Written evidence submitted by the National
Campaign for the Arts (NCA) (arts 33)
1. INTRODUCTION
1.1 The National Campaign for the Arts (NCA)
is the UK's only independent campaigning organisation representing
all the arts. It provides a voice for the arts world in all its
diversity and seeks to safeguard, promote and develop the arts
and win public and political recognition for the importance of
the arts as a key element in our national culture.
1.2 The NCA is a membership organisation. To
ensure its independence, the NCA does not receive any public subsidy;
membership subscriptions provide the core funding to enable it
to carry out its vital remit. The NCA represents some 550 organisations
and individuals across the UK, ranging from small and medium enterprises
to the major, national institutions, umbrella bodies, trade associations
and unions. This response has been informed by input from our
members.
1.3 The NCA believes that the arts and culture
make an important contribution to people's lives, their communities,
their education and to the economy. Through the Manifesto for
the Arts[1]
published in June 2009 and through briefings for politicians and
the press, the NCA has acted as a voice for the arts sector, identifying
administrative, practical, and financial issues affecting the
arts and working with Government and the sector to find solutions
to problems.
1.4 The NCA welcomes the opportunity to inform
the Culture, Media and Sport Select Committee's inquiry, to report
on progress made to date and to highlight areas of outstanding
concern. The NCA has previously raised concerns with the Committee
about deep and swift cuts to the sector. This response has been
compiled in order to draw the Committee's attention to the impact
of cuts on the artistic and cultural life of the United Kingdom.
We would also welcome the opportunity to provide additional oral
evidence to the committee in due course. As the representative
organisation of arts sector organisations working the UK we believe
we could provide a valuable perspective on the issues covered
by this inquiry.
2. IMPACT OF
CUTS
2.1 The UK's arts funding model is mixed and
formed of funding from central and local government, earned income
and private funding (via trusts and foundations and philanthropy).
According to figures from Arts and Business, public funding makes
up just over half of the art sector's income, one third of income
is self-generated through box office and other earned income while
the contribution made by the private sector accounts for one sixth.
2.2 To understand the impact of cuts it is important
to understand the difference in reliance on public funding by
art forms and organisations. Some art forms are simply more resource-heavy
and costly to produce than others, such as opera or ballet for
example. For others, such as museums, fixed costs such as care
for collections and building costs cannot be magically spirited
away. Public funding forms a vital part of the equation when seeking
to raise sponsorship money for exhibitions which are costly to
mount and insure, let alone securing the necessary levels of funding
to maintain free entry. Most of the larger, national arts organisations
and museums have adept and efficient marketing and fundraising
functions which secure greater levels of earned income and philanthropy.
In many cases, the "aspirational" ratio of 30-30-30
to public, earned and private income is surpassed by organisations
such as the Royal Opera House and Tate, whose ratio of earned
and private income far exceeds their public income.
2.3 The picture is different again for smaller
and regional arts organisations, and those community organisations
working to deliver to local and community objectives. For reasons
of size, location or remit, these organisations are much more
reliant on public funding and particularly on local government
funding. It is not always as easy for these organisations to augment
their income through private donations or business sponsorship.
2.4 Arts Council England (ACE) has already had
a 5% in-year cut to its grant-in-aid budget, reducing its original
2010-11 budget by £23 million—from £468 million
to £445 million. DCMS' share of the Government's in-year
reduction was 4.1% or £88 million. As a result, all ACE Regularly
Funded Organisations (RFOs) received a 0.5%[2]
cut, except Arts and Business and Culture Creativity and Education
who bore cuts of 4%.
2.5 Arts Council has now been asked to model
a 25-30% cut across four years (along with other DCMS funded bodies).
30% would amount to a £134 million cut in ACE's grant-in-aid
budget.[3]
(Applying the blunt principle of reducing the number of RFOs by
30% would equate to the loss of over 200 arts organisations.)
2.6 These cuts are likely to effect smaller,
regional organisations more severely. Arts Council has indicated
that it will apply cuts equally across the board in the first
year, seeing this as the fairest approach to administering cuts
in what is expected to be a very short timescale to plan. However,
"equal pain" inevitably ends up having an inequitable
effect. Some organisations may be fatally damaged, limp on but
end up having to fold. This means ACE would have lost the value
of its investment in that organisation over that year. ACE is
caught between wanting to operate a fair and transparent system,
while recognising that some of its investment could end up wasted.
2.7 The NCA is also concerned about cuts at
the local level. Museums and galleries for example, are less reliant
on subsidy from ACE, and more so on financial support received
from their local authorities. Local authorities have flexibility
over discretionary budgets and so the impact on arts and cultural
expenditure will vary from council, but their budgets are even
more vulnerable as all local authorities will be cut by 25%. The
Spending Review will need to address the impacts of these cuts
to the sector too.
2.8 Despite the economic challenges, some our
members have experienced increased popularity and continued success.
In 2008-09 there was an increase in attendance at RFOs of 17%
and a 9.2% increase in RFOs rated "strong" or "outstanding"
in artistic quality.[4]
NESTA has calculated that with Government support, a 4% annual
growth rate can be achieved in the coming years by the creative
industries, double the rate of the rest of the economy, and by
2013 the creative sectors are expected to employ more people than
the financial sector.[5]
Cuts foreseen in the Comprehensive Spending Review will prematurely
halt this growth across the creative industries.
2.9 In addition to the detrimental impact such
cuts would have on local economies, we believe Britain's current
ranking of fourth out of 50 countries in terms of culture and
art[6]
would also be compromised by such changes. The Prime Minister's
recent pledge at the Serpentine Gallery on 12 August to make Britain
one of the top five tourist destinations in the world is a timely
reminder of the role arts and culture will play in this realising
this goal. Moreover, as talent nurtured in theatres and music
venues continue to win Oscars, Grammys and other awards of international
standing, the UK's reputation as a centre of excellence will also
continue to grow.
2.10 While the arts sector accepts that some
cuts are inevitable and understandable in the current climate,
deep cuts over a long period would result in the loss of many
organisations and a reduction in the ability of the public to
see or take part in the arts. It will be the loss of opportunities
to the public that will have the most damaging long-term effects.
3. COLLABORATION
ACROSS THE
SECTOR TO
REDUCE REDUPLICATION
OF EFFORT
3.1 There are already many instances of collaboration
in the sector. For example, Sound and Music[7]
was created from the merger of four contemporary music organisations.
The initiative was apparently started by looking at 12-15 different
small organisations, of which four eventually merged. Admin savings
were marginal because the organisations already had very basic
admin structures, but the merger led to an improved infrastructure
for the new organisation as well as investment of £1.2 million
from Arts Council's "Thrive" programme, some of which
went towards providing reserves.
3.2 Examples of collaborative working include
NewcastleGateshead Cultural Venues, a group of the 10 major building
based organisations in the conurbation. Gains include:
— Digital—more efficient and
effective platforms eg through recommendation engines, Social
media protocols, Intranets, web visibility, mobile platforms.
— Facilities Management—savings
through buying waste recycling, disposal contracts, electricity
and other overheads collectively.
— Human Resources—creating a
network with larger organisations providing HR support to smaller
organisations where their only resort previously would have been
lawyers.
— Finance—buying audit or merchant
services collectively or individually, sharing practice, looking
at developing trends and opportunities eg changing banks because
the rates are better, charitable discount for train travel, etc.
3.4 The NCA would like to stress that for many
of our members, especially theatres and opera houses, a large
proportion of overall cost is due to production, which cannot
be squeezed or shared because of the organisation-specific nature
of productions.
3.5 For some arts organisations, particularly
those working to deliver specific outcomes such as health, social
welfare or criminal justice, collaboration with organisations
outside the arts sector might prove more fruitful.
3.6 Savings are possible through mergers or
collaboration. They are, however, dependent on the strategic and
cultural fit of the organisations. Much hangs on the purpose and
remit of the organisations and their constitutions and it is important
to stress that collaboration or mergers are not always efficient,
effective or desirable. Forcing organisations together solely
to fit a cost-saving agenda is unlikely to bear fruit in the long
run. There are also costs in joining together (such as redundancies)
and these should be weighed against the gains. It is salutary
to note that when the five Scottish national companies were charged
with examining areas of collaboration, the only area they found
where this could work was in HR and that involved losing just
one post.
4. NECESSARY LEVEL
OF PUBLIC
SUBSIDY
4.1 The UK arts sector thrives because of its
mixed funding model. It is neither solely dependent on state aid
nor on private giving for its success and as such is a slave to
none. For every £1 that the Arts Council invests, an average
additional £2 is generated from private and commercial sources,
totalling £3 income. At a local level investment can lever
five times its worth.[8]
This is crucial if we are to have a vibrant cultural sector. The
"arm's length" principle delivers artistic independence
from the state and state funding ensures that no one wealthy individual
can threaten controversial and challenging works with closure
by removing their financial backing. Government has a vital role
in continuing to support and encourage—and indeed to protect
its investment—in this sector.
4.2 As stated in section 2 above, reliance on
public funding also varies across art forms and across the sector;
while some smaller, more regional organisations such as community
based arts projects are almost 100% reliant on public funding,
larger, national arts organisations are much less so. It is therefore
difficult to determine exactly how much public funding is required.
However, we do know that the increase in grant-in-aid, revenue
funding made available to arts organisations over the last few
years has been instrumental in stabilising and strengthening the
sector and the rewards from this in the public's experience of
the arts and the UK's global reputation have been clear.
5. CURRENT FUNDING
STRUCTURE
5.1 The NCA supports the existence and remit
of Arts Council England on the grounds that public funding for
the arts should be distributed by a body operating at arm's length
from the Government, whose responsibility it is to ensure that
the funding available supports artistic work of the highest possible
quality and makes this accessible to the public. The NCA recognises
that ACE is responsible for making strategic funding decisions
and supports its right to do so independently.
5.2 One of the key functions of a national,
strategic body is to ensure that there is adequate provision of
venues and art forms across the country to ensure people have
good access to the arts. This requires a national perspective
supplemented by good, on-the-ground knowledge of provision and
needs in the regions. While there may be ways of delivering efficiencies
within a national/regional structure, it will be important to
ensure good local knowledge is communicated effectively up the
chain and national and central initiatives communicated regionally
to ensure decisions are made on the best possible evidence.
5.3 Local government is the second most important
funder of the arts, contributing approximately £220.5 million
in 2009-10 in England and Wales. The degree to which local authority
arts services provide support and facilities varies according
to the value (actual and potential) that they ascribe to the impact
of the arts on local communities. As funding from local authorities
is discretionary, each local council or regional authority will
have its own system of grant funding. Cultural budgets vary enormously.
5.4 At least 10% of all authorities in England
and Wales have lost their arts services since 2000. The withdrawal
of local authority support and funding for the arts is expected
to worsen, as spending cuts are likely to fall heaviest on non-statutory
services such as culture and leisure. Many arts organisations
are co-funded by ACE and the local authority. In this, ACE plays
a vital role in "shoring up" a local authority's commitment
to the arts. The NCA believes that the DCMS should also play a
greater part in supporting arts at the local level by highlighting
the economic and social benefits that arts and culture bring to
local places, or by providing incentives or good reasons for local
authorities to retain funding.
5.5 The NCA would like to see more flexibility
in funding mechanisms. Currently, arts organisations are either
regularly funded or they are not. The difference between the two
states is absolute, although non-RFOs do have greater access to
lottery funds. We know that Arts Council is looking to develop
different funding streams which will allow for a greater flexibility
in the portfolio. We support this and wait to see further detail.
5.6 We would also like to see more flexibility
in the duration of funding agreements. A three year funding cycle
is too short for many organisations who have to plan and commit
to programmes and expenditure even though there is not always
the guarantee that their funding will be secure. For some, it
may make sense for funding agreements to be extended to five or
even 10 years, although long-term or continuous funding should
never be seen as an organisation's right.
5.7 In light of expected spending cuts and changes
to the apportionment of National Lottery Shares, the ratio of
grant-in-aid to lottery-funding available to ACE to distribute
is expected to change from roughly 85:25 to nearer 60:40. This
change will have implications on what ACE is able to fund and
how, given that different rules apply to lottery funding.
6. IMPACT OF
RECENT CHANGES
TO NATIONAL
LOTTERY SHARES
ON ARTS
AND HERITAGE
ORGANISATIONS
6.1 The diversion of funds from the lottery
to the Olympics had a significant, detrimental impact on existing
grant funds. The Arts Council England Grants for the Arts fund
fell from £83 million in 2006-07 to £54 million in 2007-08,
a reduction of 35 percent. This had a dramatic effect on the sector
and caused a hiatus in the development of artists and arts projects.
6.2 The NCA welcomes the Department for Culture,
Media and Sport's commitment to restore the shares of the National
Lottery Distribution Fund to 20% for each of the good causes of
sport, heritage and the arts. This would benefit the arts by 4%.
The proposed changes would see an increase in the apportionment
of shares to 18% on 1 April 2011, rising to 20% on 1 April 2012.
This stepped change would be bearable if any potential cuts to
the grant-in-aid budget were not front-loaded. If deeper cuts
are made early in the funding cycle, then there is a case for
accelerating the increase.
6.3 Lottery funding provides the arts with the
ability to reach out beyond their core functions and audiences
through projects that have a wider community and societal benefit.
Increasing the arts lottery share will ensure that more of these
activities can take place.
6.4 The NCA is keen to ensure that the increase
in lottery shares is not used as a reason to lower public funding
to the arts in future. The principle of additionality must remain,
whereby the money provided from the lottery is not seen as a substitute
for but a supplement to existing Government spending.
7. WHETHER LOTTERY
POLICY GUIDLELINES
NEED TO
BE REVIEWED
7.1 It is important to reiterate the distinction
between the type of work supported by core grant-in-aid funding
and that supported by Lottery funding which complies with different
rules. We believe the current policy guidelines are adequate and
do not need to be reviewed.
8. IMPACT OF
RECENT CHANGES
TO DCMS ARMS'
LENGTH BODIES
8.1 The NCA would like to draw the Committee's
attention to the significant structural changes that ACE has twice
undergone in recent years. These have been the result of efficiency
drives among DCMS' arm's length bodies. The cuts announced by
DCMS and the emphasis on making savings through ACE's operational
budget will force ACE to look inwards once again instead of concentrating
its resources on developing the sector.
8.2 These cuts and restructuring exercises now
call for a serious and fundamental review of what type of organisation
and funding body Arts Council England should be. At present, the
expectation seems to be that ACE must simply continue to do all
that it does, and more, with much less. This is clearly an insupportable
expectation. Arts Council has started exploring this issue and
asking these questions of the sector in its consultation on its
10 year strategy, which is due to be published later in the autumn.
The NCA has responded that ACE should do much more in partnership
with other organisations and potentially contract out or delegate
work to other organisations that may be better placed, or better
networked, to deliver.
8.3 The NCA believes however, that equal thought
also needs to be given to DCMS' own role and remit. It has been
some years since the creation of the Department and in that time
(as far as we are aware) there has been no serious attempt to
address the arms' length principle and to identify those areas
of policy or practice that should remain strictly within the purlieu
of ministers and those that should sit in an arm's length body.
8.4 This becomes even more urgent with the decision
taken by ministers earlier this year to abolish the Museums, Libraries
and Archives Council and the UK Film Council. For example, many
of the MLA's essential and core functions will need to continue.
The NCA suggests that it would make sense for the Department to
absorb the responsibility and remit for key statutory functions
such as the Government Indemnity Scheme, Acceptance in Lieu and
the Reviewing Committee on the Export of Works of Art, while other
functions such as improving the standards and efficiencies of
museums, libraries or archives could more sensibly be delegated
to other agencies.
8.5 We would also like to raise member concerns
that in addition to distributing funds, the MLA and Film Council
also provided specialist knowledge to practitioners and artists
in their field of work. We would therefore like assurances from
the DCMS that these functions and support networks will be made
available elsewhere.
8.6 This inevitably places Arts Council England
in the frontline for potentially assuming more, and wider, responsibilities
from both the MLA and UKFC. If this is to be the case, much greater
clarity on roles, purpose and objectives needs to be defined,
as well as clearer demarcation of remit and responsibility between
the department and its agencies.
8.7 The assumption of any additional responsibilities
or functions inevitably brings resource implications and requirements.
These must be fairly and carefully apportioned to ensure good
and effective governance. It will be important to ensure that
available Government funds are properly managed especially as
DCMS and ACE face their own cuts and staff capacity is reduced
9. THE ROLE
OF PHILANTRHOPY
9.1 Philanthropy plays a key role in civil society;
it makes the link between the private individual and the public
realm. Private giving to the arts, culture and heritage can encourage
risk and innovation as it is not constrained by state guidelines.
As quoted in the document Private Giving for the Public Good,
(of which NCA was a contributor and a signatory) "there
are 68 billionaires living in Britain and a hundred new millionaires
are being created every day". Nonetheless, "since 1992
charitable giving has actually fallen by 25% as a percentage of
GDP."[9]
9.2 The NCA believes more could and should be
done to encourage more private giving into the arts, by the sector
and by Government, and we welcome the Minister's intention to
explore this more fully. Nevertheless, we caution against over
reliance on the private sector as the panacea to replace government
spending.
9.3 We contend that donors—individuals
and business alike—want to place their investment in a "sound
bet". They want their funding to provide the "icing
on the cake" rather than the raw ingredients. Private money
tends to follow public funding; it is that element which helps
to underscore the confidence in an organisation. Cuts to public
funds, therefore, will not necessarily lead to a boost in private
giving but could have the opposite effect.
9.4 Many museums and galleries across the UK,
including our major national museums, are increasingly reliant
on private funding to purchase key acquisitions. Even so, the
ability of UK institutions to outbid their rivals from the US
or Europe is ever diminishing, with the result that many UK works
of art or items of historical value are lost to the nation.
9.5 The NCA further believes that over-reliance
on philanthropy runs the risk of marginalising organisations not
based in London or other major cities. Of all the money that is
donated to culture 65% goes to organisations in London. Scotland
only receives 7%, Wales 3%, with the remaining 24% spread among
the English regions.[10]
It is significantly easier for larger and metropolitan organisations
to attract funding of private donors. When looking to increase
philanthropy, it will be important to recognise the real and significant
difficulties faced by smaller, less well-known organisations.
9.6 Finally, it is important to note that while
both business and individuals can play a role in arts funding,
historically in Britain this funding has been subject to changing
interests and priorities of business and individuals. Experience
of sponsorship is that it requires a high level of servicing in
order to ensure the desired outcome for both business and the
arts organisation, so it brings significant costs as well as benefits,
again making it only possible and realistic for larger organisations
to pursue.
10. TAX INCENTIVES
10.1 Individual giving is a significant and
vital source of private income for the arts in the UK but in order
to attract this funding it is necessary for tax concessions to
be created and made more generous.
10.2 The NCA supports Gift Aid and particularly
the retention of the current higher rate tax benefit but the system
could be made simpler for organisations to claim. Our own member
research showed that a significant proportion of organisations
eligible to claim gift aid had not done so because of "operational
or administrative" reasons[11]
underlining claims that the system is burdensome.
10.3 There is further aspect to Gift Aid
and also Payroll Giving Schemes, which is that while some arts
organisations are charities, not all are. Many are non-profit
companies for which charity status would either not be appropriate
or again, administratively burdensome. As legislation currently
stands, only registered charities are able to take advantage of
the above measures. The NCA would like to explore initiatives
that may allow organisations such as these to benefit from Government
incentives to private donors.
10.4 The ability to make lifetime legacies with
appropriate tax reliefs would be the single most significant breakthrough.
The Acceptance in Lieu scheme provides a model, whereby it would
be possible to apply the same principles but to living donors.
10.5 A corporation tax system that promotes
start-ups, innovative and high-growth businesses will also be
important for the future success of the arts sector.
11. CONCLUSIONS
11.1 Less than 0.1% of the total Treasury Budget
is spent on the arts. The current level of funding for the arts
costs 17p a week per person.[12]
In return we have world-class arts and artists, a sector that
gives Britain an international edge as an exciting and creative
place to live, work and do business, and the largest cultural
economy in the world related to GDP.
11.2 The impact of cuts to the sector will obviously
depend on the speed and depth with which they are executed. As
we have stated above, the arts sector is not expecting to escape
cuts, however the NCA is clear that the health of the sector rests
on a fragile "ecology". Large and front-loaded cuts
could result in a swift spiral of decline in the sector—not
only in audiences, quality and talent, but also in the impact
on our creativity as a nation and on Britain's world standing.
September 2010
1 A copy of the NCA's Manifesto for the Arts, produced
last June following lengthy and open consultations with the arts
sector, is available for download here: http://bit.ly/bpO4RP Back
2
ACE was able to reduce the immediate impact on the sector due
to use of its historic reserves. If this had not been possible,
the sector would have been subject to cuts of nearer 3%. Back
3
Arts Council, Why the Arts Matter http://www.artscouncil.org.uk/about-us/why-arts-matter/ Back
4
Arts Council England Annual Report 2010. Back
5
NESTA report on Creative Industries, 2009. Back
6
Nation Brand Index, 2009. Back
7
See: http://soundandmusic.org/about Back
8
ACE Toolkit, Why the Arts Mattter: http://www.artscouncil.org.uk/about-us/why-arts-matter/ Back
9
Private giving for the Public Good published 2008. Back
10
Arts and Business Private Investment in Culture Survey 2006-07. Back
11
NCA Private Giving survey, June 2008. Back
12
ACE Toolkit, Why the Arts Matter: http://www.artscouncil.org.uk/about-us/why-arts-matter/ Back
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