would
not be achieved because Luce had dismissed the recommendations
which were to provide those savings.
Instead the Minister would be "looking to the Steering
Group to set realistic but challenging targets for the overall
administrative costs of the system, including staff numbers".
His successors continued to emphasise the need for reductions
in administrative costs. "Mr Mellor is also seeking assurances
that the devolution plans will produce staff cuts at the Arts
Council and in the regions," reported The Guardian on 25
September 1990. Three months later in the House of Commons, Timothy
Renton announced that he wanted more details on reduced staffing
and administration costs and in a written reply dated 24 April
1991 said that he had called for savings of £1 million and
given the Arts Council until 17 May 1991 to define how the economies
would be made.
REVIEW OF
THE ARTS
COUNCIL BY
PRICE WATERHOUSE,
MAY 1993
Responding to concerns about bureaucracy, the Department
of National Heritage ordered a review of the Arts Council by Price
Waterhouse consultants at a cost of £53,000. Published on
4 June 1993, their report put forward three options for change:
Option I: "Least Change"—saving 19.5
full time equivalent posts and £429,000.
The aim of Option I is to tidy up some structural and administrative
anomalies and to rationalise staff numbers in the light of savings
opportunities identified. Option I enables savings to be made
without a major restructure of the Arts Council . . . 143.5 FTEs.
Option II: "A Clearer Focus"—saving 38.5
posts and £847,000.
The aim of Option II is to build on the efficiency recommendations
for Option I and to structure the Arts Council in the most logical
way to help it discharge its core functions and secure good value
for money without drastically reducing its capacity. 124.5 FTEs.
Option III: "A Radical Model"—saving
100 posts at a saving of £2.2 million plus (not fully costed).
This is a radical option for an Arts Council organisation
of about 50 posts to service a Council of 12 Members. The aim
of this model is to construct a very lean organisation so as to
reduce the overall administrative costs of public funding of the
arts . . . 48 FTEs.
On the day of publication, Peter Brooke said:
"I am convinced that priority must be given to increased
economy, efficiency and effectiveness in public funding for the
arts, in order to find the best way of channelling funding to
the artists . . . my current objective is to end uncertainty and
the current preoccupation with structures rather than the real
output of artistic activity. I was decisive on delegation after
what was arguably an over-extended period of uncertainty. I will
be decisive on the Arts Council too. But I want to hear their
own views first."
Announcing his response to the report on 21 July 1993, the
Secretary of State decided to ignore the Price Waterhouse recommendations
and invited the Arts Council to spend another three months to
develop its own proposals for reorganisation.
This led to the announcement of a package of staff cuts designed
to save £566,000, which was not seen until the financial
year 1994-95.
10 December 2001
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