Funding of the arts and heritage

Written evidence submitted by Salisbury Playhouse (arts 120)

Executive Summary

· Public investment in the arts is extremely small in relation to the overall public spending and has been maintained for the past 15 years.

· These small amounts are proven to lever significant private and commercial investment.

· The arts mixed economy ecology is lean, fragile, complex and unique. Any removal of public spending will have a significant negative effect on the sector and its repercussions will be felt across the nation.

· The maintenance, and more importantly, the inflationary increase of both central and local Government funding for the arts is essential.

· Private funding cannot replace a shortfall in public funding for the arts – they are mutually dependent.

· Organisations such as Salisbury Playhouse service its local community and economy as much as it feeds in to and supports the nation’s theatrical output and must not be seen in isolation, it is greater than the sum of its parts.

· Maintaining Arts Council England as an independent public body for the distribution of public funds for the arts is essential.

· Re-establishing the National Lottery funds to their original level and purpose is welcomed.

1. Introduction

1.1 Salisbury Playhouse is one of Britain’s leading regional producing theatres based in the South West, with a national reputation for home-grown work of the highest quality. Our on-site facilities include a 517 seat main house auditorium, 149 seat studio, rehearsal room, community and education space, set building workshop, scenery paint frame, prop making workshop and store and costume making department and wardrobe. Outside of the building the Playhouse delivers a comprehensive year round participation and outreach programme which services Wiltshire and beyond – in 2009/10 this programme engaged over 14,500 participants.

1.2 Our mission is to:

· Create vibrant and original theatre

· Celebrate our national status as a leading producing theatre

· Engage, inspire and entertain our whole community

· Train and develop the nation’s creative talent

· Maximise financial opportunities to deliver our artistic ambitions

Within an overall vision to produce ‘Theatre Beyond Expectation’.

1.3 In 2009/10 Salisbury Playhouse designed, built, rehearsed and performed nine main house productions (253 individual performances) – including one world premiere and one UK tour, five studio productions (90 individual performances) and welcomed 25 visiting companies of national and international repute - attracting 119,956 audience members.

1.4 Furthermore, in the last financial year the Playhouse contributed £9.4 million to the local economy through additional visitor spend and the use of local goods and services.

1.5 Salisbury Playhouse is pleased to submit evidence to this important inquiry as a long-standing recipient of public funding from Government via Arts Council England, South West. Public subsidy is an essential source of income for arts organisations like ours and the inquiry raises some important questions, the conclusions of which will have a significant impact on the future health of the arts and heritage sector.

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 Due to 15 years of small* sustained investment and the introduction of the National Lottery in 1994 the Arts in England are a huge success. The leverage from this public money is currently at a national ratio of 1:2 – for every £1 invested in the arts, a further £2 is generated from commercial and private sources.

*Arts Council England’s total budget equates to 0.24% of the total DCMS budget. The arts budget for the whole of Wiltshire is only 0.1% of the total council budget.

2.2 A reduction in the current public funding base, locally and/or nationally will unravel all of the beneficial effects and developments made by arts organisations over the past 15 years. It will be extremely quick to undo and will take many years to rectify.

2.3 For many arts sectors, the relationship between central and local Government funding is an essential component towards a successful and balanced ecology.

2.4 The unique model which exists in the UK between public funding and private and commercial support is one in which the balance is mutually dependent. A reduction in public funding on either a national or a local level will inevitably create an income shortfall which the private and commercial sector will struggle to restore.

2.5 As an inevitable consequence the range, activity and output of arts organisations will reduce. However, fixed running costs including overheads and salaries will, at best, stay at their current level. And the arts sector as a whole will cease to offer the current ‘value for money proposition’ expressed as a ratio of fixed costs to output that it does now.

2.6 Salisbury Playhouse is already a financially lean organisation producing enormous return for very little investment. Wiltshire recently went through a spending review (2007/08) when forming to one council and froze funding to the arts – prior to this £25,000 was cut from the Playhouse budget for three consecutive years. During 2008/09 the Playhouse rigorously sought extra funds and overhead savings (c.£200,000) in response to the recession. Consequently, further spending cuts from central and local Government would have a significant negative effect on the Salisbury Playhouse and its operation.

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 A network of smaller organisations would benefit from sharing administrative services such as finance and human resources. Digital resources could also create economies of scale to reduce marketing and publicity costs.

3.2 Joint procurement policies for services – for example, prior to Wiltshire merging as one council the Playhouse benefitted from joining the Salisbury District Council buyers group and reduced stationery bills.

3.3 Co-productions with other producing theatres with subsequent UK tours will provide greater economies of scale.

3.4 The creations of consortiums which can share access services such as captioning equipment, sign language and audio description.

3.5 City-wide ticketing networks – increasing cross marketing opportunities and box office efficiency savings.

3.6 Larger building based organisations offering space for smaller arts organisations to utilise reduces overheads.

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

4.1 Robust evidence suggests that the current level of public subsidy with annual allowances for inflation are necessary to retain the positive momentum of the last 15 years. "Art is cheap for its rich returns, but it is not free" (Polly Toynbee, The Guardian 28th July 2010), moreover the arts are profitable. For 0.07% of the total public spending bill (7p in every £1) West End theatre alone paid back £76 million in VAT, a 40% dividend – these are theatres which rely on regional producing houses such as ours to take the risk in finding their next Les Miserables, War Horse or Enron production for the nation to be proud of and promote around the world. This risk requires public funds, without it creativity will be lost along with the skills and national pride (of the 187 Academy Award nominations given to Britons in the last 30 years, 145 started out and regularly performed at subsidised theatres, such as Salisbury Playhouse).

4.2 Furthermore, the link between public subsidy for the arts and commercial return is now proven. Public subsidy for the arts plays a vital role in the evolution of talent within the creative industries, which are an essential component of the future competitiveness of British business and are acknowledged as our best route out of recession ("It is actually in recessions that people need art the most" Jeremy Hunt 14th January 2010). Between 1997 and 2007, the creative economy grew faster than any other sector, generating two million new jobs and £16.6 billion in national exports.

4.3 To further support the sustainability argument, the position of the arts and heritage sector as one of the ‘crown jewels’ of UK society foregrounds the role of the sector as a prime lever for incoming tourism in the UK. Arts and culture are central to tourism in the UK, worth £86 billion in 2007 – 3.7% of GDP – and directly employed 1.4 million people (David Cameron’s speech on 12th August 2010 reiterated that UK tourism was the most important business - rated third in the world). Inbound tourism is a crucial earner of exports for the UK economy, worth £16.3 billion to the UK economy in 2008.

4.4 The Tipping Point for arts funding is minimal. The difference between 15% and 25% cuts from the Arts Council Budget is £45 million – this is a small sum to the Government but significant to such a delicate industry. The Salisbury Playhouse’s scenario planning indicates that cuts above 10% to 15% over four years would be our Tipping Point at which significant change would need to be considered.

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

5.1 The Government’s principle of ‘arms length’ funding requires a non departmental public body, such as the Arts Council (a worldwide exemplar body for the distribution of funds and industry expertise), in order to distribute public subsidy to the arts sector without political influence. Therefore, yes, the current system, and structure is the right one.

5.2 Funding from Arts Council England also acts as an endorsement and indicator of high quality – it is proven to lever partnership funding from the private sector and philanthropic sources, particularly Trusts and Foundations.

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

6.1 Reinstating the National Lottery funds to their original level and purpose will have a positive effect on arts and heritage organisations.

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

7.1 In the past there have been issues over the restrictions governing the use of National Lottery funding which in the past have inhibited strategies to combine Lottery and Treasury funding in the most cost effective way. Policy guidelines for National Lottery funding should be reviewed to ensure that they are sufficiently flexible for its investment to work strategically, effectively and flexibly alongside Treasury 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 The impact is currently unclear but it is imperative the Arts Council is not expected to assume responsibility for the work and activity of either the Film Council or the MLA.

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

9.1 They already do - the evidence of the last 15 years confirms that small amounts of public money work hard to stimulate a mixed economy culture that is internationally acknowledged and which delivers a real return for the country both in economic terms, and in terms of quality of life and the cohesion of society and communities.

9.2 If public funding is significantly reduced, the knock-on effect will be profound. Commercial and philanthropic organisations will also be facing financial challenges, particularly Trusts and Foundations which rely on the performance of large capital funds as the means to support their grant giving to arts organisations.

9.3 It is known that commercial and philanthropic individuals and organisations will not fund public subsidy shortfalls, they want to be associated with success – it is therefore dangerous to assume that they would ‘plug the hole’.

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

10.1 Reform the current HMRC Gift Aid scheme to make it more user friendly for individual giving to the Arts.

10.2 Adopt the US model of tax incentives to increase philanthropic giving.

September 2010