Funding of the arts and heritage

Written evidence submitted by Wiltshire Music Centre Trust Ltd (arts 57)

1. Short Summary of the Trust’s response

· Our response focuses on the arts rather than heritage as our experience and expertise is in the arts.

· The arts in England operate very cost effectively and make very modest demands on public funding.

· Yet the UK has world-class arts and artists; a sector that gives Britain an international edge as a dynamic place to live, work and do business.

· The arts in the UK are a UK-wide international success story thanks to 15 years of sustained investment and lottery funding .

· The arts fuel the creative industries and help generate future jobs in one of the fastest growing parts of the economy.

· The cultural sector has a proven track record of regenerating towns and cities and contributing to a cohesive and engaged society.

· Sustained support of the arts will allow them to play a vital role in Britain's economic recovery.

· The arts are central to a government that places a healthy society at the heart of its agenda.

· Any cut to the arts will have a disproportionate effect for a relatively tiny saving to the public purse.

· The financial climate is tough, but the arts remain a compelling case for public investment.

· The arts are valued, they really matter, they are essential to our quality of life.

· The arts broaden horizons, stimulate new thinking, provide pleasure and raise aspirations - they inspire and sustain the spirit. More people are enjoying the arts than ever before (76% in 2008/9).

· The considerable benefits the arts can bring in other areas - social, economic, and to general well being - begin with the quality of the art itself. And this country has invested in artistic excellence for the long term.

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 arts in England operate very cost effectively – in most arts organisations there’s little if any fat to trim. Collectively the arts are not a large burden on the public purse, they operate on a mixed economy. Public investment, though relatively modest, is nevertheless vital because it underpins all other income streams.

2.2 The impact of the cuts and where they will fall are not yet clearly known. We are planning as advised for a cut of at least 10% for 2011/12. We know that cuts over the three subsequent years to March 2015 are expected to total up to 30%. If applied on an equal-misery-for-all basis, it seems highly likely that some arts organisations would have to close. We imagine therefore that ACE will want to apply what funding there is strategically and selectively. These funding decisions will be known by March 2011 and will need to be managed with considerable care and attention to detail.

2.3 What we can say for certain is that government cuts to the arts will yield only tiny savings in public expenditure. Total public arts funding through Arts Council England represents only 0.08% of the Government’s overall budget. A 30% cut in this expenditure is less than 0.025% of the total annual budget and less than one thousandth of the structural deficit.

2.4 Many very successful arts organisations, such as the Wiltshire Music Centre Trust, operate at the very boundaries of viability. After 10 very successful years growing the Centre’s work, and with an annual turnover now in excess of half a million, we had an accumulated trading surplus last year of just £344. This gives an insight into how a very successful small-scale regional arts lottery project, doing cutting edge education work, sits literally on a knife-edge of viability. The Trust’s Arts Council grant represents just 20% of its annual income. We achieve leverage of 4:1.

2.5 While the contribution that the arts can make to the budget deficit is minute, the impact on other aspects of arts income risks de-stabilising the arts infrastructure and causing irreparable damage. If cuts to its public funding were severe enough to destabilise the Wiltshire Music Centre Trust, the collateral damage would be the remaining 80% of our income (over 60% of which is earned and self-generated) and of course 100% of our work. The people and small businesses whose work depends on a thriving Music Centre would be adversely affected: musicians, project leaders and teachers, technicians, maintenance staff, designers, printers, builders, our suppliers, insurers, outsourced H&S and HR guidance, legal advisers and accountants etc., etc. Ancillary businesses would also be impacted, the restaurants, hotels, B&Bs and local shops etc. that our artists and audiences use. With no public funding there would be a loss of economic activity and vitality but no net gain either to economic prosperity or as improvement to the structural deficit.

2.6 The impact on our own work would be no less severe. We deliver an exciting range of charitable education work, engaging with around 4,000 young people and some 80 schools and approx. 20 community groups this year, plus 100 public concerts. This outreach work would disappear and the quality of life in the communities would suffer. The impact on educational targets, social cohesion, sense of cultural identity and local pride could compound this damage. Local communities would suffer a loss in quality of life, volunteering opportunities for older people and work experience opportunities for young people would disappear, as would outreach work with the elderly and disabled, with minority groups, children at risk, school refusers, young offenders and other vulnerable people. We have over 100 volunteers to help us manage this work and a small 10 strong team of staff to sustain this programme. By no yardstick are we a lavishly resourced organisation, yet despite starting with literally almost nothing in the bank, we have never once had an overdraft.

2.7 From a business point of view there is a point at which the operating models of many such arts organisations will have to be radically reappraised, and some will not have that option. There is a tipping point of 10-15% for most arts organisations. Cuts of the magnitude proposed will have a real impact on the frontline and cost far more than the extremely small sums they save government overall. This is because cuts in local authority funding, a reduction in private sector support and escalating running costs threaten to create the 'perfect storm' for many successful organisations who operate close to the edge of viability on the mixed economy model.

2.8 Any cuts need to be spread intelligently over four years so that they can be managed in the best way. Any dramatic cut in funding in 2011/12 will hit organisations hardest in the Olympics year and it would take many years to recover

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 The UK is among the world leaders in terms of the quality of much of its arts practice and, thanks to arts lottery funding, it now has more first rate, modern arts facilities. Yet the level of public funding per head of population for the arts in this country remains low compared to many other developed economies. At the same time there isn’t the philanthropic tradition or potential that there is in the USA, nor the degree of civic and state pride in cultural activity found in most Western European countries. The arts in the UK have learned to manage on relatively little subsidy and, with few exceptions, are already run on a very lean and cost effective basis. They are already finding new approaches to arts funding and partnerships, collaboration and delivery and thinking differently within this changing context.

3.2 In Wiltshire we’re not aware of much if any duplication of effort. There are already good networking forums and lots of collaboration – most of the Centre’s education work is delivered in partnership. Wiltshire’s local authorities have long taken a low rate, low spend approach. Rather than competing with each other, arts organisations in Wiltshire work together to make the most of what opportunities there are. This gives added value, extends the benefit and makes the work more sustainable. There are good anti-clash mechanisms too, so that we minimise the risk of splitting audiences. Together we work to ensure that what public funds are available for the arts in Wiltshire are used in the most cost effective way to deliver the greatest public value.

3.3 Nevertheless, building on the willingness to share intelligence and learn from each other, there may be scope for further collaboration, perhaps joint commissioning of work and procurement of goods and services to achieve economies of scale and greater purchasing and bargaining power. These ideas are gaining currency.

3.4 Organisations seeking to grow their outreach work could share a project coordinator rather than engage their own. However, organisations already undertaking ambitious county-wide outreach programmes, like the Wiltshire Music Centre, would have to scale down their work and ambition in order to share a staff resource because there would be a corresponding loss of capacity. However, new initiatives to engage hard to reach audiences might well offer an opportunity, for joint approaches and collaborative programmes of work, to achieve greater impact and coverage: e.g. working with BME communities who are scattered in relatively small numbers across the county.

3.5 While at first sight regional contract orchestras might struggle to achieve a reduction in core costs without drastically revising their artistic remit, the imperative to find savings might result in their negotiating more flexible contracts with their musicians. This might enable them, when not programming symphonic repertoire, to deploy musicians more flexibly in smaller venues, reaching a wider range of audiences, perhaps tapping into new sources of income. In the South West, where there are few satisfactory symphonic spaces, this could bring real benefits. Many of the more adventurous musicians might welcome a more varied diet of repertoire and work, opportunities for wider engagement with audiences and for linked education projects.

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

4.1 So many arts organisations in the UK operate at or close to the brink of viability. The current arts budget costs just 17p a week per person. As relatively little money can be saved by cutting this funding; since such good value and benefits flow from this investment; and since so much leverage and benefit could potentially be lost were the cuts to be severe enough to jeopardise the viability of arts organisations – the short truthful answer to this question is that the level of arts subsidy needed is probably more than what is currently invested and certainly not less.

4.2 However, the arts have to recognise the current economic realities and play their part in helping to eliminate the structural deficit. We are not indulging in special pleading, we want to emphasise how essential it is for the cultural health of this country, for its great strengths artistically, for the welfare of its young people and communities and for its tourism and related industries, that the arts are not disproportionately disadvantaged by the proposed cuts and not permanently damaged. Just as soon as the economy allows, investment in the arts should be swiftly restored at least to current levels.

4.3 The small amounts of public money invested in the arts work very hard and stimulate a mixed economy culture that is admired the world over. They deliver a real return for the country in economic terms; in terms of the kind of society we want to be; in general well being. All this relates directly to the quality of the art itself. Investment in the arts and artistic excellence has to be for the long term.

4.4 Arts investment is vital for the creative industries, and these are fundamental to the competitiveness of British business and seen as our best route out of recession. Between 1997 and 2006 the creative economy grew faster than any other sector, accounting for 2 million jobs and £16.6 billion of exports in 2007.

4.5 Arts and our cultural heritage are central to tourism in the UK: this was worth £86 billion in 2007 - 3.7% of GDP - and directly employed 1.4 million people. Inbound tourism is a vital export earner for the UK economy, worth £16.3 billion to the UK economy in 2008. Liverpool 08 was the most successful European Capital of Culture ever, with 15 million cultural visits and £800 million worth of local economic benefit.

4.6 Artistic enjoyment and creativity has never been more universal, more innovative, more easily distributed, shared and exchanged. The UK has the largest creative sector in the EU, and relative to GDP probably the largest in the world. The arts broaden horizons, stimulate new thinking, provide pleasure and raise aspirations - they inspire and sustain the spirit. More people are enjoying the arts than ever before (76% in 2008/9)

4.7 For every £1 that the Arts Council invests, an additional £2 is generated from private and commercial sources, totalling £3 income. At a local level our ACE funding levers in four times its worth and in some cases ACE investment can lever in five. This is because government investment in the arts through the Arts Council and ‘kite marked’ as such, acts as a stamp of approval that draws in funding from the private sector and philanthropic sources: philanthropy follows success.

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

5.1 We believe that the current system, and structure, of funding distribution is the right one. In the English regions, the detailed regional knowledge and expertise of Arts Council staff and artform specialists working at a regional level, from regional offices, has been a very valuable resource.

5.2 The Arts Council has trimmed down its operating costs to 6.6 per cent (reduced from 11% in 2001/2) since 1 April, and of that only 3% is spent on administrative costs. DCMS has asked the Arts Council, along with other Non Departmental Public Bodies, to model a further 33 - 50% cut to its administration costs. If a cut of this size is implemented, the Arts Council will no longer be able to operate effectively on behalf of the sector, or manage the profound change to the sector that will be required over the coming years.

5.3 We are somewhat alarmed to learn of this. A 30% cut would, if passed on equally, amount to a reduction in the Arts Council's budget for regularly funded organisations of £134m a year. This would mean the loss of many arts organisations - large and small. At the same time, the slimming down of the Arts Council implies increased demands on specialist arts organisations such as the Wiltshire Music Centre to provide artform specific advice, guidance, evaluation and peer review. We are simply not convinced that arts organisations already on the margins of viability could sustain cuts of up to 30%, take on additional responsibilities of this sort and continue to deliver work of the highest quality. Attempting to squeeze yet more productivity out of already marginally viable organisations would destabilise them, resulting in the government getting much less value for their investment.

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

6.1 It is thanks to 15 years of sustained investment and lottery funding that the arts in the UK are a UK-wide international success story. The shift of Lottery funding to help support sport and the Olympics has already greatly disadvantaged the arts. While the arts sector recognises the need to contribute to the economic recovery - it has already sustained £112.5 million of Arts Council Lottery funding being diverted to the Olympics, in addition to the in-year Grant-in-aid cuts.

6.2 While the proposed return of Lottery money to the arts will be greatly welcomed by all, Lottery money is only to be phased in over time. Any increase in Lottery funding will therefore not mitigate the impact of grant-in-aid cuts in the next couple of years, and Lottery cannot substitute for government funding because of the important principle of 'additionality'.

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

7.1 We believe that the principle of ‘additionality’ is an important aspect of Lottery funding. It is this that has enabled the arts to raise its game, become more effective and have a wider impact and benefit without requiring any significant increases in revenue funding.

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 While this isn’t our area of expertise, we are concerned that bodies with this degree of expertise and objectivity are being so swiftly closed down. We wonder what the long-term consequences of such ‘savings’ will be and what the future holds for the arts funding system.

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

9.1 Britain has developed a modern and progressive model for cultural organisations, bringing together public funding and private enterprise - a truly public-private partnership. But it is a finely balanced economy: if public funding is significantly reduced, the knock-on effect will be profound and the private sector will not be able to make up the shortfall, earned income would be lost and this thriving economic activity would collapse. Major donors and Friends groups play their part in supporting the arts, as do sponsors, corporate donors, trusts and foundations. But it should be born in mind that philanthropy and sponsorship follow success, they don’t have the resource in the UK to sustain organisations whose public funding has been cut.

9.2 In addressing this point we shouldn’t overlook the potential impact of cuts on arts organisations’ earned income: well over 2.3 million people, more than 47% of the South West’s population, engaged with the arts in 2008/9 (the highest percentage outside London and the South East) spending an estimated £137 million each year on culture and recreation – higher than the national average. None of these people would see it as feasible or desirable to replace the public funding. Short term Government funding and Local Authority cuts could therefore have unintended long-term consequences causing this fragile economy to collapse and many vulnerable arts businesses to fail. Under these circumstances, the loss of other income and damage to the infrastructure risks becoming permanent – redundancies would be inevitable, as would the loss of associated employment. Philanthropy is part of the picture, but only a part. The same goes for government funding, but that public subsidy is a crucial part.

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

10.1 The re-gearing of the UK arts economy implied by this question and 9 above would require considerable additional investment up front and sustained for long enough for a long-term strategy to achieve the required shift. To be sustainable there would also need to be much greater buoyancy and growth in the UK economy.

10.2 In brief, the financial climate is tough but the arts remain a compelling case for public investment.

September 2010