Funding of the arts and heritage

Written evidence submitted by the Incorporated Society of Musicians (ISM) (arts 108)

Short Summary

1. The Incorporated Society of Musicians (ISM) is the professional body for music and musicians with over 5300 members and approximately 100 corporate members.

2. There has been a substantial impact on music and musicians as a result of funding cuts to pilot programmes and in-year cuts announced by the Department for Culture, Media and Sport (the Department). Cuts to arms-length bodies increase anxiety and uncertainty for investors in the arts.

3. Private subsidy is not sustainable in the same way as public funding and the experiences of American orchestras highlight these concerns.

4. Additional funding from the National Lottery is welcome, but we have concerns over the unintended consequences of the proposals.

5. We comment on three specific proposals on encouraging private giving highlighted by the Government and whilst we welcome the intent, we are concerned that current Gift Aid proposals would result in a reduction in funding to the arts.

6. We believe that at the very least, the Government must introduce the measures needed to relax other burdens on the cultural sector if any cuts are to be made.

About the Incorporated Society of Musicians

1.1 The Incorporated Society of Musicians (ISM) is the professional body for music and musicians.

1.2 Sir Adrian Boult, Sir Thomas Beecham, Sir Malcolm Sargent, The Lord Menuhin OM KBE (Yehudi Menuhin), Sir David Willcocks and Dame Gillian Weir are all past chairs of the Incorporated Society of Musicians. Our internationally recognised Distinguished Musician Award, first awarded in 1976, has been received by Sir William Walton OM, Jacqueline du Pre OBE, Sir Michael Tippett OM CH CBE, Sir Colin Davis CBE, Sir Charles Mackerras AC CH CBE and Pierre Boulez.

1.3 Founded in 1882, we have over 5,300 individual members who come from all branches of the profession: soloists, orchestral and ensemble performers, composers, teachers, academics, a current Mercury Prize nominee and students. Our corporate membership of approximately 100 organisations includes Classic FM, the Associated Board of the Royal Schools of Music (ABRSM), the Worshipful Company of Musicians, the Association of British Orchestras, all the conservatoires, several universities and specialist music schools.

1.4 We are independent of government and not financially dependent on any third party. Our Chief Executive, Deborah Annetts, now chairs the Music Education Council, the umbrella body for music education in the UK.

Cuts and arms length bodies

2.1 On Thursday 17 June 2010 the Department for Culture, Media and Sport announced a series of in year cuts to the departmental budget

DCMS savings announced, Department for Culture, Media and Sport, Thursday 17 June 2010 http://www.culture.gov.uk/news/media_releases/7191.aspx

, the most notable of these to the music sector was the immediate ending of the Find Your Talent initiative.

2.2 Find Your Talent was launched in ten areas in 2008 to increase cultural opportunities for school children to contribute towards the previous government’s aim to offer pupils in England ‘at least five hours of high-quality culture a week in and out of school

Music Education in the 21st Century in the United Kingdom, Ed. Susan Hallam and Andrea Creech, Institute of Education

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2.3 Find Your Talent cuts will mean that planned ‘increased professional development opportunities for teachers and other members of the children’s work force’ will be lost and ‘extended services and programmes of new work for young people who have been identified as having particular abilities or talents’

Find Your Talent http://www.findyourtalent.org/pathfinders/tower-hamlets/projects/tower-hamlets-dance-consortium

will no longer take place, removing an important opportunity for talent development. It is therefore vital that the Music and Dance Scheme

Music and Dance Scheme http://www.dcsf.gov.uk/mds/

offering remains in place as now the only talent path for music education.

2.4 The planned cuts to a number of pilot schemes such as In Harmony and Sing Up will have a direct impact on the employment of music educators. The portfolio career, where a musician works in a number of different ways, performing, leading and teaching could mean that cuts in one area have a dramatic impact across the whole sector. Even musicians at the peak of their abilities teach.

2.5 The ISM is deeply concerned by the Government’s decision to cut funding to the UK Film Council and the Museums, Libraries and Archives Council because of the lack of consultation which preceded these decisions.

2.6 Whatever the merits of these individual decisions, the psychological impact of un-consulted cuts on the cultural sector as a whole creates a level of uncertainty and risk which can put off investors and private funders, and reduce the sustainability of the sector. We are also concerned at the impact such decisions could have on performers, composers and other film musicians who may have particularly benefitted from the co-ordinating role and start-up support offered by the UK Film Council.

2.7 The increased worry over the impact of cuts on the cultural sector is highlighted by Arts Quarter’s Second Recession Impacts Report

2nd Recession Impact Report, Arts Quarter, 9 November 2009 http://www.artsquarter.co.uk/newsnovember09.html

. Published towards the end of 2009, the report predicted greater difficulties with fundraising for arts organisations and a reduction in the number of arts organisations expecting high ticket sales.

2.8 The third such report closes to submissions on Monday 20 September 2010 and we recommend the Committee should use the third report if published in time to inform its work

Arts Quarter Launches 3rd Economic Impacts Survey, 11th August - 20th September 2010 http://www.artsquarter.co.uk/news.html

.

Private and public subsidy

3.1 Private support for the arts is uncertain, whilst public support offers sustainable support. Public subsidy is necessary and sustainable.

3.2 To serve as a reminder for the committee, the UK music industry was worth £3.9bn in 2009

Economic insight 20, Performing Rights Society for Music, 4 August 2010 http://www.prsformusic.com/creators/news/research/Pages/default.aspx

, up 4.7% on 2008 with music overall contributing some £5 billion to the UK economy

Music, Department for Culture, Media and Sport, August 2010 http://www.culture.gov.uk/what_we_do/creative_industries/3270.aspx

and at least 130,000 people directly employed. Our music economy is the third largest in the world for music sales and second for repertoire production. The UK’s per capita revenue of £11.45 is more than twice the size of the US which now stands at only £5.23.

3.3 The uncertainty of private giving and the uncertainty of success in the arts lie behind the importance of public support, and public support can often lever additional funding in to a project.

3.4 As an example of this leverage: The most important music education funding is the ring-fenced local government grant known as the Music Grant and formerly known as the Music Standards Fund. This fund of £82.6 million is critical in providing children from all backgrounds in all local authorities with access to music education. This Grant leverages a further £219 million of additional funding from local authorities, trusts, charities, private giving and parents

Report from the National Music Participation Director, January 2010

. If it were to be cut – which we hope it will not be – the knock-on impact would be dramatic, losing the additional funding which totals more than the Arts Council England music budget of c.£120 million

Music policy, p3, Arts Council England http://www.artscouncil.org.uk/media/uploads/downloads/music_policy.pdf

.

3.5 The structure created by this funding, which supports music services operating independently, within local authorities and outside encourages this further investment.

3.6 The Committee call for evidence included a demand to work more closely together in order to reduce duplication of effort. Music and arts services are accessible to all local authorities. They provide the overall co-ordination working closely with community groups, artists, schools, and local authority services in a number of areas. They have typically low administrative costs (5% or less from discussions with the ISM) and could expand their function significantly beyond education priorities. This co-ordination would help reduce the duplication of effort. A national organisation can often have higher administrative costs and lacks the key relationship with a local authority.

3.7 It can be difficult, some would argue impossible, to identify talent or ‘high-performance’ art at an early stage, and so private support can be very difficult to attract. Public resources are therefore key in providing initial funding, and eg supporting music education for all (as in the case of the Music Grant) to enable talent, skill and success to be identified, then allowing private support.

Uncertain private funding

3.8 The concept of the Gold Standard, whereby arts organisations are funded by a ratio of funding of 30:30:30, between box office, private fundraising and government subsidy, is designed to act as a guide to the ideal arts organisation funding levels. However, any increase in private giving could result in public funding being withdrawn or reduced.

3.9 Our individual and corporate members have expressed concerns over the experience of private-giving. Comparisons frequently made with the American cultural sector are particularly concerning. In this sector – where there is a high proportion of private philanthropy – a number of orchestras have suffered financial difficulties. This is as a result of the volatility of private giving during economically challenging times.

3.10 As examples, the Philadelphia Orchestra is facing bankruptcy due to a $7 million shortfall. Its endowment ‘stood at $112 million in November, less than half the $250 million it had hoped to have’

Philadelphia Orchestra May File for Bankruptcy, Daily Finance, 25 January 2010 http://www.dailyfinance.com/story/media/sad-violins-philadelphia-orchestra-may-file-for-bankruptcy/19330720/

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3.11 The Cleveland Orchestra has been forced to make ‘broad and deep’ cuts as a result of the financial crisis and has set out plans to reduce the number of concerts it is giving

Cleveland Orchestra plans deep cuts, Cleveland, 24 March 2009 http://www.cleveland.com/arts/index.ssf/2009/03/cleveland_orchestra_plans_deep.html

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3.12 With these concerns, it is clear that the long-term role of businesses and philanthropists in funding arts at a national and local level should never be used as a justification or excuse for reducing public funding for the arts. To do so would put music and musicians at risk and would, in turn, put the 10% of the economy relying on the cultural sector at risk.

Lottery funding

4.1 The proposed increase in funding for the arts from 16% to 20% of National Lottery funding is, of course, welcome as additional funding worth £50 million. This funding will result in an estimated minimum of £8 million going towards music-specific projects

Estimate based on overall increase of £50 million and figures from Music policy, p3, Plan for 2007 – 2011, Arts Council England http://www.artscouncil.org.uk/media/uploads/downloads/music_policy.pdf

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4.2 However, a number of music and arts projects receive funding from the Big Lottery Fund which will have its budget cut by £150 million in the re-alignment of funds to the ‘original good causes’ of the Arts, Heritage and Sport which will receive £50 million each.

4.3 These projects, with a dual focus on arts and education, or arts and health could see their funding cut in response to the reduced funding for the Big Lottery Fund. Alternatively, they could be forced to move their funding from the Big Lottery Fund to the Arts Council, resulting in a policy with no consequences.

4.4 Our estimate of funding for music related education projects funded by the Big Lottery Fund was £7 million for the financial year 2009 to 2010

Estimate based on figures from the Website, Big Lottery Fund, 18 August 2010 http://www.biglotteryfund.org.uk/wefunded-uk

. This does not include other dual focus music projects such as those involving music and health or music and the voluntary sector.

4.5 In its current incarnation, the realignment of funding could result in no change whatsoever in the levels of funding for the arts or it could result in a decline if the Big Lottery Fund became more reluctant to fund arts projects, or it could successfully result in an increase.

4.6 We believe that in order to guarantee this increase, and ensure that existing projects are not substantially cut by the Big Lottery Fund, policy guidelines need to be revised with the aim of supporting dual focus projects and ensure there is no bias against projects funded by the Big Lottery Fund relating to the original good causes.

4.7 The Government is currently consulting on the revision of the Big Lottery Fund’s priorities to encourage a greater focus on the voluntary and community sector. These revisions provide the opportunity to address the problem by inserting a line to the effect that revisions to the proportion of Lottery money assigned to the Big Lottery Fund should not impact negatively to funding for voluntary and community sector work that involves the original good causes of sport, heritage and the arts.

4.8 We have made this point in a full submission to the Department’s consultation on the National Lottery shares, and have supplied this submission as an appendix to the committee submission. The policy guidelines for National Lottery funding therefore need to be reviewed in light of the concerns noted above.

Encouraging private donations and gift aid regulations

5.1 The encouragement of private giving is welcome, and any measures the government takes will be important.

5.2 Jeremy Hunt, Secretary of State for Culture, Media and Sport, has proposed three particular methods of increasing philanthropy

Arts, heritage and sport funding boost, Department for Culture, Media and Sport, 19 May 2010 http://www.culture.gov.uk/news/news_stories/7067.aspx

:

· Reforming the Acceptance-in-lieu Scheme to ‘make it possible for donors to give works of art to the nation during their lifetimes’;

· ‘Rewarding high-performing arts organisations through longer-term funding deals, so reassuring sponsors and donors that their support would complement public investment’;

· Reforming Gift Aid.

5.3 The first of these is welcome as a method of encouraging more giving to the arts.

5.4 The second will need extensive consultation and discussion over how the Secretary of State will seek to define ‘high-performing’ arts organisations, and how this policy would support smaller arts organisations, beyond those already established, or support the innovation that can – as identified in 3.7 – not initially be identified as ‘high performing’.

5.4 Reforms to gift aid are problematic. The current view is that the system is too complex, resulting in large donations having gift aid claimed against them whilst smaller donations often don’t. The reasons for the Treasury and Department seeking to reform this policy are clear.

5.5 The current favoured proposal is for a ‘composite’ tax rate set at approximately 30% which would remove the link between donor and the rate claimed, but would create a simpler system to administer.

5.5 By removing this link, the composite rate would benefit some charities whilst, according to research carried out on behalf of the HMRC, the arts would lose out from these reforms

Gift Aid donor research: Exploring options for reforming higher-rate relief A report for HMRC and HMT, Kimberley Scharf, Warwick University and Sarah Smith, University of Bristol http://webarchive.nationalarchives.gov.uk/+/http://www.hm-treasury.gov.uk/d/gift_aid_reseach_report_091208.pdf

. This is in part because the arts often have a greater proportion of large donations, contrasted with other types of charities which have a larger proportion of smaller donations.

5.6 We strongly oppose plans to reform gift aid in this manner and setting a composite tax rate of 30% as this would reduce funding for the arts at a time when cuts are being made. We would only support such a move if measures were taken to ensure an increase in funding for the arts, though we still raise concerns at the plans to remove the link between donor and gift aid reclaimed which would lose the additional encouragement of charitable donations made by linking the donor’s tax with the donation they choose to make.

Conclusion

6.1 We welcome the opportunity to respond to this inquiry, and welcome the additional funding and support pledges by the Government with regards to increasing private giving, so long as it is not a reason for a reduction in public support which within the current model supports a substantial economic benefit. As an absolute minimum, we re-iterate the need for the Government to mitigate other burdens on music and musicians as follows:

6.2 The Live Music Bill, renewed in this parliament, supported by this committee, needs to be passed as quickly as possible (or the similar, but not as positive, draft Order) to ensure that musicians do not experience yet another delay following the lengthy consultation period of the previous parliament. Whilst we welcome suggestions of holding a review to look at radical reform of the licensing regime imposed by the 2003 Licensing Act, this should not affect the Government understanding of the immediacy of our concerns, particularly as cuts are introduced.

6.3 The Save Our Sound UK

Save Our Sound UK, http://www.saveoursounduk.com/

programme needs funding to sufficiently resource compensation schemes for all Radio Microphones (mics) which will be rendered obsolete by the selling of bandwidth. The current compensation offer

UK to see surge in next generation of mobile technology under new Government plans, Department for Business, Innovation and Skills, 28 July 2010 http://nds.coi.gov.uk/content/Detail.aspx?ReleaseID=414707&NewsAreaID=2

, though an improvement (it covers channel 69) fails to compensate other bandwidths involved (31-37 and 61-68), hitting large-scale events such as the Olympics.

September 2010