APPENDIX 2
Memorandum submitted by Southern Arts
SUMMARY AND INTRODUCTION
There are eight main reasons why the Arts Council
of England's (ACE's) proposals for the creation of a new single
organisation for arts funding and development are not the best
solution for reforming and improving the current system:
— The changes do not meet the Government's
criteria for a new single organisation
— Consultation provides ample evidence
that the great majority of artists and arts organisations do not
believe that a single organisation will benefit them or the development
of the arts
— No business case has been made for
a single organisation; in seeking further to develop the arts,
a single national organisation is likely to be less cost-effective
than a clear programme of improvements to the present arrangements
— The benefits of moving to a single
organisation do not justify the costs; these benefits can be more
swiftly and cost effectively realised within the existing system
— It would be much simpler, better
value and more effective to make savings in operating costs by
retaining—rather than abolishing—the Regional Arts
Boards (RABs)
— Arts Council and RAB staff have lost
confidence in the leadership of the Arts Council to bring about
beneficial change
— The Arts Council's proposals run
counter to the direction of other Government policy, which seems
set to strengthen regional self-determination through the creation
of Regional Assemblies
— If the idea of a single organisation
is abandoned, more rapid progress can be made to simplify the
system of arts funding and support and to improve the services
provided by the Arts Council and the RABs
The annex to this paper provides a brief factual
account of the proposals for change published by the Arts Council
(A Prospectus for Change, March 2001, and Working Together
for the Arts, July 2001) and the reception that they have received.
EIGHT REASONS
WHY A
SINGLE ORGANISATION
IS NOT
THE BEST
SOLUTION
1. The changes do not meet the Government's
criteria for a new single organisation. Successive Government
ministers have provided criteria by which the success or otherwise
of the ACE proposals should be judged. Five of the most important
are listed below with—in each case—a brief commentary
on whether or not it is probable that the criterion will be met:
— "devolution of power to the
regions is real and not cosmetic" (Chris Smith, letter to
Gerry Robinson, 14 March 2001); and "greater devolution of
power and funding to the regions" (Tessa Blackstone, letter
to Andrew Smith MP, 29 November 2001)
As stated in the Arts Council's Draft Transfer
Proposal, "devolution, in its true sense, is an impossibility
within a single organisation". There may be larger budgets
allocated at regional level, but, despite the safeguards in the
Proposed Revised Charter, there will also be a clear loss of regional
autonomy. A single national organisation will undermine regional
distinctiveness and weaken regional voices because its concerns
will stretch beyond any single region.
— "real savings throughout the
system are actually deliverable" (Chris Smith, letter to
Gerry Robinson, 14 March 2001) and "what it (the Arts Council)
proposes will deliver the administrative savings that would prove
impossible to secure under the present structure" (Tessa
Blackstone, House of Lords, 2 July)
On 16 July Tessa Blackstone, announced: "The
re-structuring will cut a quarter of the administrative costs
of the arts funding system leading to savings of £8 to £10
million by 2003". On the same day the Chairman of the Arts
Council told BBC Radio 4 listeners: "We'll certainly save
somewhere between £8 million and £10 million".
But there is no evidence that such a savings target is compatible
with maintaining and reinforcing "the skills and expertise
of the specialist officers who are such a strength of the current
system"—which is another of the promises contained
in Working together for the arts. It would also be much more effective
and swifter to make savings in the operating and administrative
costs of the funding system by retaining—rather than abolishing—the
RABs (see para 15.5 below).
— "the proposed regional advisory
bodies are credible and have clout" (Chris Smith, letter
to Gerry Robinson, 14 March 2001)
For decades successive advisory bodies to the
Arts Council have made the same complaint—that they are
marginalised in Arts Council thinking and lack clout. The obvious
loss of regional autonomy resulting from the proposed abolition
of the RABs—coupled with the way in which the change process
was launched—has resulted in many of the most expert and
experienced members of RAB Boards stating that they are unwilling
to serve on the proposed new regional councils.
— "a new organisation" (Tessa
Jowell, letter to Gerry Robinson,16 July 2001)
In several important ways the organisation will
not be new. It will have the same chairman and chief executive
and the same regional directors. There will be no new legal entity.
The present Chief Officers Group will become an Executive Board;
regional chairs will resume the seats on the Arts Council that
they lost three years ago; though somewhat weakened by recent
events, the present relationships with local authorities (including
the subscriptions system) are likely to remain broadly similar.
The "new organisation" will effectively be an Arts Council
into which the RABs have transferred their staff and assets.
— "the new organisation . . .
must attract and retain the best people" (Tessa Jowell, letter
to Gerry Robinson, 16 July 2001)
This is not happening. As a result of the uncertainty
and disillusionment caused by the re-structuring process, RABs
are reporting the loss of some of their best members of staff.
2. Consultation provides ample evidence
that the great majority of artists and arts organisations do not
believe that a single organisation will benefit them or the development
of the arts (see Annex paras 9-13 below).
3. No business case has been made for a
single organisation; in seeking further to develop the arts, a
single national organisation is likely to be less cost-effective
than a clear programme of improvements to the present arrangements:
— apart from the novelty value of establishing
a new organisation, all the purposes of the proposed reorganisation
can be achieved at considerably less cost without moving to a
single organisation; better leadership, stronger management and
a more considered use of funding agreements between ACE and the
RABs will help to realise the undoubted benefits of simplification
and greater consistency across the funding system.
— nine months after publication of
the initial proposals no budget or business plan has been produced
that would demonstrate how improved services might follow from
any cost savings.
— because more of the work of large
organisations needs to be codified, large organisations in the
cultural sector tend to be more bureaucratic than smaller ones—the
BBC is a case in point.
4. The benefits of moving to a single organisation
do not justify the costs. These benefits can be more swiftly and
cost effectively realised within the existing system.
— initial estimates suggest that the
full total transition costs will exceed £10 million.
— because no compulsory redundancies
will be effected within the first twelve months following TUPE
transfer, the costs of redundancies within the single organisation
will be greater than the same redundancies made within current
structures.
— if the proposals for a new organisation
continue to be developed, uncertainty in service to artists and
arts organisations will continue to be intense for many months
to come.
5. It would be much simpler, better value
and more effective to make savings in operating costs by retaining—rather
than abolishing—the RABs.
— ACE has less than half the staff
numbers of the RABs, but the average salary and on-cost of an
ACE member of staff is approximately 50 per cent higher than that
of an RAB employee. Because of this, following TUPE transfer,
RAB salary levels will need to be increased considerably to achieve
harmonisation with the current salary scales at ACE. It would
therefore be much simpler, better value and more effective to
make savings in operating costs by retaining—rather than
abolishing—the RABs. For example, excluding the Chief Executive,
the average salary of the members of the Executive Team at ACE
is currently approximately £80,000, while the average salary
of RAB chief executives is about £55,000. In a single organisation
all these executives will have the same status and, as members
of the new Executive Board, broadly similar salaries. In the early
years of the new organisation salary inflation is likely to be
pronounced, and will erode most, if not all, of the savings made
through reducing the number of people employed.
6. Arts Council and RAB staff have lost
confidence in the leadership of the Arts Council to bring about
beneficial change
— in 1998, the ACE leadership repeatedly
said that the Arts Council's staff numbers would be reduced to
150 and that net financial savings from that year's re-structuring
should "free up at least £2 million per year for frontline
arts activity". Neither of these targets came near to be
being achieved: the salaries and on-costs of the 200 "permanent"
ACE staff in 2000-01 totalled £7.92 million or nearly £1
million more than those of the 273 ACE staff in 1997-8 (£6.99
million).
— in March 2001 the Arts Council forfeited
the trust of RAB Board members and staff by drawing up its proposals
in secret and expecting Boards to hand over their staff and assets
within six weeks; when launching A Prospectus for Change the
Arts Council leadership was completely unprepared to manage satisfactorily
the uncertainties and disruption that it created by announcing
its plans for a hostile takeover of the RABs.
— the proposed timetable has already
been altered several times.
— in May RAB chief officers were told
that the results of the consultation exercise on the Arts Council's
first prospectus would be published at the same time as the second
prospectus. This didn't happen; indeed ACE made no serious attempt
to disseminate the findings of the first consultation exercise.
— by the time of the publication of
Working together for the arts in mid-July the Arts Council had
still not thought through many of the major implications of what
it was proposing.
— in July the Arts Council—without—consultation—decided
that "for the first three years at least" the £8-10
million savings in staffing and overheads "should be allocated
to cultural diversity and the individual artist". For the
reasons given, it is unlikely that there will be any savings of
that scale; artists and culturally diverse organisations, among
others, have been misled.
7. The Arts Council's proposals run counter
to the direction of other government policy, which seems set to
strengthen regional self-determination through the creation of
Regional Assemblies:
— the sustainability of the Arts Council's
proposals is questionable. It is government policy—to be
published in a White Paper on the regions scheduled for early
2002—that elected regional assemblies will have "strategic
authority over cultural activities"; this is not compatible
with the Arts Council's approach.
— one of the strengths of the Regional
Arts Boards is that they have the autonomy to be fully accountable
locally, regionally and nationally.
8. If the idea of a single organisation
is abandoned, more rapid progress can be made to simplify the
system of arts funding and support and to improve the services
provided by the Arts Council and the RABs:
— work done on the simplification of
funding programmes and on unified advisory, appraisal and assessment
procedures can be rapidly introduced.
— common quality standards for services
available in every region can be developed.
— a programme of further delegation
and devolution to the regions can be agreed and the long-awaited
further slimming down of ACE's staff can be introduced.
— more regular and systematic assessment
by ACE and/or QUEST of the work of RABs can be scheduled.
— improved recruitment, training and
professional development for all staff can be initiated.
— possible economies in the "corporate
services" (ie finance, IT and personnel) provided by ACE
and the RABs can be explored and implemented.
— better use can be made of funding
agreements between the Arts Council and the Regional Arts Boards
to ensure the full implementation of all these improvements.
CONCLUSIONS
Working together for the arts calls for "the
most skilful and thoughtful management of the change process".
However, the staff of ACE and the RABs are living through a textbook
example of how not to manage change. The entire process lacks
integrity. In July the chairs of six RABs wrote to the Secretary
of State at the DCMS expressing their "loss of confidence
in the ability of the current leadership of the Arts Council to
bring about beneficial change". In September, a survey of
trade union members at ACE revealed that 80 per cent of them had
no confidence in the ACE chair and 78 per cent had no confidence
in the Chief Executive to lead them through the change process.
RABs have worked effectively together in developing
the Regional Arts Lottery Programme and the Year of the Artist.
About three years ago—in its response to the DCMS spending
review—the Arts Council argued against "the imposition
of a national pattern" for arts funding and development,
and that "RABs are extremely effective agencies for the arts
with well-developed systems and skills". The Arts Council
and the RABs are all agreed that there is an urgent need to make
rapid progress with simplifying the funding system, improving
the services that it provides, and considerably reducing its operating
costs. This can be done more effectively and at much less cost
within existing structures. Root-and-branch re-structuring has
become a British disease and the Arts Council's idea of a single
organisation does not have the support of the great majority of
artists and arts organisations. No business case has been made
for the introduction of a single organisation. These proposals
should be promptly abandoned and fresh thinking applied before
further damage is done to the arts funding system.
7 January 2002
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