Memorandum submitted by Michael Holden
Associates
In preface I should state that I am a member
of the Society of Theatre Consultants (elected 1974) with some
35 years of consultancy experience preceded by work in stage management
and as a theatre producer. I am a UNESCO consultant in arts and
cultural provision.
In my work I have created and formed theatre
companies and written the architectural briefs and management
plans for theatres and other buildings. Amongst these have been:
— The Lyric Theatre, Hammersmith, where
I was also founder chairman, leading the company through its first
five years.
— The Barbican Arts Centre where I
contributed as specialist advisor to Henry Wrong, the first Chief
Executive.
— Sam Wanamaker's Globe Theatre where
I also undertook the role of Chief Executive completing the theatre
and the establishment of core activities following Sam's death
in 1993. A £12.4 million ACE Lottery investment was solicited
and expended during my period as CEO.
I have also designed the auditorium and stage
together with its technical facilities of more than 60 theatres
and in full or in part have been responsible for the expenditure
of some £37 million of Lottery capital funding.
In all this work I have been involved with the
structures of government and non-governmental bodies in this country
and overseas and am well qualified by this experience to offer
evidence to the Committee.
I am concerned about two aspects of current
approaches to support of the arts, one concerned with the physical
provision and maintenance of theatre and the other to do with
the nature of revenue support. Attached are the relevant submissions
I would like to offer to the Committee. I would be happy to expand
on these rather hasty summaries if requested.
CULTURAL CAPITAL
Theatres in today's leisure markets have little
if any margin on operations to pay a commercially viable rental
for buildings that have become increasingly expensive relative
to other building types. The value of a theatre building under
commercial valuation systems is therefore low or nil and land
value is therefore much less than other land uses. Even in the
West End of London rental returns on theatre are well below competitive
land uses.
As a result of the low property value there
is pressure to demolish theatres and considerable difficulty in
improving them as the resulting improvements will not be reflected
in the balance sheet. There is, to, a reluctance from donors to
give to what is perceived as a "black hole" since their
contribution may one day be lost to the community.
Once a theatre is lost it is a difficult and
expensive matter to purchase in the commercial market place a
site for new or replacement theatre should the community require
it. As most modern theatres have been constructed using public
contributions, local authority or lottery money the community
has made a significant cash investment in theatre capital. Where
this is not the case (as in the West End) the community derives
considerable utility from access to the theatre and considerable
ancillary benefits to the local economy. Yet under commercial
valuation systems the value of a theatre (since it makes little
or no capital return) is very small or nil. Where a theatre is
lost there is a consequential loss of community capital. Where
the lack of commercial capital value diminishes the ability to
improve theatres there may be a loss of usage and therefore of
benefit to the community utility which is incalculable.
This situation needs to be improved with a view
to:
1. Increasing the ability of commercial
and charitable trust managements to improve their buildings by
increasing balance sheet valuations.
2. Increasing the value of theatres so that
they may compete for or maintain a prescence in town centres.
3. Improving the regard and readiness for
community investment by placing a greater value on the resulting
property.
A potential solution to this problem is the
concept of establishing a "Cultural Capital Value".
The concept is a simple one, it presumes that
theatres (and indeed other cultural buildings of little commercial
value) have a place in society and that society's investment in
them is real and rational. That our communities will continue
to require places for the exchange of ideas, information, stimulation
of thought, entertainment and above all of social interaction
and will need buildings for this purpose which can not be commercially
funded in their entirety. It follows that the value to the community
of these building is equivalent to the value of the commercial
building they supplant or replace and that this capital value
can be calculated and ascribed to the property. It would be known
as the Cultural Capital Value of the building and can be calculated
and noted in the Balance Sheet.
Under the Cultural Capital concept theatres
would be valued on a full replacement equivalent basis then its
replacement, should it be necessary, and improvement will be reflected
in its improved commercial asset value. By this if a theatre is
demolished to make way for a new development its asset value for
purpose of the development land would be sufficient to make a
purchase of equivalent land and buildings to serve the community
on another, equivalent, site. Thus the community capital investment
is retained at full value. In the case of a commercial theatre
or a trust winding up, the asset value of the land and buildings
would be the full replacement value levied on behalf of the community
less the commercial value of the property which would be the compensation
to the property owner.
In the case of improvement of theatres (especially
improvements by commercial managements) the increased investment
would be properly reflected in the asset value and recovered under
the above formula due to the implicit support to the balance sheet
established by Cultural Capital. At the moment the improvement
of, say, a foyer or bar will make only a small increase in operational
surpluses and thus little increase in ordinary commercial valuation.
If the concept of Cultural Capital is applied then the increased
investment (subject to depreciation) is directly reflected in
the recoverable balance sheet asset value thus encouraging improvement
investment.
The concept of Cultural Capital is to some extent
established by the Planning Act's Section 106 agreements by which
the community, in the person of the planning authority, is compensated
by the land developer for the cost or loss of amenity to the community
of the development. In recent years these "compensation"
payments have occasionally been devoted to the provision of new
cultural buildings. I recently administered on behalf of a local
authority the shell construction of a theatre by a developer as
part of a Section 106 Agreement. The concept of Cultural Capital
simply expands on this basis to form a regularised and reliable
valuation of the community capital that can be relied on as a
basis in assessing the community value of theatres by reference
to full replacement cost.
Cultural Capital would be legally established
by extension of the Planning Act Section 106 Agreement provisions.
This would require that the redevelopment (or material change
of use) of a theatre would be compensated to the community. The
measurement used to be the full replacement cost to the community
through the purchase and construction of a similar building on
an equivalent commercial site. This would be the sum attributable
to Cultural Capital after deduction of the agreed commercial value
of the theatre which would payable to the owner in respect of
the actual purchase. The Cultural Capital remaining would establish
the basis for the Section 106 Agreement which could be offset
either by developers replacing the value in a new cultural building
or making a cash sum available to the community. In the case of
change of use the sum might be deferred where there is no deleterious
change in the Cultural Capital of the property but that capital
charge would continue to apply.
Improvements in a building would be reflected
in this valuation by reason of the replacement value equivalence,
which would accrue to the book value by reason of its implicit
value support as an off-set to the Cultural Capital assessment.
Theatre might be advised to establish their cultural capital value
and note it in their accounts.
The effect of this would be to regularise the
community compensation to a certifiable sum intrinsically framing
the asset value of the theatre It would have the same effect for
local authorities wishing to dispose of theatres, often theatres
where public donation and Arts Council donation have been important
original capital contributions.
Individual examples can be worked through as
illustrations of the huge differentials between commercial valuation
of cultural buildings against the value to the community of the
investment originally made. The Committee might like to review
the case of the Mermaid Theatre where imposition of a more realistic
Section 106 Agreement (to some degree following this concept)
has resulted in revised proposals to retain the Mermaid as a cultural
asset. They might also like to review the proposed disposal of
the Redgrave Theatre in Farnham where the council will achieve
little compensation for a lost theatre, more than half of which
was originally funded from public donation and the Arts Council's
Housing the Arts Fund.
There remains the administration of this aspect
of the Planning Act. Local Authority planning departments and
valuers are well able to establish and calculate a cultural capital
under this rule and to argue the case with the developers valuers
both working from a common basis of assessment.
However, the cultural capital if realised in
cash by a development may not always be best re-invested in the
local authority's immediate area. It might be better used for
maintenance and refurbishment of other existing properties or
for investment in other districts. For example where there is
a diminishing population or over provision of theatre it may be
desirable to apply the capital to investment in cultural provision
in expanding population centres or where provision is low. The
balance of provision in the outer areas of London is an example
of the relative riches and poverty of different geographical sectors.
The realised cultural capital might therefore
be better held by Regional or National authorities or institutions
to apply to wider community needs. The Theatres Trust is currently
undertaking this role in a very small way from returns on its
own theatre properties.
PATRONAGE RATHER
THAN SUBSIDY
The concept of continuous central government
subsidy for the theatre arts was established by the formation
of CEMA from which John Maynard Keynes led the inspiration of
the Arts Council in the closing days of the war. The Arts Council
was conceived very much as a centralised disburser of cultural
product with local authorities providing venues and organising
support for amateur activities. A schema of appropriate venue
provision was set out—a theatre for a town of 10,000 people,
a concert hall would be added for a town of 30,000 people and
so forth. Each venue was recommended to have a library and larger
venues were to have a restaurant. The restaurant might have been
inspired by the British Restaurants of the war years and there
was a similar flavour to the idea of a nutritional, balanced cultural
diet. Certainly the assumption was of largely centrally provided
professional programme and local amateur provision.
This Arts Council never enjoyed Keynes's chairmanship
nor his direction of its form. The model he had in mind I am sure
is that of the BBC the major patron of th arts in this country
through its programme of commissioning work for publication. Keynes's
Arts Council would, I believe, have been a similar patron commissioning
work and publishing it by touring across the country. The body
that was chartered was rather more modelled on civil service lines
based on assessment and response in individual circumstances to
service an expressed need. It quickly developed from broad arts
response to only supporting professional work.
General Secretaries to the Arts Council over
the years have recorded the difficulty of providing this service
and of defending the cost to the Treasury. A letter (in the Public
Records Office) from the Treasury to the Secretary General of
the Arts Council in 1950 lists the next three years revenue support
required for the Royal Opera House for the next three years and
asks how much the Council is likely require! The 1962 Arts Council
Report hints of desperation at having to justify every single
major grant to Treasury officials and it is significant that new
headings for new subsidiary grants have increasingly developed
in later years. Currently the plethora of titles and makes following
the pattern of grant aid extremely difficult to follow and time
consuming for clients to apply, monitor and report.
The Arts Council's approach to subsidy is firmly
routed in the concept of meeting an assessed need. It assumes
without substantial question a need to continue a pattern of support
on a continuum. In many ways this denies the artist the ability
to be inspired by opportunity and, most importantly, the right
to fail. These are necessary adjuncts to the business of creativity.
These uncertainties insist on commitment (rather than policy)
and apply risk, which sharpens the energy and impact for creator
and recipient.
This is in strong contrast to Keynes concept
of a programme of work commissioned and accepted by an Arts Council
then ready to show its commissions to the nation. That model in
the theatre draws much more on the preceding pattern of patronage,
notably by Annie Horniman in Manchester and Barry Jackson in Birmingham
but also by many other individuals, companies and local authorities.
Patronage requires an involvement and commitment
by the commissioner of the work. It may be the project, a perceived
need or simply support for an artist that initiates this patronage
but it is a real inter-relationship. Most of the works of art
that we treasure today are the result of patronage rather than
subsidy. Even in the commercial theatre (from Shakespeare onwards)
the patronage (not subsidy) of the public has been the driving
force.
The relationship between patron and artist is
the important element missing in subsidy. It is easier to exemplar
in the field of the visual arts. A patron commissioning an artist
to create a blue painting may well find the artist produces a
work that explores blueness using every colour of the surrounding
palette without ever actually using blue. Or the patron may receive
a purely blue painting that explores form or tonal content in
an unexpected and exciting way. The artist responds willingly,
or in opposition, to the patron's demand as the relationship and
mood dictate but the result is more likely to have commitment
and energy. More importantly the result will be judged not so
much by whether it meets the brief as by how much is excites and
stimulates—its intrinsic value. How many paintings have
been commissioned for one room but the results hung in a more
prominent place? Or in the cellar? Again the right to fail is
also important. Similar examples occur in music and all the arts.
The relationship of subsidy to the artist is
very different. The selection of artists will be the result of
pre-appraisal filtered through various external factors (ethnicity,
geographical evenness of cultural provision, social deprivation
etc) rather than the championship of a talent or an idea. The
results will be assessed by how well the work has met the letter
of the brief in order to justify public expenditure rather than
valued for its intrinsic worth. The result is likely to be safer
and less adventurous. The process of achieving subsidy, in part
because of the assumption of continuity, makes it less likely
that future subsidy will be placed at risk by radical departure
from the commissioner's brief, diminishing creative freedom.
The Arts Council has increasingly found it difficult
to frame its role in a consistent management structure as the
difficulties of supporting a managed rather than entrepreneurial
funding system for the arts has grown ever more insistent with
larger funds and more extramural agendas to be met. As it subsidises,
rather than providing patronage, it is resistant to new clients
and initiatives because they represent an assumed continuum of
commitment. The patron has the power to discard as arbitrarily
as it commissions keeping the market place active and fluid.
Under subsidy managements have been schooled
to increase budgets by creating deficits in order to show need
and so justify increased funding. Continuity and growth in staffing
establishment is encouraged as part of this process rather than
shorter term employment with resulting increase of new inputs
of energy and ideas. Lottery money, originally hypothecated for
capital projects, is now used to increase client management structures
further and to give the Arts Council the ability to support some
new clients.
It is time to reconsider the Arts council as
an institution and its basic tenets. It may also be time to honour
its considerable achievements and move on to a new era.
How should funding be provided in this event?
One element may be to remove from the performing company the responsibility
of the theatre building with its property management and consistent
cost implications. Maintenance of buildings has been sadly neglected
over the years in submission to the urgent production needs. Lease
or licence use of a building well maintained by others would focus
the artistic energy on the artistic product. In many cases local
authority ownership of the real estate already allows this to
happen without any major change of existing arrangements. Where
it is not the case there are existing non-profit distributing
institutions capable of expanding to carry out this role.
DCMS (like the Treasury before it) has felt
its role in justifying expenditure has been to undertake increasing
guidance and monitoring of the Arts Council and lottery bodies
and has developed an expanding staffing to shadow these bodies.
This has now advanced to the point that the effective control
is perceived by the public to be in DCMS hands with the Arts Council
and most lottery boards increasingly managers rather than directors
of the process.
I would propose to the Committee the concept
of a system of champions of performance companies and individual
artists to act as advocates on their behalf to the DCMS, Lottery
and Local Authorities. These champions would be empowered by those
funding bodies to be the patrons, on behalf of the public, of
that company or artist taking responsibility, pleasure and enjoyment
from their work as patrons for a period of time. The period of
time to be proposed by patron and artist in considering the commission
but not an implicit commitment or relationship into the distant
future.
Patrons/champions would be knowledgeable in
their chosen field of commissioning and would be unpaid (though
able to recover expenses) and may often, as leaders of businesses
or institutions, be in the position of commissioning work with
other than public money. Champions would be self proposing or
solicited by DCMS and other funding bodies or they might be selected
and prompted by artists or companies to advance their cause. This
is at least as democratic as the present system of central government
appointment to the Arts Councils and the selection of RCCs and
has the advantage of a much wider basis of opportunity and selection.
I commend it to the Committee for consideration.
22 January 2005
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