Written evidence submitted by the Greater
London Authority (GLA) (arts 35)
INTRODUCTION
1. The Greater London Authority welcomes
the opportunity to respond to the select committee's inquiry.
This submission highlights the Mayor's and GLA's key concerns
and recommendations.
2. DCMS has asked all its funded bodies—the
Arts Council, the national museums and galleries and key heritage
bodies—to explain what 20-40% cuts would mean. Jeremy Hunt
has sent proposals to the Treasury and proposed to cut DCMS's
own administration budget by 50%. The Mayor's position is that
cuts need to be made, but must be proportionate and managed intelligently.
3. Many arts and heritage organisations
in London face a tipping point of around 10-15%—more drastic
cuts would put many out of business. Smaller organisations are
particularly vulnerable and do not or cannot operate significant
reserves.
4. The Mayor recognises the need for spending
restraint and that the arts and heritage sectors should not be
ring-fenced from cuts. However, he is committed to ensuring continued
support for a thriving cultural scene in London; one that is sustained
by a mixed economy of private and public investment.
PRESERVING THE
MIXED FUNDING
MODEL
5. The Mayor believes in a mixed funding
model for arts and heritage. It is important to recognise that
private and public funding are not simply inter-changeable—rather,
they encourage one another, with public funds being an effective
way of leveraging greater private investment. For every pound
of public investment, cultural organisations are able to earn
or raise considerably more. For example, for every £1 the
Arts Council puts in, £2 is pulled in from elsewhere, totalling
£3 in income to the dance company or theatre house. The institutions
that have thrived in recent years are those that have been the
most entrepreneurial and adept at achieving this mixed economy
model. Public investment is crucial to supporting a diverse, risk
taking sector. Without it the ability to innovate and retain our
leading edge will be undermined.
RECOMMENDATION
— That the government encourages and supports
the strengthening of the mixed funding model and accepts that
a mix of philanthropy, corporate sponsorship and public subsidy
is essential if we are to preserve both the immediate and long
term health of the arts and heritage.
INTELLIGENT CUTS
AND THE
TRIPLE WHAMMY
6. The Mayor does not believe that the arts
or heritage should be exempt from public spending cuts. It is
important to recognise however that the level of cuts being considered
for the cultural sector will not be achieved through efficiency
savings or slashing administration costs alone. While there will
inevitably be pockets of waste these will not be sufficient to
meet the scale of the challenge and programmes and activity will
suffer. For this reason, cuts should be proportionate and not
frontloaded. This will give time to the arts sector to adapt to
a new funding environment and help preserve a world-class arts
infrastructure, which has developed over a number of years.
RECOMMENDATIONS
— It is crucial that DCMS takes into consideration
the "bigger picture" for cultural organisations when
making cuts. It is the case that many arts and heritage organisations
will already be experiencing a drop in financial support from
private sponsorship and be preparing for cuts from local government
too.
— We recommend that DCMS manage cuts intelligently
and in stages. For example the Arts Council have suggested to
their Regularly Funded Organisations to model a minimum 10% funding
cut in year one (2011-12), which is separated from the next stage
of up to 30% cuts over the following two years (2012-13-2014-15)
allowing a transition year to plan a new approach. Phasing the
cuts is one way of mitigating against a potentially "perfect
storm" of concurrent government, local authority and private
sector reductions.
VALUE OF
CULTURE
7. London's culture makes a vital contribution
to the quality of Londoner's lives and social wellbeing. It also
contributes to the national economy and enhances London's position
as a world leader in many respects. Public sector agencies across
London recognise the value of culture and invest in programmes
and projects which are proven to encourage enterprise, skills,
business promotion, education, employment, regeneration and social
inclusion.
RECOMMENDATION
— That government take into consideration
the impact of cuts on the wider social and economic landscape
and maintain a sustainable level of investment by which innovation
can thrive.
MYTHS ABOUT
THE CAPITAL
8. No doubt there are many people around
the UK who believe that London will easily cope with the downturn
and that its arts and cultural sector does not need support. This
is untrue.
9. The capital is the flagship centre of
the arts and heritage in Britain, a magnet for tourism and the
driver for creative industries across the UK. In total arts organisations
in London receive 69 per cent of all private funding in the UK,
worth £449 million in 2008. However, there is now a clear
danger that London could be exposed as investment from private
sponsorship has started to decline and the capital could take
a disproportionate hit. Total private investment in London in
the last year has fallen by 8% from its previous, a record-high
figure of £477 million. This is a drop that is in line with
the UK as a whole, which saw a decrease of 7%.
10. As well as support from strategic funding
agencies like the Arts Council or Heritage Lottery Fund, local
boroughs provide significant public subsidy. This is not always
recognised. Local authority funding made a revenue investment
in 2008-09 of over £400 million. However, culture is not
statutory and so in the face of falling tax revenues, reduced
funding from central government and increasing demands on many
of their services, many fear that they will struggle to maintain
the same levels of support for the sector in the years ahead.
11. London is home to many of the national
institutions and therefore receives the bulk of public funding.
However, London is not homogenous; the level of cultural provision
and local funding differs greatly from borough to borough.
12. It is worth noting that the biggest
disparity in levels of arts engagement in the whole of the country
can be found in the capital—between Kensington and Chelsea,
which has the highest level of engagement in the United Kingdom
at 66%, and Newham, which has the lowest, at 29%. It is also the
case that levels of funding from central and local government
differ widely from borough to borough. Cultural organisations
in London also differ in size, profile and their capacity to raise
private and public funds.
RECOMMENDATIONS
— That DCMS consider the disparity of government
funding from borough to borough. Culture is not a statutory commitment
for local authorities and therefore is very vulnerable to local
authority cost cutting.
— We recommend that DCMS commission independent
research into the effects on arts and heritage of government cuts
across the board so that there is an understanding of the full
extent of the impact and how this can be best managed.
— DCMS acknowledge that it is usually the
larger organisations with established branding that can attract
private sponsorship. Smaller organisations are not in the same
position and government cuts to these organisations can mean closure
rather than restructuring.
LONDON AND
2012
13. The last two decades have been a period
of extraordinary growth and development and London's arts and
cultural institutions have made great progress in the last 25
years in terms of widening their financial base, matching public
funding with increased private investment, both from individual
donors and businesses. Consequently London now differs markedly
from the rest of the country, with far higher levels of private
finance and support. However, with the decline in private sponsorship,
abolition of the RDAs, and the proposed government cuts it will
be difficult for London to maintain this success.
14. London's cultural and creative industry
is a major contributor to tourism; it is worth about £80
billion. That is why so many ambitious companies and individuals
from across the world have relocated here. London's cultural institutions
attract significant visitors from overseas and the rest of the
UK—15.6 million per year. Surveys show that our unique mix
of rich heritage and creative energy is key to London's appeal.
15. The London 2012 Olympics is a unique
opportunity to reach new audiences from overseas and the rest
of the UK. An estimated 750-800 thousand extra people will visit
the city per day and over four billion will be watching the games
on television. It is a great opportunity to present London's arts
and culture and maintain its reputation—one of the key selling
points for London. With only two years to go it is important that
investment is sustained. The capital is the gateway to the rest
of the UK and therefore its success benefits the whole country.
Without sufficient investment and support many arts, cultural
and heritage organisations will be excluded from participating
in a once-in-a lifetime opportunity.
16. All projections show that demand for
tickets significantly outstrips supply, so cultural activity will
be a key way for people to engage and feel involved in the Games.
17. London expects to lose £375 million
in 2012 due to tourism displacement—people staying away
because they think it will be too crowded and expensive and agents
reluctant to sell London packages to main markets. Visit London
has identified culture as a key way to mitigate against this displacement,
enabling London to offer once in a lifetime cultural events to
bring people to the capital throughout the Olympic year.
RECOMMENDATION
— DCMS continue to back and support the
London 2012 Olympics, in particular the Cultural Olympiad. Also
recognise that the stability of cultural organisations will be
an important factor in the success of the cultural element of
the Games.
SENSIBLE EFFICIENCIES
AND NEW
MODELS OF
PARTNERSHIP
18. As well as using public subsidy to leverage
further funds, arts organisations are a powerful catalyst in the
Big Society. They engender a great deal of goodwill enabling them
to draw upon substantial numbers of volunteers. They have powerful
brands that attract top-class professional services (such as design
and marketing), despite shoestring budgets; and through partnerships
with businesses, charities and government agencies, they attract
significant in-kind support.
19. Many museums and galleries are already
merging their back room activities such as shipping and storing.
Film London recently formed an alliance with Paris to support
the international film sector through sharing of services and
products. Local authorities are looking at new models of working
and there is an increased appetite for shared services, joint
procurement, transferring services to trusts, outsourcing areas
of work to private contractors and so on.
RECOMMENDATIONS
— That government take action to mitigate
complexities of VAT, making it easer for organisations to adopt
this method of joint working. Organisations pursuing this route
often end up paying higher VAT.
— DCMS should consider tax incentives for
organisations seeking to share services, as well as reducing bureaucracy
on VAT.
— Government should therefore respond to
the appetite around the sector for greater coordination through
regional partnerships. This could be through regional hubs that
bring together cultural organisations and local authorities to
share resources and reduce duplication
September 2010
| 
