Supplementary written evidence submitted
by Alan Davey, Chief Executive, Arts Council England (arts 232)
SELECT COMMITTEE
FOLLOW UP
Thank you for your letter of 21 October following
the evidence session I attended at the Committee on 12 October
outlining a number of follow up questions that I said I would
provide the answers to. These are outlined below, along with some
additional information about the recent refurbishment at our Head
Office at Great Peter Street which was also a topic of debate
at the Committee. I have also asked the Arts Council Collection
to provide you a separate note setting out its history, role and
purpose, which I hope you will find helpful. I apologise for the
short delay in responding to your letter, the response for which
was due yesterday on 3 November.
I hope that the information contained in this
letter answers the questions you raise in your letter as well
as provide some additional information for you on some of the
other topics discussed at the Committee hearing.
How many diversity officers are employed by Arts
Council, and at what cost?
Arts Council employs three full time diversity
officers at its Head Office in London at a total cost of £184,954
per annum. Their role is to ensure that the Arts Council fulfils
its statutory obligations in terms of the previous equality legislation
now replaced by the Equality Act 2010, but also to ensure that,
in line with the recommendations in the McMaster review on excellence,
we fund the arts in a way that properly reflects the talent available
in this country. They work with artists from many backgrounds
and have ensured that England is a leader in encouraging a broad
approach to the arts in terms of gender, disability, race and
ethnicity in particular, but also towards a broad approach in
line with the Equality Act 2010, We believe that diversity is
key to the vitality of the arts in this country. In addition to
these posts, Arts Council also employs a further 13 Relationship
Managers in its nine regional offices who have diversity as part
of their remit. The primary role of these 13 staff is to manage
relationships with our funded organisations as well as other key
partners such as local authorities rather than as diversity officers.
How much lottery funding is being used to top-up
Arts Council's pension fund?
The Arts Council's operating costs, including
operating staff costs, are shared between activities funded from
grant-in-aid and activities funded from the National Lottery.
Arts Council is required to apportion these costs properly between
the two areas on a full cost basis in accordance with good accounting
practice. The costs for Arts Council's pension scheme is therefore
apportioned based on an estimate of staff time spent on each activity.
The Arts Council Retirement Plan (1994) is a
defined benefit scheme which is offered to Arts Council staff
as part of their overall remuneration package. Other employers
which contribute to the scheme are the Arts Council of Wales,
The Scottish Arts Council (now part of Creative Scotland), the
Crafts Council, and Creativity, Culture and Education. The actuarial
valuation of the pension fund takes place at least every three
years. The last valuation was on 31 March 2007. The costs of the
scheme will be reviewed following the next valuation which is
currently underway.
As discussed at the Committee, a deficit was
first identified in the financial year 1999-2000. This deficit
has been reassessed and contributions adjusted accordingly during
subsequent valuations. Decisions on the funding of the deficit
in the plan are taken by trustees and employers and agreed with
the pensions regulator. Since 1999-2000 the Arts Council's employers'
contribution to the scheme has risen from 9.4% to 25.1%, or 23.1%
for staff who joined after 1st July 2006 at the 31 March 2007
valuation. It is worth noting that at the last valuation employee
contribution rates were increased from 1.5% to 3.5% to assist
with the affordability of the scheme going forward. This current
level of contribution is made up of two elements: an 11%-13% regular
ongoing contribution towards future accrual; and a temporary deficit
recovery contribution of 12.1% which runs until March 2016. The
level of these contributions remains broadly in line with those
organisations who buy into the Principal Civil Service Pension
Scheme. £4.2 million of staff costs derived from Lottery
activity has met the increased contributions since 1999. The comparative
amount from grant-in aid is £6 million.
How many drinks receptions and dinners have Arts
Council paid for since October 2008, and at what cost?
In the past two years since October 2008 Arts
Council Head Office and its additional nine regional offices have
in total paid for 32 receptions and dinners with artists, arts
organisations and other partners for business purposes, including
a series of working dinners that formed part of a consultation
on our 10 year strategy, Achieving Great Art for Everyone, published
today. These cost a total of £34,774. This figure includes
associated venue hire.
Will you publish the reports produced by Moss
Cooper on the lessons learned from the West Bromwich arts centre
project?
There is a considerable amount of material on
the issue of The Public held in our archive, and it is possible
that these records contain a report or reports produced by Moss
Cooper about the West Bromwich art centre, as referred to by Tom
Watson in his original parliamentary questions on the subject.
Records on this issue date back beyond five years and we believe
that retrieving them in order to identify whether they contain
any reports by Moss Cooper would be at disproportionate cost.
I do absolutely agree however that we must look
at the lessons learned from the experience at The Public, and
we are looking at options to review the known literature, which
is itself extensive, on this issue for that very purpose, publishing
the results so that lessons are learned.
I should emphasise that it would be wrong to
characterise The Public as solely an Arts Council project. We
were one of a number of partners and were not at any point in
a position of having sole control in how the project was managed.
The project at The Public presented a number
of risks which, when multiplied, made it a considerably risky
investment for us. It was a bespoke building, an organisation
with a lack of capacity, an untested business model, and a project
that, for the multiple funders, needed to meet a number of different
outcomes at the same time. These included arts, regeneration,
social inclusion and employment.
The lessons learned in terms of our involvement
in the project include clarity of who is in charge of the project,
and ensuring relevant capabilities exist in the organisations
running it. Also, how firm we should be as an organisation when
our conditions are not met. I conclude that we were anxious to
do something in Sandwell based on community arts as a result of
local initiative. We did so with matched funding from Sandwell
Council, the RDA and later some ERDF money. The project grew in
scope, and seemed to lose its purpose. In hindsight I would suggest
that:
— We should have acknowledged that there
was a serious question about the capacity of the team delivering
it to do so, and taken action at an earlier stage when these concerns
first arose.
— We should have insisted on clarity before
we went ahead when it became clear that the scope for the project
had become confused.
— We should not have allowed our decision
making to be partially driven by the need to secure funding from
other funders, on the basis that we had already invested valuable
time and funding into the project.
The key is to ensure we are able as an organisation
to take firm action more quickly, even when we are anxious to
do the best for the people involved.
Since Arts Council's involvement with The Public,
it has introduced a key stage review process based on the OGC
Gateway model. This process provides clarity about how projects
are monitored and how decisions are taken with other funders.
The process provides a clear and robust framework for investment
decisions, which I believe provides a reliable context for decision
making on capital and other investment decisions now and into
the future.
What is now in place at The Public is a facility
in Sandwell based on a visitor attraction and space for creative
businesses that is now well managed and is finding its purpose,
attracting over 100,000 visitors since it opened.
Can you calculate the full cost of mothballing
the West Bromwich arts centre project through the receivership
process, and what is your reaction to reports that it cost £10
million?
The Arts Council do not hold this information
and the question would need to be redirected to the administrator.
As I have already said, the Arts Council was not in the lead on
running the project.
Why did neither the Chief Executive of the Arts
Council West Midlands nor any other senior officer attend any
board meeting during the build process?
At the time of the funding decision on The Public
the West Midlands Regional Arts Board was a separate organisation
to Arts Council England. Arts Council England and the Regional
Arts Boards only combined to become one organisation in 2003.
Because of this the West Midlands Arts Board were not directly
involved in decision making and may not, therefore, have sent
representation to board meetings. The staff members involved in
the project at this time have now left the Arts Council and we
no longer have access to information regarding their diaries to
be able to confirm whether they did or did not attend any of the
board meetings.
Since the funding decisions about The Public
took place we have revised our internal guidance with regard to
attendance of our Relationship Managers at the board meetings
of the organisations we fund. This includes a responsibility for
Relationship Managers to attend board meetings or equivalent as
an observer on a regular or occasional basis.
Office refurbishment at Great Peter Street
A further point that was raised at the hearing
I attended was about the cost of the recent refurbishment at Great
Peter Street and I thought it might be useful to set out some
of the background to this to add to the information you heard
at the Committee hearing.
Arts Council England has held the lease on Great
Peter Street since 1990. Soon after this date, the creation of
the National Lottery and the identification of the Arts Council
as a distributor of the Good Causes Fund led to an increase in
staff to help deliver the very significant investment. The lease
on Great Peter Street was taken for 25 years with no breaks and
as a result of the increase in staff numbers it became necessary
for the organisation to take additional space in two offices in
Victoria and spread the organisation across three offices.
Early in 2003, following the merger with the
Regional Arts Boards to create a national funding organisation
for the arts in England, Arts Council England, in advance of the
Lyons Review and other initiatives focusing on Central London
properties, embarked on a rationalisation strategy.
Initially we looked to relocate all staff to
a new location and targeted more cost effective areas like Kings
Cross, Southbank, and the "midtown" area. We developed
a proposal for a serviced office provider to take over Great Peter
Street and provide a flexible office base in Westminster as this
need was identified by the civil estate team at the OGC. The business
case identified recurrent annual savings in the order of £1.6
million as well as significant organisational benefits by bringing
all of our London based staff together in a single location.
Our business case to relocate was the first
to go before the Treasury in 2004 following the Lyons review which
lead to a shift in policy towards central London properties, and
our case was not approved.
Following this decision, we decided to consolidate
all staff into Great Peter Street. Having occupied the building
for 15 years, we adopted an invest-to-save principle to refresh
the building, taking care to repair where necessary and maximise
the use of space. During this refurbishment process, we engaged
the artist Lothar Goetz, as we believe it is important to reflect
the sector we support in our working environments. As we needed
to redecorate internally, using an artist to articulate how we
went about this was a very cost effective way to achieve an artist
commission in our Head Office. £13,750 was paid to Mr Goetz
for this work in 2007.
Since we embarked upon this rationalisation
strategy, we have successfully reduced all our Central London
properties to a single lease at Great Peter Street. The final
portion of this strategy was achieved in the summer of 2010 as
we brought across the London regional team from their previous
offices in Clerkenwell into Great Peter Street in time to meet
a lease break at the separate London regional office.
Taken as a whole this rationalisation strategy
has realised annual savings of £1.5 million in rent, rates
and service charge alone as well as £850,000 from the sale
of a freehold storage facility.
In the 2009-10 property benchmarking performance
report, Great Peter Street was reported as performing above the
private sector benchmark average across all three measures of
efficiency, effectiveness and environment. The report is produced
as part of an annual civil government property data return exercise
and the defines buildings in this bracket as "exceeding benchmark
performance by at least 10% and delivering a positive contribution".
We remain in dialogue with the Government estate
rationalisation team about opportunities to further improve in
relation to the costs of Great Peter Street.
Arts Council Collection
Finally, I am also keen that we provide you
with some additional information about the Arts Council Collection
which I hope will provide some additional detail to contribute
to your enquiry and which I did not have to hand at the hearing
itself. The Arts Council Collection is compiling a note to you
on this which they will be submitting to you under separate cover.
In addition, my Chair will be writing to set out our new funding
arrangements in some detail once they are announced.
November 2010
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