Funding of the arts and heritage

Written evidence submitted by the National Music Council (arts 153)

Executive Summary

1. The music sector is characterised by its complex ecology and mixed economy with the result that any cut in funding will have consequences stretching far beyond the organisation directly affected by such cut.

2. Investment in the music sector represents exceptional value for money for the economy and social well being of the country as a whole.

3. Uncertainty and inconsistency in public funding for music organisations will have a long term damaging effect on the health of the sector and consequently on the country.

4. Private giving is an important source of funding for music organisations but carries risks, meaning it can never be relied upon too heavily.

Who the NMC is and represents

5. The National Music Council is a representative organisation with members drawn from the professional, voluntary and amateur music sectors and both the subsidised and commercial sectors. The NMC’s members include representative organisations for creators, performers in the live and recorded areas, promoters, festivals, music libraries, education providers, broadcasters and those providing advisory services and manufacturing and supplying musical instruments. A full list of members is attached at Appendix I.

6. The extent to which NMC members and their own individual member organisations benefit from arts council or local authority funding varies from member to member. But all NMC members are essential participants in the delicate eco-system that is the UK’s vibrant music sector.

7. The NMC itself is a charitable organisation and relies on modest subscriptions from its members and the voluntary efforts of its officers and Executive Committee.

Introduction

8. This submission reflects the views of the NMC membership as a whole. A number of members have filed their own submissions to the CMS Select Committee in which they address their own individual circumstances. The NMC supports its members’ individual positions insofar as they are consistent with the position in this paper.

9. Many of the points made in this paper, whilst specifically referring to music organisations, will have broader application to the arts and arts organisations more generally.

Responses to the Committee’s specific questions:

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?

10. Any cut in direct public funding of a music organisation, whether that funding is received in the form of an arts council or local authority grant, will have a far wider impact on the overall sustainability of that organisation than the cut itself would suggest. Many music organisations, including the regularly funded organisations (RFOs), rely only in part on direct public funding but it is a crucial element of their income without which they could not generate the other income which they need in order to be able to function.

Consequences for non-Governmental funding:

11. It is often the very fact that an organisation has won the confidence of central and/or local public funding bodies, whether for its excellence or for its pioneering work, that gives private funders the initial impetus and confidence to invest in that organisation. If the level of public subsidy goes down then the level of private funding may well be put at risk.

12. Furthermore, in the current economic climate where private sponsors, often corporations, are themselves under immense financial pressures, many arts organisations will look to Trusts and Foundations for even more support than they currently give but this is a limited and finite resource.

Impact on the development of music:

13. The perceived threat that the RFOs with a remit to represent more niche, more edgy and less obviously popular work will be at the highest risk of having their funding cut is of particular concern since it is often these organisations that are driving the development of music and the expansion of public taste.

14. The arts councils and local authorities have provided crucial seed funding for much grass roots and developmental work. This investment is critical to the growth of a dynamic, music sector, both locally and nationally, and to the development of both audiences and of future professional and amateur musicians.

15. The music available to audiences in this country is currently rich in diversity, quality and quantity. Cuts would undermine current provision and if artistic compromises are made because of economic pressures the UK arts scene will appear retrogressive in comparison to those of continental Europe, Scandinavia and the USA.

Effect on ability to plan ahead:

16. Public funding can provide a music organisation with the level of security that it needs to enable it to plan ahead. Promoters, performers and all those involved in music productions often have to plan some 2 to 4 years ahead in order to secure the venue and artist(s) needed for a particular performance, particularly where there is an international dimension to the performance and the organisation is competing on the world stage. A perennial concern of many music organisations has been that arts councils have not committed to funding them on a sufficiently long-term basis and therefore recent arts council policy to provide three year funding agreements in certain cases has helped to improve this situation for some.

17. Forward planning is also essential if the organisation is to attract audiences for its work and satisfy its core purpose of making its work accessible to the widest possible audiences. Audiences also provide the vital third element of income that a music organisation needs in order to sustain itself.

Consequences for interdependent organisations and individuals:

18. In addition to the direct impact on a single music organisation of any cut in public funding as outlined above there is the overall impact that cuts will have on all the organisations with which that single organisation works or upon which it depends. A performance with music at its heart is reliant on many more people and organisations than those visible to the audience on the night. For example:

a. It is the promoter’s role to piece together all the elements, including but not limited to the performers, that may be required to realise a particular performance, a performance that is often creatively conceived by the promoter in the first place.

b. The venue is essential in bringing together performers and their audiences.

c. Through the involvement of broadcasters the performance can reach an even wider audience, both nationally and internationally.

d. The performers are employed because of their skills acquired through years of training and education delivered by experts in that sphere.

e. They in turn rely on the creative contribution of composers and writers and on music publications and instruments that have to be manufactured.

19. These are just some examples of the hidden complexity underlying what an audience may see on stage and of the interdependence of music organisations and musicians.

Impact of possible cuts in music education:

20. NMC members are concerned that public spending cuts in education could have a direct impact on the music sector. Unless spending on music education is maintained at least at current levels the potential of some of our most talented musicians may never be realised. Music education is also important for the development of the widest possible appreciation of music in all its forms and therefore for the development of tomorrow’s audiences. Many music organisations are responsible for well-established outreach programmes that support music provision in schools. Should these programmes suffer as a result of funding cuts at the same time as a reduction in the level of funding for music education the combined impact would be very serious indeed.

The additional impact of the increase in VAT:

21. The impending increase in VAT will have a direct impact on ticket prices for commercially promoted events and therefore on the music sector. This will be the case whether organisations decide to bear the extra cost themselves, which they are unlikely to be able to afford to do, or to pass the increase, wholly or partly, on to their audiences, which may result in their selling fewer tickets and so reducing audiences.

Effect on the wider UK economy

22. The multiplier benefit, whereby for every £ invested in the arts at least double the amount or more, depending on which research and which area one looks at, is generated for the benefit of the country’s economy as a whole, is a very significant factor which is special to the arts. The UK’s musical scene is currently a major attraction for visitors to this country, so boosting tourism and all the valuable benefits they bring to the UK economy. In addition there are many other sectors that benefit from music and the other arts including the restaurant business, transport and the many providers of goods and services that support the arts. Music also is a valuable net export for this country.

23. It goes almost without saying that another impact of funding cuts will be a reduction in the number of people employed in the sector with all the consequential losses in taxes and attendant social costs associated with unemployment.

Impact on the cultural and beneficial value of music:

24. This country’s investment in music and the arts in recognition of their innate value is part of what make us a civilised society. Music and the arts also make an important contribution to community integration and social cohesion and wellbeing. Music and the arts enrich lives and their benefits go far beyond their economic impact, but they need nurturing if they are to thrive for the benefit of our society.

25. The power of music to affect the well being of our society, particularly when the country is facing difficult challenges as it is with the global recession, is well documented. If anything this is the very time to invest more, not less, in the arts. Indeed the Arts Council can trace its beginnings to John Maynard Keynes’ recognition of the valuable wartime work of its predecessor, the Committee for the Encouragement of Music and the Arts (CEMA), when the nation’s "spirits were at a low ebb".

Summary:

26. The overall impact on music and the arts of public spending cuts will be increased instability in an already fragile mixed economy far out of proportion to the actual level of cuts. Many organisations will have to reduce their activities and others will cease to exist if they cannot find one or more alternative funding sources. This will in turn have an impact on the entire sector. The current scenario has the characteristics of a perfect storm for many music and arts organisations.

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

Existing partnering:

28. Many music organisations already partner with other music and arts organisations on an occasional or regular basis in order to maximize the different skills, capabilities or investment that each can bring to bear in a particular situation or to a particular creative project.

Premises and other common overheads:

29. Premises represent a very significant element of many arts organisations’ costs and there may be scope for some degree of rationalisation in this area. Public investment in premises to house multiple arts organisations in various centres across the country could be a pragmatic and cost effective solution. In addition, the very fact of arts organisations working in close proximity to each other will enable them to find economies of scale in their operational costs that would not otherwise be possible. Furthermore such proximity could be beneficial from a cultural and creative point of view and result in some innovative work inspired by partnerships that organisations may not otherwise have contemplated.

30. The valuable outreach work that many organisations currently undertake, and which for some is a condition of their public subsidy, could be organised centrally from such premises and this could result in an increase in provision and improved equality of access to such work across the country. Examples of successful cultural hubs to date include the Sage Gateshead and Somerset House in London.

Mergers:

31. There are examples of music organisations that have already fully merged with the encouragement of arts councils. Sound and Music is a very recent case in point, bringing together 4 well established but small organisations involved in different ways with contemporary music. Whilst the experience of Sound and Music is that mergers can succeed they are nevertheless very high risk and a successful outcome is not always achieved. Furthermore, there is a significant cost in effecting a merger and, in the short-term at least, a successful merger outcome may be reliant on an increase in funding. Whilst the newly merged organisation is likely to be better placed to undertake more activity than the pre-merger founder organisations, and whilst there will be economies of scale, mergers are unlikely to result in significant overall savings.

Summary:

32. Whilst economies of scale should be sought, care must be taken to ensure that these are not secured at the expense of diversity and breadth in programming, commissioning and production.

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

33. The answer to this question requires a detailed cost / benefit analysis to be conducted which takes into account the full economic and social impact of investment in the arts going beyond the immediate returns to the arts organisations themselves. Please see the response to Q 1 above.

34. There is a considerable disparity between the current levels of public spending on the arts across the nations, both on the basis of per capita spend and as a percentage of total government spending, with Scotland investing the most and England at the lower end of the scale. It is suggested that, at the very least, public spending in England should be increased to match that in Scotland (0.49% of government spending). As a point of interest even this is well below the level of investment of many of our European neighbours. Whilst the NMC does not advocate parity with other European countries, the right balance must be struck between leanness and agility on the one hand and sustainability on the other.

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

35. On balance the NMC supports the principle of an arm’s length body being in place to allocate public monies to arts organsations. However, music organisations have experienced considerable challenges securing funding in the recent and not so recent past due to the continual changes in structures and criteria applied by arts councils and local authorities. Music organisations have to spend considerable time and resources applying for public funds, time and resource that could be spent on developing and showcasing the art form.

36. And, as mentioned above, funding has not always been granted on a sufficiently long-term basis, i.e. at least 3 to 5 years, to enable organisations to plan ahead effectively. This has resulted in an overall feeling of insecurity that has been damaging to the health of the sector.

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

37. The proposed changes are welcomed provided any increase in National Lottery funding for music organisations is additional to and not a substitute for central and local government spending on the arts in accordance with the original policy when the National Lottery was launched.

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

38. Please see our response to the above question. Furthermore, if arts council funding is to be cut then the restrictions currently imposed on RFOs applying for National Lottery funding should be relaxed.

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:

39. The impact on the music sector of the abolition of the UK Film Council is indirect but nevertheless very important. The film industry draws on the specialist skills of individuals and organisations working in a number of different areas of the music sector, most notably composers, performers and producers.

40. The UK Film Council has not only championed British film and TV production but it has secured tax and regulatory advantages which make the UK an attractive place for all aspects of film production. In particular, London now enjoys a special worldwide reputation for film and TV post-production services which in turn generate valuable income for the British economy. NMC members are keen to be reassured that this reputation and its foundations will not be jeopardized by the abolition of the UK Film Council.

41. Furthermore the use of a peer specialist review system to determine the most culturally appropriate allocation of public funds is tried, tested and workable. Funding decisions for film need to be properly informed and consequently there needs to be an equivalent arm’s length organisation to carry out this function on behalf of Government. Without such a body the landscape for British film making and all the sectors upon which it relies will not only change but there is a danger that it will be eroded to the detriment of this country’s economy.

42. NMC members would resist any future move there may be away from the use of peer review systems to determine the allocation of public funding for and within the music sector.

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

43. Businesses and philanthropists already play an important part, alongside the many private Trusts and Foundations, in funding music organisations and it is hoped that they will continue to do so. The feedback from businesses and philanthropists is that they like to be associated with funding success rather than to be plugging funding gaps left by others.

Economic risk:

44. Naturally their ability to fund is subject to fluctuation according to the economic climate. The much hailed American system of endowments and private giving has recently caused enormous problems for orchestras and other arts organisations due to the fact that giving has fallen dramatically as a result of the recession.

Reputational risk:

45. Furthermore, businesses have their own expectations and needs which must be satisfied if they are to sponsor an organisation or a particular project. The experience of NMC members is that a sponsor requires considerable servicing and that this is a resource intensive activity in itself. Furthermore, should a problem occur within the sponsoring business this can have an adverse impact on the sponsored organisation (as demonstrated by the recent anti BP demonstrations held outside Tate Britain). There can also be problems when it comes to individual donors (the Royal Opera House was forced to rename its atrium The Floral Hall in order to distance itself from philanthropist Alberto Vilar who failed to make the anticipated donation and was subsequently convicted of fraud).

Risk to artistic independence:

46. Over reliance on business or private funding has the potential to compromise the integrity and independence of artistic programming. Business sponsors and individuals are keen to protect their reputations and so are understandably most often risk and controversy averse. And yet experimentation and risk taking are integral to the development of all art forms.

Summary:

47. Private sponsorship is therefore not necessarily a reliable or long-term source of funding, being difficult to secure and sometimes high risk. Over reliance on this source would make it difficult for music organisations to plan ahead and realise their artistic and strategic vision. It is in any event more suited to high profile events than as a source of funding for grassroots creativity.

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

48. Private donations could be encouraged through double Gift Aid, Payroll giving schemes and a clear system of tax incentives. But all of these are merely alternative forms of public subsidy carrying with them their own complexity and associated administrative costs.

September 2010