Funding of the arts and heritage

Written evidence submitted by Cornerhouse (arts 41)

1. This submission is made on behalf of Cornerhouse, Manchester's international centre for contemporary visual arts and film, a leading UK cross artform venue. See www.cornerhouse.org

2. Located in the heart of the city and open seven days a week, we have 3 floors of contemporary art galleries, 3 screens showing the best of independent cinema, a bar, café and a bookshop. We also operate Cornerhouse Publications, an international distribution service for contemporary visual arts books and catalogues. We welcome over 500,000 visits per year to our building which is open 260 days per year from 9am until after midnight.

3. An independent study, in March 2010 shows just how much of an impact we are making, financially as well as artistically, on a turnover of £2.2m. Each year we contribute an annual net expenditure of £6.2 million to Greater Manchester’s economy; or, for every £1 of Arts Council funding we receive, we put over £7 back into the local economy.

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:

4. The recent in-year cuts have made little impact on the organisation. However, the proposed cut of 10% in 2011/2012 and further cuts in the following year could be disastrous. A 10% cut in Arts Council England funding will be around £90,000 which on a turnover of £2.2m is in itself substantial. If the there are reductions in local authority funding and funding for film exhibition/education this figure will increase and become more damaging taking the level of cut up to £150,000 in 2011/2012. With a total programming budget of £200,000 the impact will clearly be significant. There will have to be reductions in activity levels, staffing, opening hours and education activity.

5. Like many arts organisations Cornerhouse looks very closely at costs and income generation. Following the serious impact of the 2008 cash and recession on our fundraising and suppliers we had to make major changes to our cost base and operations in 2009. This resulted in 4.5 FTE redundancies, changes to opening hours and price increases. We mention this to illustrate that our organisation and many like us in the arts sector are managed within very tight financial constraints and have no organisational fat to cut. Cuts in funding will result in disproportionally large cuts in service. This will then reduce the significant economic impact our organisation generates.

6. A recent letter from leading arts organisations in Manchester , see appendix 1, to the Secretary of State states:

"The simple fact is there is no room for cuts of this scale. We already operate with much smaller teams and far tighter budgets than other sectors, and very few organisations have any reserves at all. The proposed cut in Arts Council and MLA funding, cuts in local authority funding, cancellation of regional development agency projects, reduction of funding to the UK Film Council and higher education cuts will all have a major effect on our ability to deliver public benefit, outreach and education programmes, support for young talent and artistic enjoyment and improved quality of life for audiences right across the region"

7. The letter also says:

However, the level and phasing of the cuts proposed will have a catastrophic impact on cultural production, creative confidence, heritage and innovation for generations to come.

This is a view that we fully subscribe to.

What arts organisations can do to work more closely together in order to reduce duplication of effort and to make economies of scale:

8. In the regions there are undoubtedly some small potential savings to be made by bringing arts organisations together. However, most arts organisations already run on significant levels of sweat-equity so the actual savings made are only ever going to be marginal. Having been part of the development of arts marketing consortia in the 1990’s I know there is evidence that collective work on audience development can increase attendances but rarely reduces costs. The situation in London may be different given the massing of product.

9. Cornerhouse has been working to develop a new business model for the Web 2.0 world. An essay by Charles Leadbeater entitled ‘The Art of With’ is available on our website (http://www.cornerhouse.org/resources/item.aspx?ID=53). We are currently engaged in a 5 year action-based research project investigating how we can work more collaboratively not only with peers but audiences. Two years into the project we have doubled our visitor numbers, improved financial performance and crucially improved artistic quality. We can provide more information if this is of interest.

What level of public subsidy for the arts and heritage is necessary and sustainable:

10. The level of public subsidy required depends upon what the government wants to achieve.

11. There is an outdated and inaccurate view that artists and arts organisations don’t know how to run a business, this is no so. Like any business sector there are managers and sole traders who run their businesses well and some who don’t. (After what has happened in the banking sector arts organisations can be proud of the financial management and perhaps leading cultural managers should be seconded to banks to help them run their businesses better!) Across the arts sector there are fantastic examples of well run businesses that are focused on providing public value, as opposed to share holders dividends. The people running them will be have be working on rebalancing their business model away from public subsidy. However, there are activities that need state funding because the market cannot/will not support it, but which the public value/is a public good. This is much of what we do. If there is less state funding to go around we need to be maximising the public benefit from the state aid that is there. Consequently, there needs to be a re-prioritisation of funding. If an arts business is not well run and does not provide good public value then as a country we can no longer afford to fund them. Salami slicing equal misery for all would be a disaster. To make any disinvestment strategy work there needs to be some clarity about what the state perceives as public value from the arts. Other than cutting the deficit the current government is not at all clear on what they consider to be public value.

Whether the current system, and structure, of funding distribution is the right one:

12. Arms length funding for the arts is vital. I can’t remember who it was but someone during the 1980’s era said something along the lines of "the trouble with artists and arts organisations is that they bite the hand that feeds them", well the problem for the state is this is our job. Artists ask questions of society but when the hand of the state directly intervenes then there is a problem.

13. However in considering the way funding is distributed it is interesting to see how artists are working - much more across media and platform. We have had a bureaucratic division of funding systems that led to my organisation spending a lot of time proving to ACE that arts funding was not being spent subsidising cinema and at the same time as having to prove that film funding was not subsidising art. Pointless. We have had a great relationship with ACE over the years and their funding processes have got better and more efficient. However, we believe the lack of a joined up approach and, in particular, the artform divisions, across the wider cultural sector, are restrictive and wasteful.

What impact recent changes to the distribution of National Lottery funds will have on arts and heritage organisations:

14. It is great to have Lottery funds available for capital and one-off projects in larger amounts in the future. However, Lottery money is only ever one-off. It cannot replace Treasury support. It can lead to short termism and encouraging organisations to lurch from short term project to short term project.

Whether the policy guidelines for National Lottery funding need to be reviewed:

15. Perhaps but not to enable the Treasury to reduce its contribution, which is relatively small, to arts funding. When John Major established the Lottery this was never his intention and it would be the thin end of the wedge if the small amount of Treasury funding was threatened.

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:

16. As yet the impact is unclear. Our understanding is that even though UK Film Council has been cut there is still a commitment to film funding but through another mechanism. If that is the case we will need to understand what that is before commenting in detail.

Whether businesses and philanthropists can play a long-term role in funding arts at a national and local level:

17. It depends upon what is meant by long-term. The UK lost the philanthropy habit in the early part of the last century, it will take generations to rediscover it. It will be even more difficult during an extended period of austerity. Whilst there is some important philanthropic giving it is particularly difficult outside of London. This is a view shared by colleagues from across Greater Manchester:

We have noted your suggestion that philanthropy can make up the gap left by a reduction in state funding. Unfortunately the reality, particularly outside London, is that it will not, especially without US style tax-breaks.

Furthermore, conversations with philanthropists and sponsors who currently support have revealed that state support for our work is fundamental to their giving/sponsorship. We currently work hard with both philanthropists and sponsors to bring in additional funding for our organisations. Since the recession this has become much more difficult. Letter to Secretary of State, see appendix 1

Whether there need to be more Government incentives to encourage private donations:

18. Yes, significant tax incentives would be needed.


Appendix 1

Open letter from Greater Manchester based arts organisations

To Secretary of State for Culture Media and Sport

Rt Hon Jeremy Hunt MP

Dear Secretary of State,

Proposed Arts Cuts

As leaders of arts organisations in Greater Manchester, we understand that

we have a public duty to protect and nurture our nation’s treasures and talent

for the benefit of the public, future generations and the economy. We are

therefore compelled to write to express our deep concern at the proposed

cuts to arts spending.

We agree that every one must play their part in reducing the national debt,

and we understand that this must include the cultural sector. However, the

level and phasing of the cuts proposed will have a catastrophic impact on

cultural production, creative confidence, heritage and innovation for

generations to come.

As you know, as a proportion of national spending, arts and cultural budgets

are very small, less than 0.1% of the total Government Budget, and the

proposed cuts will cause disproportionate, irreparable damage for a relatively

tiny saving to the public purse.

The arts matter – more people in Greater Manchester and the wider North

West region are enjoying them than ever before. Cultural organisations are at

the heart of our ‘Big Society’, the arts encourage participation, raise

aspirations and improve quality of life and opportunities for the young people

and disadvantaged communities who need them the most. They are also the

North West’s economic success story. They develop talent for the creative

industries, which are fundamental to the future competitiveness of British

business, and provide a massive boost to tourism and the visitor economy.

The simple fact is there is no room for cuts of this scale. We already operate

with much smaller teams and far tighter budgets than other sectors, and very

few organisations have any reserves at all. The proposed cut in Arts Council

and MLA funding, cuts in local authority funding, cancellation of regional

development agency projects, reduction of funding to the UK Film Council and

higher education cuts will all have a major effect on our ability to deliver public

benefit, outreach and education programmes, support for young talent and

artistic enjoyment and improved quality of life for audiences right across the

region.

We have noted your suggestion that philanthropy can make up the gap left by

a reduction in state funding. Unfortunately the reality, particularly outside London, is that it will not, especially without US style tax-breaks.

Furthermore, conversations with philanthropists and sponsors who currently

support have revealed that state support for our work is fundamental to their

giving/sponsorship. We currently work hard with both philanthropists and

sponsors to bring in additional funding for our organisations. Since the

recession this has become much more difficult.

You have publicly declared your passion for arts and culture so we believe

that you would want to be remembered for the protecting the nations cultural

infrastructure.

We urge you to reconsider the level of cuts proposed and invite you to

Manchester to view for yourself the great value for money and public benefit

that we provide.

September 2010