Written evidence submitted by the National
Trust (arts 48)
SUMMARY OF
MAIN POINTS
— The arts and heritage sectors operate
through a mixed economy.
— Private sector support is vital,
but market failure means that Government also has an important
role in maximising the benefits that derive from a healthy cultural
sector.
— The historic environment has suffered
real-terms reductions in Government subsidy over the last decade.
All public sector bodies have a role to play in tackling the deficit,
but to disproportionately penalise the historic environment further
is likely to lead to increased costs in the future.
— We fully support the Government's
proposal to restore the original shares apportioned to the Lottery
good causes, including the arts and heritage, and the Government's
recognition of the importance of the additionality principle.
— Attention needs to be paid to the
transfer of some crucial functions within the Museums Libraries
and Archives Council, once that body ceases to operate after April
2012.
— Care should also be taken over the
possibility of merging the Heritage Lottery Fund into English
Heritage. There are some good reasons why the two bodies currently
operate independently of one another.
— More might be done by Government
to improve the conditions in which fundraising for arts and heritage
takes place. This might be done by making the administration of
Gift Aid simpler and more efficient, improving the conditions
for lifetime giving, and removing the restrictions imposed on
public sector bodies through the end-year flexibility rules.
INTRODUCTION
1. The National Trust is one of Europe's
largest conservation charities, with 3.8 million members and an
annual turnover of around £400 million. Our pay-for-entry
sites attract over 17 million visits each year and comprise over
300 historic properties and a collection of 2.5 million separate
items, much of it of highly significant historic and artistic
value. Our experience and the scale of our operations may therefore
bring a unique perspective to bear on the issues that the Committee
have declared an interest in exploring.
FUNDING
Questions:
What impact recent, and future, spending cuts
from central and local Government will have on the arts and heritage
at a national and local level?
What level of public subsidy for the arts and
heritage is necessary and sustainable?
Whether the current system, and structure, of
funding distribution is the right one?
2. The arts and heritage sectors operate
through a mixed economy. Much activity is driven by the contributions
of private individuals—paying for tickets or admission,
becoming members, donating fundraising contributions, buying goods
and services, or, in the case of heritage and the historic environment,
owning and caring for the assets themselves. This private sector
approach to funding arts and heritage is to some degree exemplified
by the National Trust's own business model. Nearly a third (31%)
of our income derives from the subscriptions of our members, with
the rest of our income coming from legacies (16%), enterprises
(14%), investments (9%), rents (9%), catering operations (8%),
admission fees (4%) and fundraising appeals (3%).[13]
Just 6% of our total income is attributed to grants provided by
the public sector and others, although of course we also benefit
greatly from the tax advantages that come with our charitable
status.
3. Taking a broader perspective, however,
it is widely accepted that the health of the arts and heritage
sectors depends on public subsidy of one sort or another. This
is because of the market failures that are present within these
sectors, given the "public good" characteristics of
the services that they provide. At the same time, heritage and
the arts provide significant economic and social benefits: heritage
tourism is said to be worth over £20 billion a year to the
UK economy.[14]
Such "externalities" are also evidence of market failure,
since Government intervention is required to ensure that their
full value is realised.
4. Where market failure can be demonstrated,
a measure of ongoing public sector support can be justified in
the interests of maximising the overall level of benefits to society.
Conversely if this support is withdrawn, and service provision
is left solely to the commercial sector, there will inevitably
be a diminution in the overall level and quality of provision.
5. The welcome improvements to funding for
the cultural sectors over the last 15 years have seen increases
in grant in aid to Arts Council England, the reintroduction of
free admission for the national museums and galleries, and new
schemes such as Renaissance for the Regions. These have led to
all sorts of benefits, not least the increased levels of participation
shown in visitor figures to the major museums, and the competitive
economic advantages that derive from a vibrant and creative cultural
sector.
6. Not all DCMS sectors have benefited equally
over this period, however. In particular, the historic environment
has suffered from cuts in the grant in aid allocation that has
gone to English Heritage. In real terms, English Heritage's grant
in aid fell by more than 11% in the 10 years from 2000-01, while
Arts Council England's grant in aid increased by 41% over the
same period.[15]
7. This has of course happened at the same
time as the Heritage Lottery Fund has made a transformative difference
to the support available to heritage of all kinds. But the additionality
principle means that Lottery funds should never be regarded as
substitutes for funding provided through taxpayers' money. The
real-terms reduction in support for English Heritage has, instead,
meant straightforward cuts in the level of support that was previously
available, for instance in the form of grants to the private owners
of historic properties, for essential conservation and maintenance.
8. We know that the Government is committed
to tackling the public sector deficit and that DCMS and its Arm's
Length Bodies are facing potential cuts of 25-40%. This, ultimately,
is a political judgement, which should also be viewed in the context
of the Government's aspirations for building a Big Society. However,
there are likely to be costs incurred as a consequence of cuts
of this scale, which we fear could create longer-term problems.
In particular, further cuts in English Heritage's grant-in-aid,
as well as in local authority resources, are likely to mean:
— more buildings put at risk;
— less support for education and outreach
within the historic environment sector;
— fewer conservation officers at local
authority level, leading to poor decision making;
— the new Planning Policy Statement
on the historic environment (PPS5) not being implemented as fully
and effectively as it should be.
LOTTERY
Questions:
What impact recent changes to the distribution
of National Lottery funds will have on arts and heritage organisations?
Whether the policy guidelines for National Lottery
funding need to be reviewed?
9. The Lottery is a powerful force for change
within the arts and heritage sectors. The Heritage Lottery Fund,
for example, has truly transformed perceptions of the value of
heritage and its relevance to the lives of individuals and communities.
By refusing to define in any restrictive way the types of "heritage"
that it funds, the HLF has helped to broaden understanding of
the manifold ways in which the past is a living part of today's
society.
10. We therefore fully support the Government's
proposal to restore the original shares apportioned to the good
causes, including the arts and heritage. This could have powerful
benefits in promoting the Big Society, since arts and heritage
have a major role to play in galvanising community action and
support.
11. We also welcome the Government's recognition
of the importance of the additionality principle in relation to
the Lottery. Lottery funding should not be a substitute for Government
subsidy, and nor should any increase in the shares apportioned
to the good causes of arts, heritage and sport be used as a justification
for reducing Government support in these areas. Decisions on Lottery
grants should continue to be made by Trustees operating independently
from Government.
STRUCTURES
Questions:
What will be the impact of recent changes to DCMS
arm's-length bodies—in particular the abolition of the UK
Film Council and the Museums, Libraries and Archives Council?
12. The Government's decision to abolish
the Museums, Libraries and Archives Council by April 2012 leaves
a number of as-yet unanswered questions about how some key (and
in some case statutory) functions will be delivered going forwards.
These include the expert advice that is needed in handling Acceptance
in Lieu transfers and the Government Indemnity Scheme, the professional
understanding that underpins the process of museum accreditation,
and the support for regional museums provided through the Renaissance
in the Regions programme. We expect that arrangements for the
transfer of these functions to another body should be undertaken
in a way that seeks to preserve as far as possible the expertise
that resides at a professional level within MLA. If this expertise
is lost, it would represent a huge net cost to the taxpayer, as
well as potentially jeopardising the survival of valuable parts
of our heritage.
13. The DCMS is also considering the possibility
of merging the Heritage Lottery Fund with other of DCMS's heritage
bodies, in particular English Heritage, as part of the forthcoming
Public Bodies Bill. The pros and cons of such a move would need
to be considered in great detail before any changes are made.
For example, while the proposal may offer some marginal savings
(in terms of overhead costs), it raises some difficult questions
about keeping the Lottery-giving powers of any new body distinct
from its regulatory powers (for example within the planning system)
as well as its more commercial role in operating the existing
English Heritage visitor attractions. Moreover, as has been noted,
the Heritage Lottery Fund has a far broader definition of "heritage"
than English Heritage, and operates UK-wide (rather than solely
in England).
PHILANTHROPY
Questions:
Whether businesses and philanthropists can play
a long-term role in funding arts at a national and local level?
Whether there need to be more Government incentives
to encourage private donations?
14. Businesses and philanthropy can play
a very important part in supporting heritage and the arts at all
levels. Our recent acquisition of Seaton Delaval in Northumberland
is a good example. The fundraising campaign led by the National
Trust saw over £1 million raised through the donations of
people in the local community, a clear demonstration of their
commitment and support for the property and its acquisition. Local
businesses were also generous in their support, as was the Regional
Development Agency. This experience demonstrates what can be done
when individuals, businesses and charities work together, underpinned
by support from the Government through the Acceptance in Lieu
scheme (administered by the Museums, Libraries and Archives Council
on behalf of HM Revenue and Customs).
15. We agree that more might be done by
Government to improve the conditions in which fundraising for
arts and heritage takes place. Making the administration of Gift
Aid simpler and more efficient, for example, would help to ensure
that more people take advantage of it, and understand the difference
that it makes. There could also be benefits in adjusting fiscal
incentives in ways that would promote lifetime giving to the arts
and heritage sectors.
16. For organisations within the public
sector, a potential barrier to increasing income from philanthropic
sources is the complexity of the rules around end-year flexibility
that the Treasury imposes across all Arm's Length Bodies. These
rules are designed to ensure Government can keep control of the
overall level of public expenditure, but they serve also to restrict
those bodies' use of funds held in reserves, which might have
been raised from entirely private sources. The problem particularly
affects DCMS's Arm's Length Bodies, since so many are established
as charities, and are therefore required by law to hold adequate
reserves or to raise funds from private sources for furthering
their charitable purposes. Restrictions on the use of these funds
potentially means the Government is operating against the terms
of charity law, and also provides a disincentive for donors to
give without fear that their funds will be effectively "frozen".
DCMS and Treasury should discuss whether there might be a case
for giving Arm's Length Bodies in the arts and heritage sectors
more freedom to raise and spend money drawn from private sources
without risk of contravening rules that were designed primarily
to control against excessive burdens on taxpayer's funds.
September 2010
13 National Trust Annual Report. Back
14
Investing in Success (HLF/Visit Britain, 2010). Back
15
Figures from DCMS. Back
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