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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 641-i House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE THE COMMITTEE OF PUBLIC ACCOUNTS MAKING GRANTS EFFICIENTLY IN THE CULTURE, MEDIA AND SPORT SECTOR
DEPARTMENT FOR CULTURE, MEDIA AND SPORT MR NICHOLAS HOLGATE
SPORT
MS JENNIE PRICE
ENGLISH HERITAGE DR SIMON THURLEY
ARTS COUNCIL MR ALAN DAVEY
THE LOTTERY FUND PETER WANLESS
Evidence heard in Public Questions 1 - 149
USE OF THE TRANSCRIPT
Oral evidence Taken before the Committee of Public Accounts on Members present: Mr Edward Leigh, in the Chair Mr Richard Bacon Mr Paul Burstow Mr Philip Dunne Nigel Griffiths Mr Austin Mitchell Mr Don Touhig Phil Wilson ________________ Mr Tim Burr, Comptroller and Auditor General, National Audit Office, gave evidence. Ms Paula Diggle, Treasury Officer of Accounts, HM Treasury, gave evidence. REPORT BY THE COMPTROLLER AND AUDITOR GENERAL MAKING GRANTS EFFICIENTLY IN THE CULTURE, MEDIA AND SPORT SECTOR (HC 339)
Examination of Witnesses Witnesses: Mr Nicholas Holgate, Chief Operating Officer, Department for Culture, Media and Sport; Ms Jennie Price, Chief Executive, Sport England; Dr Simon Thurley, Chief Executive, English Heritage; Mr Alan Davey, Chief Executive, Arts Council; and Mr Peter Wanless, The Lottery Fund, gave evidence. Q1 Chairman: Good afternoon. Welcome to the Committee of Public Accounts where today we are looking into the Comptroller and Auditor General's Report into Making Grants Efficiently in the Culture, Media and Sport Sector. We welcome to our Committee Nicholas Holgate, who is the Chief Operating Officer from the Department for Culture, Media and Sport; Alan Davey, who is the Chief Executive of Arts Council England; Peter Wanless, who is the Chief Executive of The Big Lottery Fund; Dr Simon Thurley, who is Chief Executive of English Heritage; and Jennie Price, the Chief Executive of Sport England. Perhaps I will start with you, Mr Holgate, and if anyone else wants to chip in they can do. If you look at paragraph 2.2 of the Report, which you will find on page 18, you will see: "The Departments considers that as the grant-makers are different types of bodies working in different sectors, the costs of their grant programmes are not comparable. It does not therefore require grant-makers to report against a common set of measures." But if you are not comparing the efficiency of these various grant-makers, how can you ensure that they are doing their jobs properly and, for instance, are not wasting money on bureaucracy? Surely it makes eminent good sense to compare how they are performing in this regard, does it not? Mr Holgate: Thank you, Chairman. What the Department does is place general pressures on the totality of the operating costs of these bodies by one means or another and we delegate to the managements of those bodies exactly the locations of the savings, and in most cases it is year-on-year savings comparing like-with-like. We do not insist on them comparing across each of the bodies who are engaged in intrinsically different bodies. Q2 Chairman: Why not? It rather calls into question what is the point of your Department. If these are independent bodies doing much what they want to do and you are not comparing their efficiencies, which I would have thought you could do, because although they are different, they are making grants in very different enterprises, they all have offices, they all have IT systems, they all have forms and applications for these grants, I would have thought this is a prime role for you to compare what they are doing and ensure that they are efficient, that they learn best practice. Mr Holgate: Yes. Can I give two complementary answers to that question? The first is that although there are processes that are plainly common to nearly every form of grant regime you can imagine, if they are interspersed or, as it were, alternating bits of a process which are quite different and quite unique to the grant-giver in question, then it is not actually that easy to compare meaningfully and draw useful management conclusions from what proportion of a small number of pence per pound goes on a particular function which happens to be the same one compared with another. The second part of my answer is that because of the pressures that we put on all these bodies to save costs year-on-year it is actually entirely in their interests to compare costs with one another, we are putting absolutely no hindrance in their way, and we have made attempts to do that and they have made attempts to do that in the past. The sad fact is that we have not learned enough from that process in the past to make a regular job of it. What they have had to do instead is find other ways of making the efficiency savings. Q3 Chairman: Reading on in the report on a similar sort of theme, paragraph 4.19, page 38: "However, the grant-makers had not taken the opportunity to work together to identify potential cost savings or efficiency gains. For example, the Arts Council and Sport England were independently implementing shared service centres in different locations, but had not appraised the costs and benefits of sharing facilities..." This seems to me fairly basic. This should be the prime role of your Department, to ensure that we are getting value for money, should it not? Mr Holgate: Again, we did try to make such comparisons several years ago and it did not yield insights of sufficient value that that should become the driving force to determining the scale of costs to be expended on --- Q4 Chairman: You say that but, frankly, I do not buy that. If you read 4.20, it says: "Similarly, the grant-makers had all separately developed and implemented their own grants management IT systems and there was little evidence that they had shared knowledge of effectiveness or lessons learned." Are you still going to stick to your mantra that they cannot learn from each other? Mr Holgate: Well, I think they can learn from one another. Q5 Chairman: That is all I am saying to you. Mr Holgate: I also think they can learn from other bodies. There are examples. For example, English Heritage looks to Defra for some steer on what you would expect grants with characteristics not wholly dissimilar to the Repair Grants to have. They can and do learn, the question is how much effort you put into that compared to other ways of bearing down on costs. That is the essential --- Q6 Chairman: Perhaps I can ask Mr Wanless, would you describe yourself as the voice of this sector? Mr Wanless: The voice of the grant-making sector? Q7 Chairman: Yes. Mr Wanless: We are probably the biggest --- Q8 Chairman: Exactly. Why do you not try and answer this question that I put to Mr Holgate. Let us look again at paragraph 2.2. Mr Wanless: Yes. Q9 Chairman: Before this Report was published, did you compare the costs of making these grants between different bodies? Mr Wanless: Up to a point, yes. We have looked to both develop performance measures, key performance indicators, to test our effectiveness and the costs of our processes and looked at sharing those not just across Lottery distributors but grant-makers as well. We have a lot of conversations through the Association of Charitable Foundations and also the Intelligent Funders' Forum, which we describe. I would reinforce what Mr Holgate has been saying about the elements of the grant-making process which are common to different grant-making schemes but a portion of the total operation, so even across the Big Lottery Fund there is a range of different programmes which we would support which would have different cost-drivers depending on the policy objectives we were seeking to achieve from that programme. Q10 Chairman: Perhaps, Mr Davey, I could ask you about this IT point that I put to Mr Holgate. This is mentioned in paragraph 1.16. You had a new IT system in 2006, did you not? Mr Davey: Yes. Q11 Chairman: Why are you all using separate IT systems? When you brought in a new IT system why did you not go round the other grant-making bodies and see if you could share IT? Mr Davey: We did look quite widely at a number of examples of different systems. The one we chose, which is called Arena, is more than a grants management programme, it is also around procurement and wider finance management. If I can put that in context for the Committee, that is part of a series of quite large structural changes we have been making over the last five years which began with combining ten organisations into one, which continued with combining over 100 grant schemes into five, and has continued with ten IT systems into one. We concluded after extensive study that the Arena system we chose was the most cost-effective for what we required from it. Taken together, all of those initiatives that I have outlined there have saved us £10.3 million. That is before we start our further work in coming years. Q12 Chairman: If I could ask about Sport England's IT system, for instance, we read in paragraph 4.l3: "All applicants to Sport England's Community Investment Fund programme can now apply online", that is fine, "We found that for the other grant programmes we looked at, however, the grant-makers continued to receive large numbers of paper-based applications." Surely we should be making more progress there, should we not? Mr Davey: If I could comment on the online application issue. That is something we want to make progress with in this spending period, although we do find that some of our clients prefer paper-based applications. When we are dealing, for example, with individual artists they might not have the IT requirements that a totally online process would require. However, we do want to move to an online process and we think that might bring benefits. Q13 Chairman: Perhaps I could ask Mr Wanless then further on this IT point. In the USA, this is dealt with on page 37, if you look at figure 22: "Grant-makers in the US have developed automated shared services". Have you seen this? Mr Wanless: Yes. Q14 Chairman: This seems to be quite an interesting idea. Why have you not got something more along these lines in this country? Mr Wanless: We actually do have something rather similar to this up to a point already. The Lottery distributors together run a website called www.lotteryfunding.com and there anyone can go in, answer very simple questions about, "How much money are you seeking to access? Where do the people live that you are seeking to help? What is the subject you are seeking to support?" One click and it will tell you the Lottery programmes that are open for distribution. From there you can print out the application form, the rules, procedures and all the rest of it. We are not yet at the stage where applications can be made online right the way across the piece and, like Mr Davey, I am really keen the Big Lottery Fund should get more of its application processes online. We can see based on experiments we have done on online applications previously that that very significantly improves the cost-effectiveness of the programme. Q15 Chairman: Perhaps I can ask Mr Davey again, would you like to look at figure 11. Right at the top there: "Direct staff cost for each £ of grant awarded: Grants for the Arts for Individuals: 18 pence. Grants for the Arts for Organisations: 4 pence." Why is it so much more for an individual? Mr Davey: Because a large part of that
cost is around the development work we undertake with individual
applicants. The Grants for the Arts for
Individuals scheme is one of the main development schemes we have for
developing individual artists, individual artists such as the Q16 Chairman: Could I ask another question of the Big Lottery Fund. This is dealt with in figures 11 and 15. We read that it takes on average about five days' work to do a grant but you only spend about £200 on each grant. What is going on here? Is there not a mismatch between the two? Mr Wanless: This is the Awards for All programme? Q17 Chairman: Yes. Mr Wanless: We do not prescribe how much time applicants should choose to put into applying for --- Q18 Chairman: It only costs you about £200 for processing each application but you need applicants to spend about five days putting the application together. Mr Wanless: I would not say we needed them to spend five days. If they choose to spend five days it is probably time well-spent because they are going to put together a good application which is going to help with the planning and delivery of their proposal. The application form, and I have got one here, is pretty simple. You answer 20 questions and you have got about a 50% chance of securing an award. We administer it, as you can see from the figures, pretty cost-efficiently, not to say we could not do it better as we move online into the future. Q19 Chairman: Dr Thurley, can I ask you, at figure 13 we read that the average administration cost for each grant awarded was £9,700. That seems a lot of money to me. Dr Thurley: Our grants are quite big grants and, as the NAO pointed out, it works out as about 7.6% of the cost, which is a significant reduction. In 2003-04 we did an exercise which calculated the cost of undertaking our grant programme and it was 9.15%, so what the NAO are showing is our percentage has actually dropped quite a bit over the last three years. Q20 Chairman: What value are you actually adding to the £10,000 you make on each grant? What value is your organisation actually adding? Dr Thurley: Our grant programme is a very high risk programme because we are giving quite large sums of money to very poor congregation groups who own buildings that are often up to 700 years old, very often the incumbent would never have been involved in a building project before, his PCC and his church wardens equally may have absolutely no experience of building whatsoever, and yet we are proposing to give them maybe £200,000 worth of public money. What our grant programme is intended to do is help guide these people and support them, and often support their architects as well because very often their architects do not have the necessary expertise and knowledge to deal with the repair costs. The added benefit that we bring is the ability to bring the project in on time, on budget and actually achieve its aims. Chairman: Thank you. Q21 Mr Touhig: Mr Holgate, if there is one message that comes through from the C&AG's Report it is that applying for grants in the DCMS sector is too complex, too difficult. Would you agree with that? Mr Holgate: I do not think I would agree, I am afraid. That is not to say for one moment that we cannot improve, and colleagues have already given examples in response to the Chairman's questions about online application. I am sure we can improve year-on-year. Q22 Mr Touhig: So you do not agree with that conclusion? Mr Holgate: I do not think I do agree, no. The satisfaction rating for the --- Q23 Mr Touhig: Well, let us look at the satisfaction rating on page 30, paragraph 3.9. It says it is rather poor and those applying only rate you six out of ten. That is not very good, is it? Mr Holgate: Well, I do not think you can tell whether six out of ten is very good or not very good because it is not normalised against some other measure of quality. Q24 Mr Touhig: It is clearly an indication of the dissatisfaction of people having to go through the process of applying for grants. Mr Holgate: Well, I am looking at figure 17 and I see a marked disparity. I see it is perfectly reasonable between the people who were successful in their grant applications and those who were not. Q25 Mr Touhig: So you are fairly complacent about it then? Mr Holgate: No, I would not claim complacency at all. As I said, I am sure we can do better and these bodies all have plans --- Q26 Mr Touhig: What do you specifically have in mind to make it better? Mr Holgate: The online applications could be one improvement if we could get it to work. Q27 Mr Touhig: If you could get it work, yes, but you do not have any other improvements in mind at the moment? Mr Holgate: Well, it depends on the policy objectives. As Peter said, it depends a bit on the policy objectives of the scheme as to whether you think it has succeeded or not. I suspect Alan's example is an example of a successful grant if the book he was referring to went on to win prizes or enabled him to make a living as an author. Q28 Mr Touhig: I am sure we will come back to that in due course. Mr Wanless, it is pretty clear that your organisation's applications process is complicated too, 62% of applications you receive you have to send back because they are incomplete. Mr Wanless: Yes. This is the Awards for All programme again which, as I said, earlier, if you look at the application form is not at all difficult. There are pieces of information that you need to complete, like bank statement details and a reference and so on. We have found that many applications that are received for this scheme, often from people who are applying for Lottery money for the first time, do not attach key pieces of information. Q29 Mr Touhig: Except that six out of ten you have to send back. Mr Wanless: Yes. Q30 Mr Touhig: Are you suggesting people who complete these application forms should have a business administration degree in order to get it right? Mr Wanless: Absolutely not. I would say if you look at the application form it is pretty straightforward. We have tried to improve the guidance notes since this Report was produced to make it even clearer. It actually says, "How to apply. Paragraph 1: Read the guidance notes. Over three-quarters of the applications we receive are sent back or rejected altogether because they contained basic errors, were missing information or asked for a grant for something that Awards for All does not fund". For example, we would not fund profit-making organisations of one kind or another. Through improving our guidance and simplifying processes we have reduced this figure, but it is still unacceptably high. Q31 Mr Touhig: It is high, it is six out of ten. Mr Wanless: It is now down to more like five out of ten, but I would agree with you that is not good enough. Q32 Mr Touhig: The Chairman referred to figure 15 on page 29. Mr Wanless: Yes. Q33 Mr Touhig: Why on earth did it take the time equivalent of 613 full-time employees to prepare an application for the Lottery Fund Reaching Communities programme in 2006-07? Mr Wanless: This is a scheme which is enabling people to access larger sums of money than the Awards for All, so there are a set of planning procedures and checks to ensure --- Q34 Mr Touhig: You are supposed to be helping people, not burying them under paperwork, are you not? Mr Wanless: Absolutely, and I would say that our processes are designed to encourage and help people through that process to make the best case they can for Lottery money. Q35 Mr Touhig: The Report says that 613 full-time employees would be required to complete the applications in 2006-07 for your Reaching Communities programme. Mr Holgate: Could I make a point at this stage. I think I am right in saying the mean award is £221,000 from this scheme, so at 21 days average application time, plus two days for evaluation, the person is in a sense "earning" £9,600 per day that he or she is compiling their application, which I think is quite a high rate of return for filling out the form correctly and meeting the objectives of the scheme. Q36 Mr Touhig: A large number of people have been suggested by the NAO Report, 613 people would be required. Mr Holgate: There is a multiple. There are two things there. There are unsuccessful applications and there are successful applications. I am saying if you succeed an average award under this scheme is £221,000 --- Q37 Mr Touhig: If you succeed. Mr Holgate: If you succeed, yes, and it is 23 days in total both applying and evaluating to achieve that, and that is quite a high rate of return. Q38 Mr Touhig: As the Chairman pointed out earlier, your costs seem to vary and you do not seem to be learning lessons one from the other. Is it not true with all your staff that the application process is so complex, so long, you are sending some of them back because they are incomplete, that your staff are not coping with these applications in an efficient way. You are making it too complex for people to access the money. Mr Wanless: On the incomplete applications, we have evidence now from the People's Millions programme, for example, which was an online applications programme, that that almost obliterated incomplete applications because you could only move to the next stage by attaching the right information. That was a hugely beneficial change. Q39 Mr Touhig: How far have you got with the online? It seems from what Mr Holgate said that it is at an early stage, you do not even know if it works yet. Mr Wanless: We do not. We would hope to have that coming on-stream in 2010 across all our programmes. Q40 Mr Touhig: In any of your organisations, do you have any other proposals for radically simplifying the application process other than going online? Mr Davey: We have recently simplified the application form and subjected it to extensive user testing. What I want to do in the next year or so is to look at how we can reduce our Lottery administration costs by 15%. We will be looking at our application schemes to see how we can simplify them. Ms Price: We are also introducing a single online application form for all of our grant programmes in September, so that will reduce the burden. Q41 Mr Touhig: Is it possible that we could have a note before we complete our report on what each department is doing? Mr Holgate: Certainly, Mr Touhig. Q42 Mr Touhig: That would be helpful. One of the cancer charities had a mission statement, it might be a mission statement, or it might be a slogan, "Get it spent where it's meant", very simple but it gets the message across. Perhaps that is something all of you could be looking at. Mr Holgate: These schemes all have quite specific objectives. The only problem with having specific objectives is that sometimes people apply who do not fit into that projection so solving one thing can lead to one of the other issues that you have mentioned. Q43 Mr Touhig: Why is it that you require the Lottery Forum to publish its admin costs when you do not require the same information from the Exchequer funded grant-makers? All taxpayers want to know they are getting value for money, not just Lottery payers. Mr Holgate: I think the answer to that is wherever there is a major Lottery distributor that is a large volume of business, unlike English Heritage where its grant-making is only a small proportion of its business. There is a case for accountability of a relatively crude nature for the Lottery distributors which I do not think there is across the generality of our bodies where grant-making may not be the principal source of engagement. Q44 Mr Touhig: You do not think perhaps knowing the admin costs of all the others would be helpful? Mr Holgate: I think that brings us back to the point where the Chairman began which is the problem of not quite comparing like-with-like. The NAO did a valiant job getting figures which do appear broadly comparable, but they are only comparable to the extent that they are pence per pound of grant, they are not pence per pound of effective grant. As the NAO rightly point out, they have not been able to investigate the relative effectiveness, so the true ratio is missing a really compelling denominator. Q45 Mr Touhig: Mr Davey, in 2006-07 80% of the grants made under the Arts Council's individual programme were for £5,000 or less and it cost you £2,000 on average to administer. That is about 40% of the grant value going on costs in eight out of ten cases. That is not really value for money, is it? Mr Davey: If I refer to my previous answer, much of the work around Grants for the Arts for Individuals is working with the applicant to work up the application and work up what the scope of the application would be. For example, with a choreographer, the Arts Council officer might work up with them what kind of application would be likely to succeed and work with them as to what their artistic --- Q46 Mr Touhig: Forgive me, I am short of time, but you did explain that in answer to the Chairman. The point I am making is if you have a particular project that gives grants on average of about £5,000 and it is costing you £2,000 to administer then you ought to be looking at the project as a whole as to whether it is value for money at all. Mr Davey: The clients who are successful regard the development work as being valuable. Yes, I do agree that we need to look at it to see if we can get those costs down. Q47 Mr Touhig: A final question for Mr Wanless. What is happening with applications for Lottery funding now that the 2012 Olympics have taken so much of your money? The Friends of the Newbridge Memo, in my constituency, built by miners in memory of those who died in the First World War, need £4.9 million to rejuvenate and use the building. Are they going to get the money? Mr Wanless: To some extent it depends on the quality of their application! Seriously, we are going to enter into a tighter budget in the period ahead now because there will be less money available per year for the next period. Q48 Mr Touhig: I asked Mr Stevens when he came before us, the Permanent Secretary of the Department, about what the Lottery Fund was doing to find extra money as a result of the £2.1 billion that has now been transferred to Olympic Costs. What are you doing to raise extra funds? Mr Wanless: It is not my job, I am afraid. Q49 Mr Touhig: I appreciate that, you administer it in terms of the distribution but surely you have an input in terms of passing back information to those who do raise the necessary funds. Mr Wanless: Our role is simply to administer as best we can whatever money is given to us. Q50 Mr Touhig: So you do not have any view or have not put forward any suggestions about how more money could be raised? Mr Wanless: That is for others to determine. We are obviously keen to administer as much as we possibly can. Mr Touhig: Heads in the clouds, is it not? Q51 Mr Burstow: I want to come back to the issue of forms and a simple way of how to fill them in and the answer that Mr Wanless has given already. You say that the form has been simplified now the new guidance has been issued, but do you really think that is enough given that, certainly before you did that, 50% of people were not filling in your forms completely? What are the steps you have taken to try and address that huge number of objections? Mr Wanless: I do not think it is enough. Every opportunity we can take to ram home to people the basic pieces of information that are required to enable an application to be successful we should take. We have a telephone helpline dedicated number available. We have a dedicated website. As I say, we have sharpened up the guidance. It makes it absolutely clear, point one and point two, "Read the guidance notes, make sure you attach the documents. These are things which are required for basic propriety/fraud purposes". Beyond that I think the real answer is this online application change which, as we have seen from other programmes where we have run that kind of approach, will make a very big difference. Q52 Mr Burstow: Taking that online portal for applications for fraud, is that simply going to be something that will be available in one place for lottery applications or is that something that you and others across the grant-making sector have been discussing to see whether or not there can be a single portal as there is in the States? Mr Wanless: When we researched our online capability, which is referred to in the report as the Business Process Re-engineering Project, we went out and we looked at the Arts Council system, the Heritage Lottery Fund, Esme Fairburn, Wellcome Trust, the Gates Foundation. We also looked at retail banking sector parallels to try and establish what were the very best possible online processes. We are looking to develop a modular system and it could very well be that modules from what we are seeking to develop would be of application and interest to other distributors, lottery and non-lottery, and we are very happy to explore that further in those conversations. Q53 Mr Burstow: Is this something where it would make more sense and would be more readily understandable for members of the public and those who want to make applications to the various grants that are represented here for them to have one place they knew they could to make that point of entry to the system? I can see Mr Davey nodding in some support for your comments. Mr Davey: We already have the common
lottery website which directs people to the right place. In the case of the arts, if you are a
choreographer, a painter or a writer you fairly clearly want to come to the
Arts Council programme and it is about which grant is the right avenue for you
to be exploring and you need to have conversations with someone at the Arts
Council to help you navigate through that, so I am not quite clear what the
total advantage to a potential applicant might be, but if we can attach online
applications to the National Lottery website that would be a very great
improvement. To return to the Q54 Mr Burstow: Let us move on to Mr Holgate and ask a question about something which some of the Committee have expressed disappointment about in the past, which is this lack of back office facilities sharing among various organisations to help drive down costs. Is that something where, as in this NAO report, there looks likely to be any further progress? Why has there not been any progress since the last time the Committee drew attention to this obvious opportunity to save taxpayers' money? Mr Holgate: If by "the last time" you meant the report on DCMS accommodation when I came before the Committee about 18 months ago, I can assure you that both in response to that and in response to the OGC's high performing property initiative, all of what is represented here and several others are trying to economise on their property holdings. The Big Lottery Fund, for example, is making £3.5 million savings. Q55 Mr Burstow: But in terms of taking the idea that was inherent in that and applying it to this issue of how the offices that run the grant systems within all of these organisations can be better organised, and indeed in some cases rationalised, is that something that is being done? Mr Holgate: No, it is not something that is being done. It is a possibility. Q56 Mr Burstow: It is. It has been suggested in this report and has been canvassed. Why is it still only a possibility? Mr Holgate: The problem is that we need to learn to walk before we can run. The first recommendation in the report is to compare on a segmented like-for-like basis - I paraphrase - the costs incurred by the different grant givers. If we can do that compellingly I think that builds the platform for the next step, and it could be a step along the lines that you are suggesting, but I do not think we can leap to a common online platform or something like that on which everyone depends. It is a different thing having an option of a site, which is what Peter has described, from something on which the organisations depend for the processing of their applications. Q57 Mr Burstow: One other thing before my time is up which I would suggest you reflect on is that it is not just about the online presence and how that is organised in a more unified way. It is the back office administrative aspects as well. Mr Holgate: Yes, I understand that. Q58 Mr Burstow: I hope that is being looked at as well. I am, though, curious at the fact that there does not seem to be - this is back to Mr Wanless again - any real feeling for the amount of time that many people spend filling in the grant application forms, the extraordinary amount of person hours that are being invested in getting absolutely nowhere in terms of getting grants that are successful. In response to Mr Touhig you seemed to be really rather dismissive in the sense that it is not the Big Lottery's fault that people are spending so much time. Just what research are you doing to understand why people are investing so much hope and energy and time on this without the payback and what are you doing to try and change it so that people understand that perhaps they should invest less time and less hope in getting these grants in the first place? Mr Wanless: I am sorry if I gave the impression I was at all dismissive about the needs of applicants coming forward for money because that absolutely was not my intention. We put a lot of effort and time, particularly through our regional outreach operations and a range of award partners, who can be all sorts of people from voluntary sector organisations to functions within local government, into getting out and about to help potential applicants and applicants understand the process and what it means to apply for our programmes and to maximise the likelihood of their being successful. There is a major programme of outreach workers, particularly ----- Q59 Mr Burstow: But four out of five are rejected. Mr Wanless: We run across the Q60 Mr Burstow: And the greatest investment of time. Mr Wanless: Absolutely, but our consultations with the voluntary community sector have said time and time again that they value an open programme and the opportunity to have a go at the money. We will be consulting on our post-2009 programmes later this year and I think it is a really important question for us to address with all interested parties about the pros and cons of these more open programmes for larger sums of money because they do have higher potential failure rates. The flip side of that is that we prescribe more tightly the sorts of projects that are likely to be eligible and also to fail at an early stage of the process. Q61 Mr Mitchell: Why can you not develop an automated standard service as they have for grant applications in America? I see in paragraph 4.15 that "the Cabinet Office estimate that by sharing corporate services, such as human resources and finance functions, more effectively, central and local government could make savings of £1.4 billion". In figure 22 above that it says that the USA have an efficient system for sharing some basic services and referring grants off in the right direction but a common website. Why can we not have that? Mr Holgate: Like others, I have been
navigating Grants.gov with interest over the past few weeks and I am grateful
to the NAO for unearthing this example.
As someone else said, it is something of a portmanteau system. It is not really a unified or particularly
user-friendly system as it happens. It
is mostly, to my limited experiment, a way that the federal government liaises
with all the other bits of government in the Q62 Mr Mitchell: Yes, but you preside over them all, do you not? Mr Holgate: Yes, over the lottery instruments. Q63 Mr Mitchell: You could provide or insist on a common system. Mr Holgate: That depends on how homogeneous you can make the grant schemes which these bodies run which have quite different customers and sometimes for quite different purposes. The core issue here is the interaction of the obvious attraction of common processes against the fact that it might militate against, for example, the outreach that these non-departmental public bodies undertake to bring forward applications that would not come anywhere near more of a one-size-fits-all website. There is a trade-off. You could try and do both but that would add to cost and Committee members have rightly emphasised their interest in cost. Q64 Mr Mitchell: I think applicants might find it more confusing. I see from the report that a lot of people are milling around huge of crowds of people applying for grants, often not accurately, not filling in the forms correctly, many of them inexperienced, not knowing what the hell to do. On Reaching Communities, for example, I see that over 600 people a year are spending time putting together grant applications rather than actively helping their communities. You are imposing a small industry on people. This must be an area into which consultants are going to move, saying, "We can advise how to get grants and we will do so for a small cut of the grant", or something like that, and, "All our applications are guaranteed successful". Is there any sign of that happening? Mr Holgate: I am afraid I do not know the answer to that. Does anyone know? Mr Davey: I am not aware of it. Mr Holgate: We are not aware of it. Q65 Mr Mitchell: How do you know? Have you considered the issue? Mr Wanless: We are back to the Reaching Communities programme again, which, as I said, is our most open grant scheme because we were responding to voices in the sector who said they wanted an open programme and were willing to pay the price, if you like. We have certainly sought to reduce the costs subsequent to this report which was in 2006/07 by having a much tighter outline proposal form stage so that we can guide people at a much earlier stage of the process on the basis of the form, which is very much shorter, as to whether they have any chance at all of accessing the money. In 2007-08 over 60% of potential applicants were advised at that simple stage, well before the man hours you are describing, not to proceed with their grant application. Q66 Mr Mitchell: That is a welcome development. That imposes costs on you presumably. Mr Wanless: It does but it is a cost benefit because for us that process takes on average two and a half hours and if we choke off the application it saves us a process which takes 15 and a half hours, so it is well worth doing. Whether there are more people disappointed at the news that their ----- Q67 Mr Mitchell: I was asking whether there is now a breed of consultants arising, which is happening in so many other fields of government, and I know in north-east Lincolnshire we had an adviser attached to the council who advised groups who to apply to and what channels to use. When, of course, in its usual round of economies, that job went out, I had lots of applications come to me and I had not the foggiest idea, but there must be a situation where advice locally or from consultants helps people. How do you know that is not happening? Mr Holgate: Sometimes it may not be a bad thing - sometimes. The question is whether it is introducing ----- Q68 Mr Mitchell: It would be a bad thing if it were done for money. Mr Holgate: Absolutely, and it would be a bad thing if it distorted the application and misrepresented the application on the basis of being more likely to get the money; we entirely accept that, but I do not think we are conscious of such examples. Mr Wanless: Our regional outreach
operations are looking systematically across the areas of Q69 Mr Mitchell: I cannot see why it costs so much in terms of the number of full-time staff, for instance, in the arts compared to the amount of money disbursed. We have got one estimate that for £1.8 billion in grants there is £647 million in costs, and we are only dealing with a proportion of that. Mr Holgate: Exactly. Q70 Mr Mitchell: But why is the ratio of costs to grants so high? Mr Holgate: I think the £647 million is the total of the grants given under these eight schemes. Q71 Mr Mitchell: Exactly, and we are dealing with about a third of it but if the ratio is the same it is huge. Mr Holgate: You are dealing with a third of the grants that the department oversees in total and the costs in administering those grants vary from 1p or 2p for the arts regularly funded organisations through to, I think, 4p for Awards for All, through to 7.6p for the repair grants for places of worship up to the 35p that Alan was discussing earlier on the Grants for the Arts to Individuals. The percentages differ. Actually, seven of the eight schemes and all the seven biggest schemes cost in the range of 2p to about 8p and it is a modest crumb of comfort - only a modest crumb - that in paragraph 2.17 the NAO kindly give us two rough benchmarks from other sectors where it is 9p and 10p for the other two organisations. Q72 Mr Mitchell: Let me turn to the Arts Council. Paragraph 1.16 says, "In 2006-07, the Arts Council employed around 870 staff and its total operating costs were £51.67 million". It is a huge number to give out the grants you are giving. That is imposing a burden on the arts community, is it not? Mr Davey: Would it help if I clarified that figure? Q73 Mr Mitchell: Yes, it would. Mr Davey: Two hundred people of that figure are responsible for delivering the Creative Partnerships programme, which is a programme that works between arts organisations and schools. If you take the totality of the money we give out and our administration, that is working out at 8% at the moment overall and that is down from 10% three years ago. The report here is examining only some of our grant-making activities, the main ones. If you take the three grant-making activities that are considered in the report, they are giving out £399 million and the administration cost directly attached to them is something like £14.9 million. That works out at about 5.6% on average. However, the Grants for the Arts for Individuals programme is very expensive at 35p in the pound. Q74 Mr Mitchell: Why does it cost so much to give very small sums? Why do you not raise the limit? You have raised it from £200 to £1,000, which seems sensible. Why not raise it to £5,000? £200 to an artist is peanuts, is it not? Mr Davey: But often £1,000 could be quite valuable. I quoted an example of a novelist and he required something like £4,000 to give him the time to write his book because he had no other source of income and also he needed the encouragement of our literary department in his regional office to develop his project. Q75 Mr Mitchell: I am a photographer. If you give me £5,000 it is peanuts. It would buy two cameras. Mr Davey: It might well buy two cameras but they are cameras that you can use to take excellent photographs with, or it might buy some time. Q76 Mr Mitchell: I notice that your costs for regularly funded organisations are much lower. That is as it should be, but then you did not have a big take-up last year and you decided not to fund regularly some of the regularly funded bodies. That must have cost a lot in staff time. Mr Davey: It was a fairly intensive activity but that is at the core of what the Arts Council should be about. Q77 Mr Mitchell: Have you now pulled back on this? Mr Davey: Every three years we get our money from government and we allocate the money to regional regularly funded organisations. We took the money away from around 180 organisations, we brought 80 new organisations into the funding mechanism who were not funded before and we gave 264 organisations an increase of more than inflation, so we were investing in quality and depth of the arts experience, and that was a legitimate part of ----- Q78 Mr Mitchell: I will stop you there; I am at the end of my time and tether, but I just wanted to refer you to one point, which is English Heritage, and I am not sure why this is in but there it is on page 5, "In 2007, a grant of £127,000 was awarded to the Losang Dragpa Buddhist Centre at Dobroyd Castle in Todmorden, West Yorkshire". This sounds like Daily Mail stuff, does it not? "The grant was used to fix a leaking roof and preserve the intricate stone-work and tower". It is a beautiful folly. It was built by the Fieldens who started the cotton industry in Todmorden in the 19th century. It is a Grade II listed building. One can make fun of that and say, "How many Buddhists are there in Todmorden?", and I think the answer would be, "Not many", but that was in 2007 that you gave them £127,000. Would it surprise you to know that the Losang Dragpa Buddhists have all gone to live in the south of France and the building is now up for sale? This sounds extraordinary. English Heritage has contributed £127,000 to Buddhists who have now left the country and put the building to which you have contributed the money - public money - up for sale. Are you going to claim it back? Dr Thurley: I have no idea why the NAO chose this particular grant as an example. It is to my knowledge the only time that we have ever funded a Buddhist place of worship because our scheme is not only for Christian places of worship; it is for all places of worship. I am quite certain that the reason that we gave them a grant was because they fulfilled the criteria in that at the time they were a viable place of worship, it was a listed building and they had repair needs that they could not cope with. I am afraid I am unable to comment about ----- Mr Mitchell: Perhaps you could give us
some more information on that matter because it sounds extraordinary that you
gave them such a big grant in 2007 and at the end of that year they went to the
south of Q79 Nigel Griffiths: But the Lord works in mysterious ways. Dr Thurley: I have just been informed by my assistant here that the grant was not actually taken up in the end because the building was put on the market. A lucky escape, Chairman! Mr Mitchell: So the roof is still leaking! Mr Bacon: What are you going to do about the roof? Q80 Chairman: Mr Davey, I see in that same figure that you gave £7,500 to David Fine, the poet in residence for the 2006 Ashes cricket test, where he wrote 25 poems, one for each day of play. Were the poems any good? Mr Davey: I believe they were, yes. I heard some of them on the radio, fine poems celebrating a fine game. Q81 Chairman: Have we heard them ever again? Mr Davey: I am not sure, to be honest. Q82 Phil Wilson: My question is to Simon Thurley and it is about repair grants for places of worship where it costs you nearly £10,000 for each grant and the vast majority of that money you say goes on architects and surveyors. What are you doing to ensure that such experts are being employed efficiently? Dr Thurley: Our grants typically go to
places of worship where there is very little expertise in the business of
conservation. Last year we gave a grant
to a church in Q83 Phil Wilson: Mr Wanless, in the Reaching Communities programme, first of all can you explain what that is and what it is supposed to do? I have looked at the figures and it seems to me that four out of five grants are rejected, which points out to me that apparently not very many communities are being reached. It is in paragraph 4.2. Mr Wanless: As I mentioned earlier, Reaching Communities is our most open grant programme of all the programmes which the Big Lottery Fund runs across England basically to help communities develop issues that are important to them pretty much across the Big Lottery Fund's portfolio, and this was responding to a desire in the voluntary community sector to have a programme which gave them plenty of space to develop and deliver the things which really matter to them in their communities, so we could be supporting under this programme all sorts of activities from environmental developments of one kind or another to health promotion, education community development, you name it. As I say, because it is open it attracts a large number of applicants and we will need to consider when we review our programmes later this year the balance between open programmes and failure rates, if you like. As I described earlier, we have tried to reduce very considerably the costs to which potential applicants are being put through this programme by introducing a much tougher outline proposal stage which makes clearer to people the likelihood of succeeding and what they would need to do to succeed so that people who are proceeding through the full application are doing so very clearly in the knowledge that they have only got a one in five chance of being successful under this particular programme. Q84 Phil Wilson: Is there any common reason for why four out of five are being rejected? Mr Wanless: It could be a variety of issues but sometimes it is simply that we have not got enough money to go round. There are a lot of excellent projects that with more money are clearly fundable and we would like to be able to support. Q85 Phil Wilson: So are we going to see an increase in the funding for this particular initiative? Mr Wanless: We will have to consider its position in the portfolio programmes which the Big Lottery Fund runs. As I say, it is popular but what people do not like about it is the failure rate that you have described. Q86 Phil Wilson: It is just that when I read that and I looked at the headline I thought that you are not reaching very many communities if four out of five of the applications that you receive are being rejected. Mr Wanless: We are reaching the one in five which in absolute numbers is 452 awards in 2006-07 and it was always going to be round about that number, however many actually apply, because that was the amount of money that we had available, and there will be communities being reached through all sorts of other programmes that we run. One of the things that we have sought to do over the last 12 months or so in that outline proposal stage is refer people very much more carefully to other funding opportunities that are available, not just from the Big Lottery Fund but from our Young People's Fund grants, for example, where the success rate would be considerably higher, up to programmes being run by other funders. Q87 Phil Wilson: We saw the budget for this particular programme was increased. Does that mean each individual application will receive more money or does it mean that more applicants would receive a share of the pot? Mr Wanless: It would depend on the rules we chose to apply to the programme, I suppose, as to whether we wanted to hand out larger or smaller awards. Q88 Phil Wilson: Mr Holgate, can I make two points on international comparators? What do you do to learn from experiences from other countries? I know in the USA apparently they have one common website to promote grants, which was mentioned in questioning earlier on. What other countries do you look at to try and find out best practice? Is there anything we can learn from other countries that run lotteries, et cetera, or award grants? Mr Holgate: Consistent with the
department's view that there is a great deal of particularity about the
recipients and the fields of endeavour that we support through each of these
bodies, the main contact will be done through the NDPBs. Simon will forgive me for mentioning that he
was in Q89 Phil Wilson: Do you liaise with the Lloyds TSB Foundation or even the Northern Rock Foundation in the north east which does a lot of good work in the area where I am from? Do you talk to them? What do you learn from each other? Mr Holgate: Indeed. Peter mentioned earlier the Association of Charitable Foundations and the fact that the Big Lottery Fund are in contact with them. Q90 Phil Wilson: Paragraphs 4.18 through to 2.0 are about "Grant-makers in the sector could do more to share information about grant-making". We have heard a lot today about what we can learn from each of the programmes about the best way of awarding grants, et cetera. There is a body you refer to here called the Lottery Forum. Can someone explain to me what that is and whether you share best practice on that? What role does the Lottery Forum play? Is that a way in which you could migrate best practice? Mr Holgate: It is a potential vehicle for precisely that. I think it involves not just the three lottery bodies represented here but also the Heritage Lottery Fund on which the Committee had a hearing not long ago and other bodies that are lottery distributors. I think precisely what they do is to compare notes of the things that they are doing. The issue is how much time should we put into a process like that compared to alternative ways of getting better value for your lottery programmes. I do not know whether I am traducing it but I think it is a relatively light touch process at the moment and even to come up to scratch on the first recommendation that the NAO make it will have to become a little bit more heavy duty. Mr Wanless: I agree with that. There are some specific illustrations of activities where as lottery distributors we have sought to get our act together and work out common processes and be more efficient and effective, and one would be a capital centre of excellence where we have been looking across the distributors at best practice for preparing yourself for making capital investments of one kind or another where our respective experts got together with one another and worked out common ideas and a common approach, so there is something to work on. Q91 Phil Wilson: Do you see a bigger role for the Lottery Forum going forward? Mr Wanless: Potentially, yes. Ms Price: Just to add to that, as well as the chief executives meeting within the Forum the finance directors meet separately, and I think there is a significant opportunity for us to encourage them to exchange information on a more regular basis. Q92 Mr Bacon: Dr Thurley, I would like to ask you about the work you are doing to restore buildings where you say that sometimes you even provide support to the architects and you give the example of the evangelical vicar who had no experience of building contracting. I have a project in my constituency which I am pleased to say has just been given a very large grant of £900,000 to restore a 14th century chapel at the back of a school, which was part of the BBC Restoration Village competition and got to the semi-final. I should say for the record that I live in the village where the building is although that is a complete coincidence; I had nothing to do with their success, but the reason why I can see why they were successful when they came to see me was because of the detail that they had gone into. They had got very clear records. They knew which grant-making bodies other than public sector ones and the lottery had criteria that they could meet and which did not. Is not part of your job in distinguishing between the many applications you get to use as a criterion the capacity of somebody to meet these needs that you have described before you make the grant? I am quite surprised that you are supporting architects. In fact, the one in Norfolk made me think of this because they chose the architects specifically because they thought they were highly suitable for that particular project. Why are you supporting architects? Surely they should either be able to run with this or you should not be funding them? Dr Thurley: Quite right. Our Places of Worship scheme has two phases to it. Each year we get about 500 applicants and we find that about half of them are eliminated in the first six weeks and we have a very close look at the applications. It is a relatively simple application process and we try and work out which places of worship are capable of taking such a project forward in exactly the same way as you are suggesting. That is the very first step. Q93 Mr Bacon: How much money do you spend in that programme for which you have 500 applicants? Dr Thurley: The total, because we do it jointly with the Heritage Lottery Fund, is £24 million. Q94 Mr Bacon: Each year? Dr Thurley: Each year. Q95 Mr Bacon: For those 500 applicants? Dr Thurley: Yes, and of the 500 it is about 240 who will get through. A big chunk of them are eliminated at the first fence and they are told very quickly, because our architects will look at it and because most of these places we know of, quite honestly. Q96 Mr Bacon: Is it just for the church roof quite often? Dr Thurley: Our scheme is confined to high level repairs, so it is roof and it is masonry, no improvements, and it is really for places that are desperate where literally there are buckets up the aisle or, if it is a synagogue, whatever you have in the middle of a synagogue. That is who it is confined to. We do that sift initially. The next phase, which is why our scheme takes a bit longer to come to a resolution than the other schemes, is that our architects then go out and visit every single one of the 50% which get through the first sift, and that is where what you are talking about comes in. We then meet the architects and we have to take a view as to whether the architect has got it right. Some of them are very good and have great experience of dealing with 700-year old masonry. Others are not so good. That is where our people come in and at that stage we knock out another 7% or 8% and we end up giving grants to about 46% of applicants. Q97 Mr Bacon: It is not for me to suggest ways that you could be creative in your accounting, but is there not something to be said for the idea that if you are helping them with structuring invitations to tender for contractors and that kind of thing there ought to be a column of the cost of the professional help to get this right rather than the cost of the grant-making? Dr Thurley: That is right. Of the 7.6% which the NAO quote in their report only 1.5% is administration, 4.5% is the cost of what I am describing to you, which is our architects going out, and the balancers of the costs are our quantity surveyors, because one of the other things that we do is maintain a database of the cost of this sort of work because a normal QS firm will not really be able to help you in how to put shingles on the spire of a mediaeval church, so we have our own cost database so that we can have a close look at what the costs are. As you rightly say, only 1.5%, in other words 1.5p in the pound, is the administration costs of our scheme. Q98 Mr Bacon: I am interested to hear you talking about quantity surveyors because I have sat on this Committee for seven years and I think you are the first witness I have heard talking about quantity surveyors as if it is something you should do regularly, although many of our witnesses are people who should have been talking to quantity surveyors. I was told by the President of the Royal Institute of British Architects that Portcullis House, the building over the road, would have been cheaper to build had they clad the exterior in 7-series BMWs than what they actually did. Are you sharing your obvious expertise with other government departments and agencies who could plainly benefit from it? Dr Thurley: The slight difficulty is that very few governments or government agencies have buildings 700 years old. Q99 Mr Bacon: This one. Well ----- Dr Thurley: There are one or two. The expertise that we have on costing is shared not only in this grant scheme but through all the grant and regulatory activities that we undertake. The Committee suspended from 4.38 pm to 4.44 pm for a division in the House Q100 Mr Bacon: Mr Davey, Grants for the Arts for Individuals and the 35p. Can you tell me first of all how many grants there were? £1.79 million was the cost of awarding those grants; is that correct? Mr Davey: Yes. Q101 Mr Bacon: How many grants were made altogether? Mr Davey: 1,666. Q102 Mr Bacon: I worked it out at 1,665. That is fine. I am surprised that we are funding novelists. How many novelists are we funding? Mr Davey: I do not have the answer to that question but we do give grants to quite a few in terms of emerging novelists who are developing their writing. I can write to you with the exact number. Q103 Mr Bacon: What I would be interested in is if you could send us the details of the 1,666. Presumably, in order to have compiled this information to the National Audit Office and to have worked out the cost, this information is already there, it already exists, what the 1,666 grants were for and to whom they were made. Mr Davey: Yes. It is on our website. Q104 Mr Bacon: Is it possible that you could send that to us broken down by category so that we can see how many novelists, how many - what are they? Sculptors, painters? Mr Davey: It could be sculptors, painters, photographers. Q105 Mr Bacon: If you could send us a list that would be very helpful. Mr Davey: I will see in what way we can break it down. Q106 Mr Bacon: I would expect the costs for small amounts for individuals to be higher than for large grants to professional organisations; that is just obvious. Nonetheless, 35% is startling and it does make you wonder. I think you did say in your earlier answer to a colleague in relation to the novelist that you were helping him with working out what he was going to do. Was it in relation to a different applicant or was it the novelist? Mr Davey: That was a choreographer, as an example. Q107 Mr Bacon: Yes, so you were going to help the choreographer work out what he was going to apply for the money for? Mr Davey: Yes. Mr Mitchell: What steps to take. Q108 Mr Bacon: Yes, indeed, what steps to take. If they have so little idea of why it is they are applying for the money that you have to spend 35% of the money that you are giving to them helping them work out what it is that they are applying to you for then why are you doing it? I can understand it if it was Dr Thurley and a 700-year old church building that was Grade I listed but for a choreographer or a novelist, why? Mr Davey: Often an emerging artist will have a very general idea of the kind of thing that they are wanting to do and they might work with specialist Arts Council officers to refine that proposal and come up with something that is much more likely to find an audience, for example, or that is more likely to succeed. Sometimes artists might have a very general idea. Under our Royal Charter we are an arts development organisation and it is our duty, I think, to help those artists who do not have a very clear idea of what the end point will be to try and work out what that is. Q109 Mr Bacon: That is a good answer. If that is what your Royal Charter says I am all for that. Can I move on to page 31? I would like to ask one more question and that is concerning the Community Investment Fund, which I think, Jennie Rice, is a Sport England body. Why do you think that the satisfaction level for that is lowest compared with any of the other bodies in that chart on figure 17? Ms Price: We were certainly concerned to see that, and in fact we are asking the NAO for more details of what that particular batch of applicants felt about the scheme. Q110 Mr Bacon: These are the successful applicants. Ms Price: That is right. Q111 Mr Bacon: Three out of ten of the successful applicants are happy. I would expect the unsuccessful applicants to be unhappy; it goes without saying. One wonders why only four out of ten of the unsuccessful applicants are unhappy, but three out of ten are the successful ones. Ms Price: We have some anecdotal evidence. When we talk to users about the Community Investment Fund process it indicates that one of the parts of the process they find quite onerous is that when they put in an application to us we will challenge the quality of that application and, for example, we are often revenue funding to develop the sport and we will try to improve the quality of the sport development plan that is put forward and they find that going backwards and forwards quite frustrating sometimes. The benefit for us in doing it and the benefit for sport in doing it is that you end up with a more robust plan. Q112 Mr Bacon: And presumably a sustainable plan when you cut the funding? Ms Price: Yes, a sustainable plan in the long term. What we are doing though is looking at possibly replacing the Community Investment Fund with a different type of fund to support a new strategy we are developing and in the consultation leading up to that possible replacement we were asking very explicitly what aspects of the application process people would like us to retain and the areas that they really would like changed or improved, so we will get very good evidence in the next few months that will make sure that if we do replace the fund it is going to be a better experience for the applicants. Q113 Mr Bacon: Dr Thurley, eight out of ten of your applicants who get the money are happy and two out of ten are not. You have just given somebody £50,000 or £100,000 to repair their church and they are still not happy. Are they just a bunch of ingrates? Dr Thurley: No. I think that some of them do feel that the hoops that they have to jump through are quite bamboozling and they feel that very often because they have not come across the experience of taking public money. Public money always comes with conditions and many of them find the fact that we impose on a church a condition that they have to be open to the public so that people can walk in for a certain number of days a year in exchange for the money a bit difficult sometimes. I think there is sometimes some dissatisfaction, but when it is all done and finished and the re-consecration takes place I think most people are happy. Q114 Chairman: I do not understand, Mr Davey, this question about novelists. There are 50,000 books published every year and most of them sell very few copies. There are hundreds of novels submitted to publishers every week, most of which are put into the trash can after a couple of minutes' reading. How can you possibly know whether a novel is any good and worth publishing and why should the taxpayer be involved in this, and if it is any good, if there is a track record, why the need to do it in the first place? Mr Davey: We employ officers who are specialists in nurtured literature in our regional offices and in our national office, and one of our duties as an arts development organisation is to increase the opportunities for artists to practise their art as far as possible. Indeed, recent reports from this Committee have urged us to encourage funding amongst communities which do not traditionally get funding. Sometimes the path to getting a thing published is quite knotty and difficult and sometimes a would-be novelist and writers of various kinds are seeking space and additional help in which to make their artistic statement and that is what we provide with Grants for the Arts for Individuals. Q115 Chairman: You have had success, have you? You have discovered hidden talents, have you? Mr Davey: Yes, we have. Q116 Chairman: Which have sold well in the market place? Mr Davey: Yes. Q117 Chairman: As a result of your efforts who would not have sold otherwise? Mr Davey: Yes. Q118 Chairman: Give us some examples. Mr Davey: The example that I just gave
you of the novelist from Chairman: What worries me about this is the dead hand of the state descending on a pure art form. If Leon Tolstoy had to rely on you would we ever have ended up with War and Peace? Mr Bacon: He owned an estate. Q119 Chairman: If he owned an estate that would help, I agree. Mr Davey: I do not think it is the dead hand of the state landing on a pure art form. It is to help people at the beginning of their careers make a breakthrough. It is not on an individual scale. Mr Holgate: Indeed. Your own figures, Chairman, suggest that all we are doing is providing a possibility of success to quite a small number of people compared to a very large number overall. It is a minor additional possibility. It is not really a large handout or a large number of handouts. Q120 Mr Dunne: I am going to pursue this a little further if I may because I have had a little bit of involvement in this industry myself, having set up a bookshop business. Just to correct the Chairman, which I hesitate to do, it is not 50,000 new titles published every year; it is 190,000 new titles published every year. I happened yesterday to be at the Hay Book Festival where 140,000 people visited over the ten days of the festival and I would think virtually every single one of them, if they were aware that there was a potential government handout to start their literary endeavour, would be coming to your door, Mr Davey, and I think the publicity given to this hearing will undoubtedly mean that the number of applications from potential novelists will soar, but I find it peculiar to think that your regional experts can substitute for the role played by the literary agents up and down the country who make a commercial living out of doing what your experts are able to do to a minor degree. I am absolutely perplexed that there is public money being given in this way. Mr Davey: What we do is give the would-be writer the possibility of undertaking the writing. They may be from backgrounds where they cannot afford to take the time off to be able to undertake the work required. What we do not do is second-guess the commercial publishing sector who make the final decision on whether anything is published or not. Q121 Mr Dunne: I should not really delve too deeply into literary endeavour and what makes a good author and what does not make a good author, but a very large proportion of the most successful authors sold at the moment in this country come from relatively deprived backgrounds. It happens to be a genre which has been very successful and I think it is hard to argue that you are providing a social service that is not being provided by the commercial sector in terms of allowing people to come forward and start writing. People write books because they are determined and dedicated to do it and that is the best discipline and generally speaking around the history of novel writing that is what has created the best books. I have got that off my chest, Chairman, and now I would like to return to the slightly bigger picture and, Mr Holgate, ask you if I may, in your role at the DCMS what oversight do you have of these multiple grant distributors here in terms of setting priorities or monitoring what they are doing or trying to encourage them to share best practice, which is perhaps the thing that comes out most strongly in the NAO report, that there has not been enough of that going on? Mr Holgate: Could I distinguish between exchequer funded bodies and lottery funded bodies? You have a perfect portfolio here. You have two that are both, one that is pure lottery and one that is pure exchequer, and we do treat them slightly differently. In the case of exchequer funded bodies we set objectives, conditioned by the three-year spending review. We set efficiency targets. Indeed, the department was engaged in this business even before Sir Peter Gershon took an interest and, of course, we believe that we have met the gains for the 2005-08 period and we believe we will make the gains expected of us over the 2008-11 period. Where exchequer bodies are concerned we are about the downward pressure and the greater value for money looking across any one NDPB. Very rarely do we, within the business of the non-departmental public bodies, pick something out and say, "That is particularly in need of reform", or whatever. There are examples but we try to make them as rare as possible because the whole benefit of an NDPB is that you are employing experts like Simon Thurley to run the organisation which delivers church repairs and no civil servant is able to second-guess him. On lottery funded bodies we place more heat on the chairs and trustees of those bodies who are appointed by ministers, I think, in most or all cases (with some exceptions perhaps) and who are in a sense the representatives of the would-be applicant and are very keen, not least because they will be lobbied the whole time by people with very good ideas, to see that the highest proportion of the money of the lottery body will go on the grant and the least amount will go on the administration of the grant. There are other conditions that apply to both, but on the lottery you also have to have financial directions which the department issues which the bodies are obliged to meet. For both sets there are accounts directions and a statement of internal control. Q122 Mr Dunne: Do you have directions on any particular criteria applying to grant-making bodies, such as, for example, geographic distribution or distribution to particular social groups? Mr Holgate: I believe that there will be
directions for the lottery bodies that impinge on both those points. A good example might be that the Big Lottery
Fund now has committees for Q123 Mr Dunne: I think individual grant-making bodies have it. My question is whether the department is issuing directives to the boards of these grant-making bodies to do something in a particular way. Mr Holgate: It will be clear to them that they are incumbent upon spending their grant as equitably as possible across the country and, at the risk of taking the novelist example again, if there is someone who is from a background that would not naturally lead them towards making a successful application when the intrinsic case may be very strong, we will always be wanting to try and attract that marginal application. Q124 Mr Dunne: But, Mr Holgate, you have not got a written directive to Mr Davey that he must produce X number of novelists from a Y type of social background and Z geography? Mr Holgate: No, but the bodies do incur costs in trying to spread the possibility of successful application both geographically and to groups from different backgrounds or different traditions who may not think to look to the state or the lottery for help. Q125 Mr Dunne: One of the reasons why I am probing on this is that we have not got anybody here from the UK Film Council but I have had representations from bodies that are currently funded by the UK Film Council. One such organisation is called Flicks in the Sticks. It provides rural displays of films in village halls and on the Welsh Marches, including near my constituency, and they are very concerned because at the moment there is a significant amount of investment being made by the UK Film Council in providing digital installations, which is a good thing, but 100% of that is going into urban areas and the question for me, representing a rural area, is, where did that direction come from? Why are they not giving a proportion of that funding to provide digital access to rural cinemas? Mr Holgate: I think it is extremely unlikely that we would direct the UK Film Council as to where geographically it should put its investment other than the general presumption of trying to reach parts of the country which would not normally be reached. Q126 Mr Dunne: In this particular case they are very definitely not reaching the parts of the country that in my view deserve to be reached. Perhaps you could have a look at that for me and send a note about it if you do establish that there is anything the department has said along those lines. Mr Holgate: Certainly. Q127 Mr Dunne: Thank you. Mr Wanless, you have been praised by Mr Holgate and others in your responses to other members of the Committee about the outreach that the Big Lottery Fund undertakes and I am aware of that, having participated in both meetings with MPs. I think I am hosting one for you next week for West Midlands MPs, but I have also had the benefit of your West Midlands team coming to my constituency to explain the various schemes that are available for applicants. I applaud you for doing that and I think that perhaps goes further than any other grant-making bodies in doing that. That may be because many of your grants are for small individuals but it sounds to me as though if Mr Davey were to start having similar events he would be absolutely swamped by artists of every description looking for some kind of grant. The question I have for you is that the success in certain local authority areas seems to be predicated on that local authority having an individual who helps the voluntary sector with grant applications, and in those local authorities that do not engage someone to do that the uptake is somewhat lower. Does this reflect a deliberate policy on your part to seek to outsource this accessibility and information sharing and if you were to take this on yourselves would you not have greater success and a more even distribution? Mr Wanless: There is a limit, I guess, to
how much of this outreach we can take onto ourselves because of a desire to
control the amount of lottery money we spend on ourselves rather than on the
money going directly to the good causes, and this is why there are these kinds
of classic dilemmas where efficiency comes up against effectiveness. We have taken a decision to have a very
fundamental restructuring and concentration of our grant-making activities in
two income centres and have small regional outreach offices with eight people
in each, and the Q128 Mr Dunne: I have a final question, Chairman, if I may, to Dr Thurley. In response to a couple of Committee members you touched on the Religious Buildings Programme and I applaud you for doing this because I think you are an absolutely vital source of repair for many of our communities. I have two concerns about it. One is, and particularly in light of the much publicised increase in the value of lead and the number of church roofs that are stripped of recently renovated lead, what happens to an applicant who has recently had their roof repaired by you and they then lose the lead to theft? What is their scope for getting it repaired again, using your funding? Dr Thurley: I would very much hope that the church would be insured with the ecclesiastic insurers. The insurers would be responsible for paying out for that, but the thing that we are really interested in is trying in some way to stop this haemorrhage of lead off church roofs. There is a clever device that you can paint onto church roofs which we have been promoting to try and reduce that loss but it is a serious problem and churches are going to their insurance to cover it. Q129 Mr Dunne: Can I suggest that every time you provide funding to such a church you make it a requirement that they paint it with this equipment and, secondly, publicise the fact that the roof is protected and make that a condition of their application because it might help stem the theft? The other part of my question is, where you are investing significant public funds into buildings which in many cases may be on the verge of becoming redundant but for good architectural reasons you are protecting them, do you have some kind of fallback mechanism that if public money has gone into a church that subsequently, within a reasonable period, becomes redundant that money does not then goes into the coffers of the Church of England or similar bodies? Dr Thurley: Redundancy is still quite rare, it has to be said. The best churches, which are likely to be the ones that we have funded, are very likely to go the Churches Conservation Trust, which is a body which is funded by the state for looking after redundant churches. All our grant schemes have provision for clawback if for some reason someone is being seen to make some sort of profit out of it but I should say that in the Places of Worship scheme that we are talking about it is very rare. I am not sure that there is even a record of that happening. Q130 Chairman: I am very interested in your work, Dr Thurley, on keeping churches open and I think what you do is excellent. I do not think you do it enough. When I was visiting Stow church, which you might be familiar with, in my constituency, they had a problem with lead being stolen, but I am interested by your answer about keeping churches open. It infuriates me that so many churches are still locked. You just mentioned ecclesiast insurance. They have made it absolutely clear in the past that they want these churches to remain open and I would have thought that if you are giving public money, given especially that many people do not necessarily go so much now to formal services on a Sunday but they like to visit these churches during the week, particularly in rural areas, you should be much more insistent in the use of your money to keep these churches open, and if the excuse is that they have valuable objects such as silver candlesticks, they would be locked away and wooden ones put there. I just do not buy this argument that these churches need to be kept locked. Dr Thurley: Chairman, I absolutely agree with you and we do use our money for that purpose. We have very strict criteria of not giving our grant money unless churches are able to keep them open. The current number of days is 28 and we are going to increase it this year to 40 days. Q131 Chairman: It is not good enough just to say, as I so often see, "If you want a key go down the lane to Mrs Bloggs". It is not good enough. People want to have the church open. Dr Thurley: You are quite right. We did a survey last year with the Church of England which revealed that an astonishing 89% of the population last year went into a church, not necessarily for the purposes of worship but they just went in because they really enjoyed it, and the majority of those churches are churches that are left open. Q132 Chairman: But why did you say earlier, I think to Mr Bacon, that they are sometimes resistant? Why should they be resistant? Dr Thurley: I think there is anxiety about theft and vandalism, particularly in urban churches. You find that in rural areas churches are very often left open. In urban areas it is much harder because the likelihood of ne'er-do-wells coming in is higher. The insurance situation I think is one of the keys to this because the insurers are now offering, extraordinarily, insurance discounts for churches to be left open because a church that is left open is far less attractive for someone to break into than a church that is kept locked. Q133 Chairman: I am also interested in the work you do for cathedrals. How much do you give to the cathedrals of England a year? Dr Thurley: Perhaps I can preface the answer to that question with a remark which is that in 1991 we did a survey of the English cathedrals to work out how much work needed to be done to them to get them into good condition. It revealed that there was a significant amount of work to be done and between 1991 and 2001 we spent very nearly £50 million on the English cathedrals and we conducted a second survey in 2001 that revealed that the vast majority of the very significant backlog of repairs to English cathedrals was completed. Q134 Chairman: So this is a long preamble to explain why you have cut their grant, is it not? Dr Thurley: It is one of the two explanations of why we now give less money. Q135 Chairman: Is it not about £3 million a year you give? Dr Thurley: At the moment, yes, it is in that region. Q136 Chairman: I find this staggering. As a nation we spend £650 billion of public money. This is the greatest architectural resource we have in this country and we are only prepared to spend the staggeringly small sum of £3 million from the public purse to maintain what is our greatest historical legacy. Do you not find that extraordinary? Why do you not take this opportunity to criticise your paymasters, the Treasury, and ask for more money? Dr Thurley: English Heritage has not received an inflationary increase to its grant since 1997. We have had to be very clear about what we are prioritising in terms of spending. After the ten years of expense on cathedrals we decided that the priority had to be parish churches because cathedrals are much more able to raise money than a remote parish church like Stow, although that particular one attracted a great deal of attention, but the average parish church finds it much harder than Lincoln Cathedral to raise a lot of money. Therefore, given the fact that we had significantly less money to give away, we decided to prioritise parish churches over cathedrals and, of course, I agree with you that it would be good to continue our Cathedrals Funding Scheme at the sort of level that we did during the 1990s but the simple fact is that we had to take a decision on priorities in relation to how much money we had. Q137 Chairman: And when you have got to save money why get involved in the scheme in Salisbury Cathedral, for example, which caused a lot of upset over lighting? I am on the Cathedral Council of Lincoln and this went round the cathedral community in this country that you were getting involved in a very proactive way which was quite unnecessary? Dr Thurley: If I may correct you,
Chairman, it was not the lighting that there was a dispute over. It was a dispute over the replacement of the
high level stonework and the parapets.
We are very supportive of Q138 Mr Bacon: Mr Davey, Trollope wrote a lot of novels about the doings of English cathedrals. Are you having any novelists doing a post-modern take on cathedral internecine warfare? Mr Davey: Not to my knowledge. Q139 Mr Bacon: Thank you. Dr Thurley, you mentioned lead being stolen from roofs in answer to Mr Dunne, and I have certainly had experience of this in my own constituency and throughout Norfolk. I ask this because I used to spend, for reasons too boring to go into, a lot of time in Germany in a copper factory. I just wondered whether you had ever used pre-patinated copper or recommended it to be used because it might be cheaper and you get your patina right there, 200 years of wear, but it is new and it lasts? Dr Thurley: There are two issues there. There are issues of performance. There is no doubt about it, lead does perform better than any other metal roofing metal. The second issue is one of authenticity because it just does not look the same. Whilst it might be possible to make some types of substitute material in some parts of a church where performance and authenticity are not an issue, for many churches the appearance of a lead roof, which is quite often very visible, is a very important part of the whole feeling of the church. Yes, we would consider alternative materials but we would have to take those other two factors into consideration. Q140 Mr Bacon: One quick message to the Treasury, again based on my Germany experience. There is a payroll tax in Germany. All German citizens who are in employment pay a payroll tax and when they fill in the various forms you have to fill in they say which church they are a member of and a small payroll tax is deducted each month and as a consequence all the churches in Germany are rolling in money and the buildings are very well maintained. Has the Treasury given any thought to this? Seriously, have you ever asked? Ms Diggle: A very long time ago I was involved in setting up the national insurance surcharge, which was indeed a payroll tax, and it was very unpopular indeed and it was stopped very quickly by a Tory Government, if you remember. Q141 Mr Bacon: So as a politician you would not recommend me to pursue this? Ms Diggle: I just convey those facts to you, Mr Bacon. Q142 Mr Mitchell: I hesitate to argue with our Chairman because after 11 years of being Labour I am a total sycophant, but I think we should not deal with any of this as the dead hand of the state but as the more generous hand of a culturally concerned people. However, my question goes to Dr Thurley. I would like a note on Dobroyd Castle because the report is adamant that the grant was used on things like preserving the stonework, so can you give us a note on what actually happened? Dr Thurley: I would be delighted to. Q143 Mr Mitchell: Do not answer it now. More importantly, is the report that was in yesterday's Sunday Telegraph correct that money spent on churches is now going to be cut back because of the draining of money to the Olympics? Are our churches going to crumble because we have paid the money to the Olympic Games? Dr Thurley: Not from a cut to the scheme that is looked at here and the scheme that is run by the Heritage Lottery Fund and English Heritage. No, this is incorrect. Q144 Chairman: One very last question, Dr Thurley; will you forgive me? Have you ever given money to Warwick Castle? Dr Thurley: Not to my knowledge. It is a commercially run operation. We do not generally give money to commercially run enterprises. Q145 Chairman: Will you take this opportunity to comment on this commercially run organisation because you are obviously passionate about your concern for access to our history? Yesterday I went to Warwick Castle and the entrance fee is £17 per adult, £10 per child, so with a family of two adults and three children you can spend the best part of £80 or £90. Do you think this is acceptable? Warwick Castle may be commercially run but it should belong to the whole nation, should it not? Why should this business, Madame Tussaud's, be profiteering to this extent? Dr Thurley: Chairman, could I suggest that instead you join English Heritage and visit Kenilworth Castle, which is nearby, is a much better castle and you can take in as many children as you like free with you? Q146 Chairman: It is a ruin. Dr Thurley: There are many ruins inside it. Chairman: They are all ruinous. Q147 Mr Bacon: Can I just ask another question about ruins? You just prompted another thought. What is your policy on ruins? I am not suggesting that we put a glass roof on Stonehenge and start using it for meetings of Druids. I think the Druids meet there anyway. You see a lot of ruined buildings around the country. I think of Llanthony Abbey just south of Hay-on-Wye, which I often drive past, which is a ruin, but also in that area is Tintern Abbey, a much more spectacular Cistercian abbey, and sometimes when I see these buildings I do think to myself perhaps it would be better to put a glass roof on it and have the National Choir School there, make use of it rather than not using it but just having it as a ruin. Have you ever been tempted down the road of suggesting that we should be doing something more actively with some of these buildings for the purposes for which they were intended rather than just leaving them as lumps of rock to look at? Dr Thurley: The answer to your question is yes. As a rule of thumb we do have a policy which is that if a ruin is a product of a historically significant event it is probably better to leave it as a ruin. Tintern Abbey is a wonderful example of the effects of the Reformation and therefore building it back again in a sense would be to spoil the wonderful feeling that you get there of the terrible destruction wrought by Henry VIII on a flourishing national church. I said that specifically for the Chairman's benefit, by the way. Q148 Chairman: You are doing very well! Dr Thurley: On the other hand, if the result of the ruination was not a historically significant event, the building was neglected or there was a fire or there was something else, we would positively encourage it to be built back. I think there is quite a considerable movement, not only with the ruins that we look after on behalf of the state but also with privately owned ones, to look at them and bring them back into viable use because it is very expensive maintaining a building as a ruin. Q149 Mr Bacon: Of course. Why, just because it is ruined as a result of a historically significant event, should that rule out doing something with it? Let me give you an example. The Reichstag in Berlin, ruined as the result of what I think most people would regard as a historically significant event, is now fully back in use as the German Parliament. Indeed, if you go along the corridors you see bits of graffiti in Russian and in German where it was all fought over and raised decks and walkways where you can see all this and it is protected behind glass, and it is now back in the use it was intended for as a Parliament, and indeed, as I am sure you know, the dome has been replaced by one of glass and light pours in and the whole thing is much more of a celebration now than it was as a ruin and you could say the same for Tintern Abbey. Dr Thurley: I did say that as a rule of thumb that is the approach we take. I think many people really enjoy looking at ruins and in fact you have to enter something in your Who's Who? entry as your recreation and I put "ruins" down as mine because I think visiting ruins is a wonderful experience. I think there are very few people who would want to build back Tintern Abbey or Fountains Abbey. Mr Davey: I think I am going to put "restoring ruins" as mine. Chairman: That concludes a very interesting hearing. Gentlemen and lady, thank you very much.
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