Supplementary written evidence submitted
by the Arts Council England (art 237)
Following the evidence session that Alan Davey
attended and your letter of the 15 November I am writing to provide
you and members of the committee with a complete briefing regarding
our settlement, our plans for funding organisations for the duration
of our funding settlement (20112015) and two key pieces
of work; our 10 year strategic framework, and our new programme
for funding arts organisations in England. I would also like to
take this opportunity to update you on our emerging thinking on
We are absolutely committed to ensuring that public
investment in the arts works as hard as it can and I am concerned
to see that recent statements from the Committee regarding the
Arts Council's record on transparency and efficiency continue
to arise from out-of-date information. To this end I am also setting
out more detail here on our current and future plans to remain
a strong, efficient and outward looking organisation.
Arts Council England has consistently worked
to reduce administration costs-we have cut our operating costs
by 30% since 2002-03 and since 1 April 2010 the Arts Council's
overall operating costs have been brought down to 6.6% (reduced
from 9.3% in 2001-02). By current Treasury definitions we estimate
just 3.4% of our grant in aid is spent on administration. When
combined with lottery support work the combined figure is 4.1%.
We believe this to be an extremely low figure for an organisation
to operate at.
During the evidence session Alan Davey attended
he was asked about a number of areas of Arts Council expenditure
which committee members thought were too high, including attendance
at party conferences (which we have not done for the last two
years), and the high numbers of staff employed in Advocacy and
Communications (which were reduced by 46% as part of our organisation
review). I would urge the Committee to make sure that it is looking
at up to date figures, and calling well-informed witnesses, as
a considerable reform of our working processes has occurred over
the past two years, many of which go directly to some of the concerns
voiced by your colleagues. I am sure that you and the Select Committee
will appreciate our continuing efforts to reduce administration
costs as far as possible.
We have also worked with our partners and stakeholders
to develop Achieving great art for everyone, a clear set of priorities
for the arts over the next ten years, and our new arrangements
for funding arts organisations in England. We are confident that
both will support us in ensuring a strong and resilient future
for the arts, realising our vision of England as a world leading
creative and cultural nation driving innovation and excellence
in the arts.
On 20 October the Arts Council was given a reduction
of funding of 29.6% over the period of our funding settlement.
This cut means that our budget will reduce from £449 million
to £349 million by 2015.80% of this reduction will take place
within the first two years of our settlement. This was obviously
a very significant reduction that presented us with a serious
However, we will ensure that over the four year settlement
period the overall budget available for funded organisations will
only be reduced by 14.9%
In our conversations with the arts sector we
had made clear our commitment to make funding decision for this
period in two stages which I outline below.
In addition, we have also been asked to reduce
our administration costs by 50% over the course of our settlement.
Our National Council has expressed concern at the potential impact
on our Charter responsibilities but we will work hard to maintain
the quality and effectiveness of our advice, support and expertise,
and to ensure that value for money continues to be secured from
the investment we make in the arts.
In anticipation of our move towards a new programme
for funding, to replace the current regularly funded system, we
have put in place transitional funding for 2011-12.
Regularly Funded Organisations (RFOs) will receive
a year-on-year reduction of 6.9% during this transitional year
This transitional year will mean that organisations
who currently receive regular funding will have the benefit of
secure funding for one year, and a full year's notice of significant
future changes to their funding. It will also allow time for discussions
with co-funders and partners to minimise damage.
We are now asking organisations to apply, through
a very simple on-line process, for funding from 2012 onwards.
All applicants will be notified of the outcome of their application
to this new funding programme in March 2011.
We have limited the reduction to our budget
for front-line arts organisations through significant reductions
to two bodies we currently fundCreativity, Culture and
Education, who administer the Creative Partnership and Find Your
Talent schemes, and Arts & Business, who both received a 50%
reduction in funding. The government's complete cut to the Creative
Partnership's programme as part of the Comprehensive Spending
Review meant that we had to reassess the level of support we gave
to CCE. Children and young people continue to be a priority for
us and we will still provide leadership in ensuring that the resources
invested across the sector are used to achieve a high quality
arts offer for children and young people.
I understand that the Committee has expressed
a strong interest in the work of Arts & Business, an organisation
that has received around £4 million a year over the course
of our previous funding settlement (2008-11). This will be reduced
to £2 million for 2011-12, and we have informed them that
they will not be eligible for regular funding beyond 2012.
We have taken this decision as we believe our
funds are best used to support front-line organisations directly
engaged in the production and provision of art and that it is
unsustainable for us to continue to provide core funding for Arts
& Business in such a challenging financial climate. We are
looking to move towards a private giving strategy that is owned
and led by the sector and to which a number of specialist organisationsquite
possibly including Arts & Businesswill contribute on
an openly tendered basis.
We will also be reducing our development (or
`managed') funds by 64% in 2011-12. These funds are used for a
range of projects that help us to create a resilient arts sector
through work on audience development, partnership working with
local authorities and the private sector, and projects including
the Manchester International Festival (2010-11 funding500k)
and the Cultural Leadership Programme (2010-11 funding£3.3
During the process of putting together our 10
year strategic framework, Achieving Great Art for Everyone
we have consistently made clear our intention to move to an
application process for organisations that receive funding on
a regular basis for 2012-15. This is an important change in the
way that we provide funding to organisations and will make our
investment approach more flexible, more open and more transparent.
We see the four major changes to our existing regular
funding programme as:
an open application process for all organisations;
funds awarded will be for a fixed term
of normally three years, but there will be the flexibility to
have variable funding terms of as little as two years or as many
as six years;
the funding agreement with individual
organisations will be tailor-made, based on the delivery of shared
goals and clear criteria; and
the funding agreements will be based
around "strategic" and "programme" relationships
with organisations, rather than a "one-size-fits-all"
All funding decisions will be made against a
set of published criteria, with organisations demonstrating how
they will help us meet at least two of the five goals set out
in Achieving great art for everyone. The five goals are: working
to ensure talent and artistic excellence are thriving and celebrated;
that more people experience and are inspired by the arts; creating
an arts sector that is sustainable, resilient and innovative;
ensuring the arts leadership and workforce are diverse and highly
skilled; and that every child and young person has the opportunity
to experience the richness of the arts.
A list of the criteria against which we will
be judging applications is contained within the guidance notes
for applicants, and I have attached a copy for ease of reference.
We will of course continue to support financially well-run organisations
under the new application process as happened under the previous
This move will help us to ensure that funded
organisations help us to realise the long-term vision for the
arts that we have articulated in Achieving Great Art for Everyone,
and to manage demand for funding at a time of diminished resource.
All existing regularly funded organisations
have been invited to apply through a straightforward online process.
Organisations not currently funded by the Arts Council will also
be eligible to apply. Following the closing date on 24 January,
applications will be assessed and we intend to let organisations
know of their funding for 2012-13 onwards by the end of March
2011. As I pointed out, this will give organisations at least
a year's notice of any significant changes to funding.
Our funding decisions will be made in the context
of the more limited resources available. This will of course mean
that will have to make some very tough decisions. There will undoubtedly
be good applications that we are unable to support. I would also
like to reassure you that we do not anticipate a significant increase
in the amount of bureaucracy surrounding this new process. Application
forms will be light touch and on-line. "Box-ticking"
will be minimal. Organisations will be asked to explain in their
own words how they contribute to one or more of our stated goals.
This is a fair and rigorous process that will enable us to provide
funding in a transparent and open way.
Philanthropy has always been important to the
arts but we now need a step change in the level and nature of
the contribution from private giving. We do not underestimate
the challenge this presents and the Arts Council will shortly
be producing a report which we shall share for with the Secretary
of State which will set out how together we can achieve this.
As part of this work we have been conducting an informal
consultation with a cross-section of arts organisations, philanthropists,
and organisations that specialise in fundraising, and a review
of the levels of philanthropic giving that funded organisations
have received over the past five years.
Following some very productive conversations
with leading arts fundraisers about how they might help to mentor
their colleagues we are confident that in the future advice and
guidance can be generated from within the sector as well as working
to pull together major partnerships. We also anticipate that we
will launch Challenge Funds designed to incentivise donors and
to direct support to the arts and cultural organisation to build
Many people within the art sector were pleased
that the Select Committee chose to initiate an inquiry in funding
for arts and heritage and are looking forward to a report that
makes afresh case for continued investment in the arts and creative
industries, properly examines the mechanisms through which that
funding is provided, and makes constructive recommendations about
how organisations, government and Arts Council England can work
together to increase private giving.
We have been disappointed that our engagement
in this inquiry continues to be dominated by the particular concerns
of one committee member, using out of date information that has
been exhaustively aired in parliamentary questions mostly focussed
on several years back. Of course Mr Watson has a perfect right
to raise any matter of concern and Alan and I remain accountable
for the Arts Council even in matters before we joined it. However,
after six months and 120 Parliamentary Questions I would hope
we could now come to focus on the present and future rather than
the past. Alan Davey and I have continually attempted to engage
with Mr Watson directly but so far our invitations to come and
discuss his concerns about our work have been declined.
We are ready to provide the committee with any
further information that will be helpful to your inquiry and look
forward to a constructive report that will help us tackle the
challenges for the cultural sector caused by the current financial