Written evidence submitted by the Association
of British Orchestras (ABO) (arts 125)
EXECUTIVE SUMMARY
— The arts have benefited from sustained
public investment over the past 15 years. This public investment
is tiny in relation to overall public spending.
— The UK's mixed economy model of arts
funding is effective and efficient.
— The maintenance of both central and
local government funding for the arts is essential for the health
and cultural wellbeing of the nation.
— Private funding cannot replace a
shortfall in public funding for the arts.
— The maintenance of Arts Council England
as an independent public body for the distribution of public funding
of the arts is essential.
— The Government's proposed changes
to the distribution of National Lottery funds are welcome.
1. Introduction
1.1 The Association of British Orchestras (ABO)
is the representative body for professional orchestras in the
UK. Its members range from the major symphony orchestras (including
the BBC) to chamber, opera and ballet orchestras. Our vision is
of a society where orchestral music is valued as a core component
of contemporary culture.
1.2 The ABO is pleased to submit evidence to
this inquiry as a long standing stakeholder in the full range
of issues impacting upon funding for the arts. Our evidence is
submitted, as a representative body, on behalf of the entire orchestral
sector.
1.3 Our evidence will inevitably focus on the
arts rather than heritage. However, it should be noted that orchestras
to some extent have a "heritage" role, preserving the
canon of great works from the past, while also playing a role
in nurturing contemporary composers and artists. In effect, it
is analogous to combining the role of museum and contemporary
art gallery. In 2008-09 British orchestras commissioned 113 new
works and put on 132 first performances.
1.4 It is important to explain the complicated
mix of funding for professional orchestras. This investment has
helped them not only to perform great music in the traditional
concert hall but to extend their reach into schools, rural and
hard-to-reach communities, as outlined in the ABO's publication
Beyond The Concert Hall, and to be in the vanguard of innovation
in digital delivery and new concert formats, as outlined in the
ABO's publication Orchestras into the Future.
1.5 Arts Council England funds eight symphony
orchestras and six chamber orchestras (two of which are specialist
contemporary music ensembles and one a specialist period instrument
ensemble), across seven Arts Council regions. While there are
four London self-governing symphony orchestras funded by Arts
Council England, this funding is also intended to enable them
to develop residences and tours outside London. So, for example,
the Philharmonia Orchestra has residencies in Bedford, Leicester
and Basingstoke, the Royal Philharmonic Orchestra in Croydon,
Northampton, Lowestoft, Crawley and Reading, and the London Philharmonic
Orchestra in Eastbourne and Brighton.
1.6 Over recent funding rounds in 2004 and 2007
there has been a steady decrease in the number of chamber orchestras
funded by Arts Council England. These chamber orchestras have
survived without public funding, albeit on a reduced level of
activity. Of increasing importance has been the role played by
Orchestras Live, the development agency for orchestral music in
England, which has successfully enabled partnerships between and
levered funding from local authorities and promoters to extend
the reach of orchestras into those parts of the county not served
by a resident symphony orchestra.
1.7 In Scotland, two orchestras are funded
directly by the Scottish government, to a more generous extent
than their equivalents in England to enable them to tour widely
across the nation. A third orchestra is funded by Creative Scotland.
1.8 The BBC National Orchestra of Wales is jointly
funded by the BBC and the Arts Council of Wales. Chamber orchestras
in Wales have relied solely on funding from the National Lottery.
1.9 In addition, there are the orchestras of
the opera and ballet companies, which are also beneficiaries of
public funding through the public investment in the opera or ballet
company, funded by their respective Arts Council or by the Scottish
Government.
1.10 In respect of this enquiry, we are excluding
the BBC performing groups from the evidence we are submitting.
1.11 Funding from local government varies from
orchestra to orchestra. Some, such as the Bournemouth Symphony
Orchestra, have funding agreements with multiple local authorities.
More crucially, local government is often the primary source of
funding for the concert halls and local promoters.
1.12 Public funding for orchestras tends to
account for anything between 10% and 55% of income, depending
on the orchestra. The rest is generated by a mix of earned income
from ticket sales, commercial engagements, foreign tours, broadcasting
fees and recordings, and private support (sponsorship and individual
giving). In recent years the income from recordings has declined
as record labels have suffered from the impact of illegal file-sharing
and in consequence are less able to invest in classical music
recordings.
1.13 There are a number of orchestras, some
of international renown, in membership of the ABO which do not
receive direct funding from their respective Arts Council, and
which therefore rely exclusively on earned income and private
support. They are indirect beneficiaries, however, of the funding
for venues and from Orchestras Live, and are part of the delicate
fabric of public and private support for the arts. These orchestras
are concerned that their viability may be threatened by increased
competition for the limited pot of corporate sponsorship and individual
giving.
2. 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
2.1 The ABO would contend that public funding
for the arts and heritage had reached a level in 2008-09 that
enabled arts and heritage organisations to achieve a healthy balance
between public subsidy, private funding and earned income, under
the "mixed economy" model. While concerned at the number
of chamber orchestras that had been "disinvested" by
Arts Council England in 2004 and 2007, the ABO was pleased that
investment in the symphony orchestras and opera and ballet companies
had remained stable. The consequence of this sustained investment
and funding model was that British orchestras presented over 3,100
concerts in 2008-09, to over 3.4 million people.
2.2 The cuts imposed in 2009-10 by both Arts
Council England (0.5% to their regularly funded organisations)
and by some local authorities have already led to a contraction
in orchestral activity, with fewer concerts planned for 2010-11
and beyond. We have already seen the impact of public spending
cuts in Scotland, with Scottish Opera proposing to halve the working
hours and salaries of its orchestral musicians.
2.3 This will be exacerbated hugely by the impending
spending cuts for 2011-12 through to 2014-15. Arts Council England
has already written to their regularly funded organisations recommending
they plan for a reduction of 10% in subsidy for 2011-12, and we
await nervously what level of cuts will follow. We are working
on the assumption that the total contraction in funding for the
arts could be as much as 30%.
2.4 The consequence of this will be that there
will be a serious contraction in the amount of concerts, opera
and ballet productions available to the public. It is simply unimaginable
how our members would cope with this level of cuts and the disappearance
of some internationally renowned orchestras, opera and ballet
companies would be inevitable.
2.5 This of course would also have knock-on
effects in terms of unemployment of artists and administrators,
loss of tax and national insurance receipts and a rise in welfare
payments. It is arguable that the amount saved by cutting the
arts, which would make a negligible impact on reducing the national
debt, would simply be offset by the increase in costs associated
with rising unemployment and decline in economic activity.
2.6 It is important to note that orchestras
and opera companies are in a particularly difficult position in
that artists such as conductors, soloists and singers are contracted
anything from two to four years ahead. They therefore have contractual
obligations and a rapid decrease in public funding would be catastrophic
and place them in a position of insolvency.
2.7 It is also important to point out that an
orchestra carries large fixed costs in terms of human resources.
An orchestra may require the employment of upwards of 100 musicians
on fixed contracts, in addition to the management team. Unlike,
say, a theatre company, an orchestra cannot simply choose to perform
works with fewer musicians. If a Mahler symphony requires 100
musicians on the concert platform, that is the number that must
be fielded. And the public, of course, expect a symphony orchestra
to play the symphonic repertoire. The problem with carrying such
a high level of fixed costs is that the same outlay of expenditure
on human resources is required regardless of whether activity
is reduced, and a reduction in public subsidy would create an
imbalance in the "value for money proposition" expressed
as a ratio of fixed costs to output.
2.8 Arts Council England's Stabilisation programme
made a massive contribution to the health of some our leading
orchestras and other arts organisations, in response to the pressure
placed on them by cash standstill revenue grants in the 1990s
which had made it increasingly difficult for them to manage their
business on a sustainable basis. Not only did it provide additional
funding, but also developed their business planning and internal
operational reform. The success of our orchestras today, and their
ability to compete in a global marketplace, is directly the result
of that investment of lottery funds. However, we should point
out the obvious lesson that a shortfall in public subsidy inevitably
leads to a build up of deficits for arts organisations such as
orchestras that carry a high fixed cost in artistic personnel.
2.9 An orchestra is not just about playing great
music on the concert platform. Orchestras have been pioneers in
developing education and community programmes, that serve both
to develop new audiences and to complement music education in
schools. Much of this work is celebrated in the ABO's publication
Unlocking Potential: Education and the Orchestra, with over 400,000
young people in England and Scotland benefiting from engagement
with orchestral musicians in both the classroom and the concert
hall. However, it is important to stress that while the infrastructure
that supports an orchestra's education department may well be
supported by the orchestra's public subsidy, the projects themselves
will often be funded by trusts and foundation or by fees from
schools/local authorities.
2.10 If concert halls, venues and local promoters
suffer significant funding cuts from their respective local authority,
the irony could be that there continue to be British orchestras,
but an acute shortage of venues in which to perform in. It is
vital to recognise the delicate balance that exists between local
authority and Arts Council funding. If one is cut, the other will
inevitably follow.
2.11 It is also important to point out that
the cuts will not just have an impact at a national or local level,
but at an international level as well. Orchestras are cultural
ambassadors and operate within a global marketplace, and to cover
shortfalls in other areas of earned income have increased the
amount of foreign touring they do. This puts them in competition
with other European orchestras, which are publicly funded to as
much as 85% of their income. Reducing the amount of public investment
in British orchestras will put them at a commercial disadvantage,
exacerbated by the recent rise in the value of sterling. Their
success can be judged by the fact that in 2008-09, British orchestras
played in 39 different countries and performed in 500 concerts
overseas.
2.12 The arguments for the financial return
on public investment in arts and heritage organisations, including
orchestras, have been well-rehearsed. They are generators of income
from tourism, as evidenced in Visit Britains' recent report Culture
and Heritage Topic Profile. Performing arts organisations
also, of course, generate VAT receipts from ticket sales. Recent
research into the impact of Welsh National Opera on the Welsh
economy reveals the company contributes £22.5 million to
the country—five times its current annual revenue funding
of £4.5 million from Arts Council of Wales.
2.13 It is salutary to compare the UK government's
decision to cut spending on culture with the USA's enlightened
inclusion of the arts in its fiscal stimulus plan. President Obama's
remarks at the 6 December Kennedy Center Honors included the following
statement of support for the arts: "In times of war and sacrifice,
the arts—and these artists—remind us to sing and to
laugh and to live. In times of plenty, they challenge our conscience
and implore us to remember the least among us. In moments of division
or doubt, they compel us to see the common values that we share;
the ideals to which we aspire, even if we sometimes fall short.
In days of hardship, they renew our hope that brighter days are
still ahead. So let's never forget that art strengthens America.
And that's why we're making sure that America strengthens its
arts. It's why we're reenergizing the National Endowment of the
Arts. That's why we're helping to sustain jobs in arts communities
across the country. It's why we're supporting arts education in
our schools, and why Michelle and I have hosted students here
at the White House to experience the best of American poetry and
music."
3. What arts organisations can do to work more
closely together in order to reduce duplication of effort and
to make economies of scale
3.1 Although it seems tempting to assume that
there is potential for significant savings from mergers and sharing
back office functions, there is a body of evidence that shows
this not to be case. Evaluation of Arts Council England's Thrive
programme revealed that for a successful merger to take place,
significant additional one-off investment is required, for which
there is no obvious source of funds. And merger does not necessarily
generate a saving in subsidy or running costs; it merely enables
the merged organisation to do more with the same level of subsidy.
3.2 In addition, a study of Scotland's National
Performing Companies was undertaken during 2007-08 into the likely
impact of combining backroom HR and payroll services. This reported
that whilst it was possible that ultimately savings could have
been made through this process in future years, the cost of setting
this service up was deemed to be prohibitive and contrary to the
expectations of such combined working.[49]
4. What level of public subsidy for the arts and
heritage is necessary and sustainable
4.1 The answer to this question is that it depends
on the individual organisation. Arts Council England will make
a judgement on the level of subsidy required based on the mission,
need and quality of the organisation.
4.2 The level of funding for Arts Council England
in the funding round 2008-11 was in our opinion at the right level
for the long-term sustainability of its regularly funded organisations.
5. Whether the current system, and structure,
of funding distribution is the right one
5.1 We are tempted to argue that if there wasn't
an Arts Council England, one would have to invent it. The model
adopted in Scotland of five national performing companies, funded
directly by the Scottish government, provides an interesting comparison,
but it is hard to see how orchestras in England would benefit
from a similar approach except for those attached to a national
opera or ballet company.
6. What impact recent changes to the distribution
of National Lottery funds will have on arts and heritage organisations
6.1 It is important to stress that changes to
the National Lottery are currently at the consultation stage and
there is no guarantee the proposed return to the original shares
will be adopted.
6.2 Should the arts share return to 20%, this
should mean an additional £50 million of lottery funding
for the arts will be forthcoming by 2012-13.
6.3 However we are mindful of the principle
of additionality, and are concerned that any increase in lottery
funding may not replace the decrease in revenue support for orchestras.
6.4 We believe it is important that lottery
funding provides some capacity for strategic investment to allow
arts organisations to develop. The Thrive programme, as an example,
used lottery funding to help generate mergers, and additional
investment will be required in the coming years to develop digital
distribution and implement greener working practices.
7. Whether the policy guidelines for National
Lottery funding need to be reviewed
7.1 We are supportive of the principle of additionality
and see no need for this to be reviewed.
8. 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
8.1 The operation of these non-departmental
public bodies has no direct impact on British orchestras. However,
we would be concerned if responsibility for the work carried out
by these two bodies was passed on to Arts Council England without
the provision of sufficient additional resources, thereby impacting
on the amount available to support performing arts organisations.
9. Whether businesses and philanthropists can
play a long-term role in funding arts at a national and local
level
9.1 Businesses and philanthropists already play
a significant and valuable role in supporting arts organisations
at national and local level. As some of the leading philanthropists
have made clear, however, in recent correspondence with the Secretary
of State for Culture, Media and Sport, their contribution is already
generous and they would not take kindly to being taken for granted
as a quick fix for a substantial cut in public funding. What a
philanthropist gives can all too easily be taken away.
9.2 Corporate sponsorship has been a source
of income for arts organisations for many years but evidence from
Arts and Business has shown, not surprisingly, a decline during
the recent recession.
9.3 Another important source of private support
is trusts and foundations. However, these have suffered in recent
years from the decline in their investments and reduction in yields,
reducing the amount they can make available in grants. In addition,
grants can tend to be focused on education and community work,
rather than on the main body of an orchestra's work.
9.4 It is important to note that Arts Council
England created the Sustain Fund in 2009 to enable lottery funding
to be used to cover shortfalls in earned income and private support
that resulted from the recession. This proves that private support
declines during a recession, and therefore should not be seen
as a stable long-term solution.
9.5 There has been much talk of endowments as
a replacement for public subsidy. However, evidence from the USA
has shown the danger of an over-reliance of endowments, with the
collapse in the markets leading to both a reduction in the capital
value of the endowments and in income. This has led to orchestras
in the USA having to re-negotiate contracts with their musicians,
industrial unrest, contraction in activity, and cessation of operation
altogether.
9.6 This is not to say that endowments do not
have their place in the UK mixed economy funding model. They should,
however, be seen as one tool in the toolkit.
9.7 Arts organisations already work their hardest
to secure private support and it is difficult to see how they
can "redouble their efforts" at a time of funding cuts,
especially as the cuts will inevitably lead to a reduction in
the workforce. It is perhaps rather obvious, but for an arts organisation
to raise funds, it needs to employ fundraisers.
10. Whether there need to be more Government incentives
to encourage private donations
10.1 The Treasury is currently carrying out
a review of Gift Aid. The ABO and its members support the retention
of the Gift Aid system, in particular the retention of the higher
rate tax benefit, with some simplification of its bureaucracy.
We also believe "lifetime legacies" should be explored
as a mechanism for helping build endowments.
10.2 There has been talk of adopting "US
style" fundraising in the UK. It is important to point out
that in the USA, gifts to qualifying charities (which include
arts organisations) can be offset against income tax by all taxpayers,
as opposed to the UK's Gift Aid system, where there is a marginal
tax benefit for higher rate taxpayers only.
August 2010
49 National Performing Companies-Report on Activity
2007-08 and 2008-09. Back
| 
