Funding of the arts and heritage

Written evidence submitted by London Councils and the Chief Leisure and Cultural Officers Association of London (CLOA London) (arts 135)


This response is submitted by London Councils (the cross party membership organisation of the 32 London boroughs and the City of London) and the Chief Leisure and Cultural Officers Association of London (CLOA London).

London is often the envy of the rest of the UK for its levels of arts and heritage funding. However, many of London’s local communities are not touched by national or regional cultural investment and as well as some of the highest levels of cultural engagement, London also has some of the lowest.

There are going to be extremely challenging times ahead for the arts and heritage sectors and London local government like other funders will be making difficult decisions. All funders will need to work closely together to ensure that the inevitable reduction in public subsidy has the least negative impact possible.

We are concerned however, in the turbulent times ahead for the arts and heritage sectors that local organisations and those working most closely with local communities are going to see the worst impact. We therefore would like to see:

· Government incentives which encourage private sector investment and philanthropy but with particular consideration to be given to those smaller organisations that may not be able to offer private partners high profile

· DCMS ensure that those organisations it funds either directly or through its NDPBs are committed to greater engagement with local communities across London. This could include linking to local authorities’ cultural priorities or to consider whether reinvestment in local museums could be facilitated through, for example, charging international visitors for museum entrance

· National Lottery investment reflect local rather than national priorities with more local control over how decisions about lottery funding are made to ensure that money best addresses local need.

· Government consider ways in which local economic generation can come back to local communities to reinvest as set out in the Prime Minister’s recent speech on tourism.

Detailed comments on the questions are given below.

Specific points

1. 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

a) Recent and future spending cuts from central and local Government are undoubtedly going to have a huge impact on the arts and heritage sectors.

b) Collectively, local government is one of the major investors in the cultural sector. In London alone, the 32 boroughs and the City of London have a combined annual spend on cultural services of over £509 million, with £79.4 million specifically for ‘culture and heritage’1, This means that local government currently contributes around half of the £1.1 billion investment by public bodies on culture and sport in London2. (Further information on this can be found in the London Councils’ publication, ‘Playing Their Part’)

c) Local authorities however are under unprecedented budgetary pressure and are going to have to make difficult decisions over future funding. Non-statutory services are inevitably going to be particularly vulnerable.

d) Most arts and heritage organisations are reliant on a complex mix of, often interdependent, public funding streams and private sponsorship. Many local arts organisations, for example, are revenue funded by both Arts Council England and local government. Should one funder withdraw support, the organisation will not be financially viable to other funders and the impact to the organisation will be far greater than may have been envisaged.

e) It is vital in these times that funders work together to ensure that strategic joint decisions are made that ensure the best outcome for local areas rather than knee-jerk reactions. London local authorities often work closely with Arts Council England individually and collectively, ACE supports the London Cultural Improvement Programme and invites four elected members onto its Regional Council. However, we need to be mindful that there is currently no mechanism to arbitrate where there are different priorities between different funders. It is vital that local priorities are at the heart of every decision around future arts and heritage funding, and local government is best placed to do this.

f) Where funding cuts are unavoidable, these cuts should be implemented as part of a phased process to allow organisations sufficient time to put contingency plans in place / seek alternative funding.

g) It should also be remembered that arts and heritage organisations attract much inward investment, particularly from tourism. This is particularly true in London where tourism is worth over £16 billion per year and employs 285,000 people and two-thirds of visitors give ‘culture’ as their primary reason for visiting the capital3 .. The loss of funding to arts and heritage organisations will therefore have a detriment impact on the wider local economy.

h) Whereas local investment supports arts and heritage organisations that attract tourism, the economic impact that they generate through additional tax yield goes directly to the Treasury. As the Prime Minister stated in his recent speech on tourism, ‘if a local council does more to attract tourists to its area they know they’ll be picking up costs but they’ll get none of the additional business rate revenue. Central government sucks in 100 per cent of this revenue generated by all local economic growth. This is just mad. Local authorities must be allowed to invest some of this back into their own communities.’ If local authorities can access the revenue generated by local economic growth it could be used to support those attractions that help generate the revenue in the first place.

i) The London boroughs recognise the economic impact that can come from culture and are working together to seize these opportunities. The five host boroughs of the 2012 Olympics - Greenwich, Hackney, Newham, Tower Hamlets and Waltham Forest have pooled their resources to develop the CREATE festival. Now in its third successful year, CREATE will return every summer leading up to and following the 2012 Games. Based on research undertaken with the University of East London, CREATE estimate that the 2009 festival with its audience of 822,000 had an economic impact into the local area of more than £15 million.

j) As well as the economic benefit, London local government recognises that arts and heritage organisations are often focal points within local communities and have a positive impact on people’s lives and improve satisfaction with their area, generating civic pride, community cohesion and a level of ‘feel good factor’, particularly during periods of recession. When asked about their local area, residents who are satisfied with their local cultural and sporting facilities are more likely to be happy with their local area as a place to live.4 Should funding be ceased or dramatically reduced, then these important community elements may be affected similarly.

k) This is supported by a recent GLA survey on culture, indicating that 84 per cent of Londoners think that the city’s cultural scene is important in ensuring a high quality of life. And far from being a luxury, the survey showed 71 per cent of respondents feel that it’s important that ‘taxpayers’ money continues to be invested in London’s culture during difficult times, compared to just 16 per cent who disagree5

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

a) London local government cultural services are already developing new ways of working both in terms new models of governance for cultural services and in joint working across borough boundaries. The London Cultural Improvement Programme has been driving this work towards more efficient working and is recognised as an example of best practice nationally.

b) There are undoubtedly ways in which arts and heritage organisations can also work more efficiently together and therefore lessen their reliance on public sector funding in terms of mergers and/or formalising the sharing of administration, management, technical services/expertise, premises, and marketing, advocacy etc. This will play to the strengths of each organisation and help drive efficiency.

c) Local authorities can play a local leadership role in these arrangements and in moving towards arrangements of local cultural partnerships that address local need. In many instances local authorities are already playing this advocacy and brokerage role in bringing organisations in the borough together to work collectively and share best practice.

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

a) Due to the different ways in which arts and heritage are subsidised it is extremely difficult to give one answer to this questions, especially due to the fact that many public bodies that support these organisations, especially local authorities, have to consider their level of public subsidy for the arts and heritage in the wider context of other, competing, demands for public funding – e.g. housing, social services, many of which will be seen to have higher priority.

b) We believe however in the fundamental need for continued, stable public subsidy in arts and heritage in order to deliver long-term strategies. The level should aim to both ensure that the sector can flourish and contribute to the economy in the way that it currently does, and also to ensure that arts and heritage provision can be affordable and accessible to all.

c) Public subsidy in the arts and heritage generates economic benefit. The creative economy has greater importance in London than anywhere else in the UK. The Gross Value Added of London’s creative industries sector was estimated at £18 billion in 2007. Relatively small amounts of public subsidy have stimulated a mixed economy culture and resulted in local and regional investment.

d) The arts and heritage sectors can help economic recovery. Arts Council England note that 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.

e) Vitally the creative and cultural sectors are identified as one of the top seven growth areas for London’s economy6 .

f) It must be recognised that short-term savings now may lead to situations that are not redeemable in the future – this applies in particular to conservation of heritage.

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

a) In the difficult times ahead it is vital that funding reflects local needs and priorities. Local authorities are best placed to know what these local needs and priorities are and in many cases have the direct relationships with local organisations and communities. By ensuring that local authorities are at the heart of funding decisions, available money can be directed in more targeted way to address local needs and aspirations.

b) DCMS and its NDPBs must ensure that nationally and regionally funded instructions are committed to a local community approach and to working in partnership with other local organisations. There are many boroughs, particularly in Outer London who do not feel that these organisations are reaching into their communities or that there is any attempt by these organisations to align their work to these boroughs’ local priorities.

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

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

a) The changes to the distribution of National Lottery funds should help arts and heritage organisations although we do not yet know how quickly this will translate to more funding on the ground and particularly how those organisations that are facing high reductions in revenue funding will be able to respond. In order to make a real impact on a local level, the NLDBs should be considering more radical changes that allow more local control over lottery spend. This would ensure that this spend is responsive to local needs and priorities rather than national.

b) We do not want to set a precedent whereby Lottery funding Is seen as replacement for, rather than complement to, Treasury funding

c) It is vital that we ensure flexibility in the funding options available for smaller local/community groups.

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

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

a) If businesses and philanthropists are to play a long-term role in funding arts at a national and local level there needs to be more Government incentives to encourage private donations.

b) There is a strong concern that it should not be assumed that there is enough capacity from the private sector to ‘plug the gaps’ that the inevitable reduction in public sector funding is going to recreate. New arrangements will take time to establish and cannot immediately replace government subsidy. Fundraising relies on developing relationships and making approaches from a position of strength or mutual understanding, and as such, simply seeking funding to plug the gap left by government will not be tenable. Recent announcements and media articles have demonstrated that sponsors do not and will not see their role as a replacement for mainstream funding.

c) Cuts in public funding of arts and heritage are likely to make the sector less attractive to private companies, trusts, foundations, philanthropists and others. Private sector funding is more likely to be secure by arts and heritage organisations for specific projects rather than on-going revenue support.

d) This is particularly true at a local level. Those arts and heritage organisations who have a national/international profile will be the ones most able to benefit from this type of giving. More locally focused organisations, who in fact may be the ones best delivering local priorities for their communities will not be able to offer the same profile opportunities for sponsors/donors and will inevitably struggle to compete with the larger organisations.

e) Fundraising is a skilled and time consuming role. Small arts and heritage organisations, often those working in the most challenging communities, will be unable to achieve the funding needed because of a lack of staff resources, critical mass and skills; we do not want to create a situation whereby large well known organisations able to attract finance surviving, at the cost of the small companies. The arts sector is an eco system, with grassroots artists and companies experimenting with ideas, artists and audiences. By way of example, BAC in Wandsworth feeds the Barbican Centre with new and extraordinary performances, which the Barbican could never develop itself. If local arts organisations are allowed to fail it will lead to a steady decline of the vibrancy of arts in the UK.

September 2010

[1] CIPFA data 2008-2009, Service Expenditure (Outturn prices), Excluding Capital Charges: Cultural and Related Services - t his includes the CIPFA categories of Culture & Heritage, Recreation & Sport, Open Spaces, Tourism and Library Service.

[2] Public Expenditure Statistical Analyses 2009, HM Treasury, 2009

[3] Key visitor statistics, Visit London, 2009 and London Tourism Action Plan 2009-2013, 2009

[4] Place survey, Audit Commission, 2009

[5] Cultural Metropolis. the mayor’s draft cultural strategy: 2012 and beyond, 2010


[6] Destination 20:20, LDA, 2010