Funding of the arts and heritage

Written evidence submitted by Liverpool Biennial of Contemporary Art Ltd (arts 160)

Liverpool Biennial is a public art commissioning agency, and delivers the UK’s contemporary art biennial, the largest contemporary art festival in the nation.

It is by nature, belief and action a partnership organisation. Everything we create is produced with partner organisations, giving us a broad range of knowledge, experience and practice on which to base our opinions. These partners include small visual arts organisations, community groups, registered social landlords, environmental agencies, local authorities and a wide variety of development and regeneration agencies.

Executive Summary

1.1 Liverpool city region has a world-class cultural offer, driven by the finest visual arts offer outside of London. Culture is a key driver in the area’s recent renaissance, evidenced by the success of its European Capital of Culture year. Culture remains a crucial asset in the city region’s economic and social development and future competitiveness.

1.2 Liverpool Biennial is an example of the quality and distinctiveness of the UK’s cultural offer, attracting tourism from across the globe, generating economic benefit, levering investment and contributing to national and international external image as well as local quality of life. The funding of the arts sector is an investment, and large cuts, or cuts which are prolonged or repeated, will have a devastating effect on the benefits the arts can deliver.

1.3 In addition, the arts and cultural organisations and practitioners in the city have a considerable track record (both pre and post 2008) in delivering work that has contributed to improvements in key areas such as health, social cohesion, sustainable communities and the urban environment.

1.4 Throughout, and as a result of, Liverpool’s European Capital of Culture 2008 year, the city region has engaged in cross-sector, cross-organisational collaborative working in order to create positive change across the city region’s needs, ambitions and aspirations. Working together through initiatives such as LARC and VAiL allows the arts to achieve more, but the potential for cost savings is limited.

1.5 Most cultural organisations are part of a finely-balanced cultural ecology, which has international impact and reach, but is locally relevant and specific to residents and voters. The priority for government funding and new funding structures must begin with quality of the artistic offer, but must also recognise that the ability of organisations to deliver against a range of desired outcomes (economic, regeneration, education etc.) can support funding decisions.

Responses to Questions: Evidence and Recommendations

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 It is currently unclear what scale future spending cuts will take, however it seems appropriate to predict that deep, cumulative cuts will immediately affect individual citizens at a local level as well as Britain’s image internationally.

2.1.1 The arts are flexible and adaptable and are driven by those with a passion for what they do and an exceptional belief in the power and importance of the arts.

2.1.2 Small-scale cuts over a limited period of time will provide many challenges. Organisations are likely to respond with vigour and innovation and may actually improve the efficiency of their systems, although the scale and quality of programming will undoubtedly suffer.

2.1.3 Large cuts in funding, or cuts of any size which are prolonged or repeated are likely to have a devastating impact on arts organisations, but, more importantly, will destroy a raft of benefits to our communities and fellow citizens – environmentally, socially and economically, and on the perception of the UK as a cultural centre, affecting tourism and levered investment.

2.1.4 The impact of cuts will be multiplied through a knock-on effect on the availability of funding from other matched sources. Equally, we recognise that spending cuts will not be limited to DCMS. The sector relies on funding from other government departments and public sector organisations, due to its wide-ranging impact in areas such as regeneration, education and health. The effect of cuts across all government departments will be accumulative.

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 Liverpool Biennial is a partnership organisation and has practiced working with partners from various sectors for more than a decade. Collaboration can provide certain efficiencies, but it is more useful as a means to achieve desired outcomes. Partnerships can also take great resource and time to develop and require investment in a level of trust.

3.2 For Liverpool Biennial, this trust has enabled the partner organisations to present programme that is greater than the sum of its parts, creating economies of scale in terms of artistic merit. This model is also being implemented through Liverpool Art Regeneration Consortium (LARC) and Visual Arts in Liverpool (VAiL) to coordinate programme and thereby attract greater attention and audiences.

3.3 But, these examples are about collaboration to achieve greater things, not about savings. Liverpool Biennial is not building-based and derives both saving and freedom by partnering with venues in Liverpool, but this won’t be appropriate to all organisations. Much of the savings generated by working together is likely to come in operational areas (finance, marketing, purchasing) and while these will be very important to the sustainability of the arts going forward, the sector is already highly efficient in these areas, and organisations like Liverpool Biennial spend the vast majority of their revenue on creating and presenting work.

3.4 Therefore, we feel that working together is unlikely to be a short-term solution, except for those organisations that have already formed close partnerships. We will continue to take advantage of such relationships and will help our colleague (smaller) organisations to develop and exploit them.

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

4.1 The level of public subsidy is really more a question of public benefit. What does the government believe that that arts can achieve? How much of our international competitiveness is tied to the world-beating provision of cultural opportunities that public subsidy catalyses? Liverpool Biennial generates international attention, contributes to the image of Liverpool as a city worthy of investment, and works to develop the fabric of the city - outcomes that would not be possible without public investment.

4.2 The funding of the arts should be perceived as an investment, rather than a subsidy. Investment implies a return. Cultural organisations can justify some investment directly - Liverpool Biennial 2008 generated a spend of £26.6 million, more than 10 times the amount of public money invested in the festival - but other returns are more difficult to value. Our ‘On The Street’ programme in one of the most deprived wards in the country directly equips disengaged young people (NEETs) with skills and aspiration, and the desire to re-imagine their derelict neighbourhood and to lead their community toward a positive vision of their place, time and opportunity. DfES studies suggest that the current cohort of 16-18 year old NEETs will have a total cost to society of £15billion. What will investment in this programme be worth to those young people, their community, and to wider society in the future?

4.3 It is true that subsidy plays a role, and that not all of the work that the arts undertake pays a direct, or even closely indirect, return, but this research and development work is critical to maintaining the quality of the art and to the extended creative industries. The knowledge economy depends on creativity.

4.4 Likewise, the tourism industry needs product to offer, product that is distinct in a global market place. Quality and distinctiveness works: Liverpool Biennial 2008 attracted 9% of its total 975,000 visits from international visitors who came specifically for Liverpool Biennial, and it levers around 20% of its production budget from Europe and around the world. Liverpool’s year as European Capital of Culture proved that cultural output, commissioned from British arts organisations with real weight behind their punch, will attract visitors and the consequent economic benefit*.

4.5 So, the challenge is not to quantify public subsidy, but to find new ways to quantify the return on the public investment. If this is properly understood, sustainable levels should become obvious.

* Between 2004 and 2008 the city region’s seven largest attractions saw a 50% rise in visitor figures. The Liverpool ECoC attracted 9.7million additional visits to Liverpool, generating a direct economic impact of £753.8million of additional visitor spend in the city region and region. These included 2.6million visits from Europe and the rest of the world, 97% of which were first-time visitors to the city. These additional visitors generated 2.43million staying visitor nights in the city region.

National and local media coverage of Liverpool’s cultural offer more than doubled between 2003 and 2008. Positive stories about the city grew by 71% between 2007 and 2008. 68% of UK businesses believed that the ECoC had a positive impact on Liverpool’s image. 85% of residents agreed that Liverpool was a better place than before the ECoC award.

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

5.1 The current system has encouraged sustained growth in the cultural sector and the associated creative industries. The system has created an artistic infrastructure and output which is the envy of much of the world. The development and funding system that exists has provided the government and the world with an extraordinary example of culture-led regeneration. Few cities have managed to lead their regeneration through such a broad diversity of cultural offer as that provided by Liverpool. The city was blessed with great infrastructure, talented programmers, and the full range of artistic production, although the visual arts were particularly strongly represented. What the combined, and conjoined, efforts of DCMS, Arts Council England, Liverpool City Council, Northwest Regional Development Agency and other development agencies achieved was to knit the city’s cultural advantage into economic, social and regeneration advantages.

5.2 This is not to say that the system does not need to be renewed and updated. The environment in which we operate has, and will change, considerably. The unified strategic vision that benefited Liverpool is not common enough and more could be made of seamless work across the social, education, regeneration and health sectors. Real questions remain as to how the current system can help entrepreneurialism blossom in arts organisations, and how the economic benefits that the arts contribute should be reinvested by the businesses and municipalities that receive these benefits.

5.3 Liverpool Biennial believes that the system should reward success and that part of the reward should be the availability of funds that enable risks to be taken to create better output. Those organisations that can demonstrate a track record should be enabled to create more, to innovate and speculate. This belief is rooted in a corollary belief that partnership means that partners learn and grow from each other and share their resources and ideas to create the new. Liverpool Biennial has been working with smaller, emergent arts programmers by sharing our experience, contacts and resources to enable them to develop their capacity to make artistic content. In short, we help them to mitigate risk that facilitates improved artistic reach.

5.4 Finally, we encourage a move away from structures that promote short-term project or initiative based funding. This breeds inefficiency as opposed to longer-term investment which allows for more efficient planning and delivery.

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

6.1 We welcome the return to the original distribution framework of National Lottery funds as Lottery funding has produced real benefits in many areas.

6.2 A recent Lottery application by Liverpool Biennial gives an example of how Lottery funding can have wide ranging benefits:

6.2.1 Better chances in life for project beneficiaries through specific and transferable skills to aid their progression into education, training or employment;

6.2.2 Stronger communities by bringing together disengaged young people with community groups, schools and residents of all ages;

6.2.3 Bringing the community together to tackle the needs of the neighbourhood, generating pride, community identity, and a safer environment for residents;

6.2.4 An improved urban environment and permanent asset, with community ownership contributing to reduced anti-social behaviours.

6.3 Changes in Lottery funding will only be judged successful by the quality of decision-making regarding funding distribution. In an environment of reduced public funding, we return to our belief, discussed above, that joined up, strategic vision will be required to make big picture, high impact, and sustainable impact using National Lottery funds.

6.4 We share the LARC assertion that there must be a fair balance between cultural and heritage beneficiaries, and between investment in projects and investment in core costs, infrastructural development and maintenance.

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

7.1 We support a review of the policy guidelines, but re-assert our view that, much as organisations like Liverpool Biennial or LARC have made much of concerted, strategic action, new structures and guidelines for funding bodies must be established within a strategic framework. Any review or changes to the funding systems must understand what can be achieved

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 cultural sector is amorphous and open. Experience, knowledge and ideas are customarily shared between the sector and beyond, often through movement of staff between institutions. The cultural sector in the UK has thrived because of this interchange and we therefore believe that support systems must remain in place to keep the wider sector at the cutting edge and to ensure that it can maintain its ability to generate programme and content which is valued locally and internationally.

8.2 We don’t work specifically with film or with museums, libraries and archives, but we do understand that these sub-sectors require support that is relevant to their needs. Finding mechanisms that can replace the service the abandoned DCMS arm’s-length bodies offered to these sub sectors will be a matter for consultation with the organisations affected, but we do express concern that this consultation did not happen before the bodies were finished. Deep, swinging and sudden cuts will frequently create shockwaves and impacts that are greater than those created by the cuts themselves.

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

9.1 The private sector, including sponsorships, trusts, foundations and individual giving has played an important role in supporting culture for many years, providing time and expertise as well as finance. There is every reason to think this will continue, but we think that private support will be constrained in the near future by perceptions of the financial environment. Many private individuals, trusts and foundations have seen the resources available to then shrink, while spending cuts will mean considerably more competition for the funds that are available. We believe that many individuals will respond to the third sector generously and will increase support, but the timescales in which this happens are unlikely to replace the resources lost through spending cuts.

9.2 However, there are models that provide the real possibility of increasing funds. Endowment funding is relatively unexplored in Britain but has been a successful means of supporting activity in other places. In America and Australia, individuals are more willing to make commitments to arts organisations through small donations, season tickets and memberships. We feel that a significant culture shift is required to embed these sources of revenue and support and to grow them to the point where they provide sufficient free revenue.

9.3 Major questions also remain about the time scale and commitment necessary to develop real growth in private investment and for the cultural sector, legislation and support systems to build the skills, knowledge and structures required. We also understand that some areas will continue to find private fundraising more valuable than others. London and the South East have advantages in profile, access to wealth, and a more well-developed history of private sector support. Other areas of the country will have further to travel.

9.4 The arts are adaptable and entrepreneurial and many organisations will, like ourselves, expand their ambition and capability to raise private support. We have no doubt that private donations and support will continue to play an intrinsic role in the sustainability of the arts.

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

10.1 The introduction of Government incentives would be welcome and should help to encourage private donations. This is likely to occur only if it is part of a package of actions which help to change the culture of giving in Britain, and so incentives should be seen in the role of a catalyst to change rather than a direct benefit which triggers action by individuals. Tax benefits already exist for private donations, but it is important to note that the organisation which collects donations receives and understand the impact of the benefits rather than the individual who donates. We would like to explore whether this system provides a greater benefit or if other means of delivering tax benefits would create more growth.

10.2 Additionally, we would like to see the Government explore other initatives such as lifetime giving, gifts of works of art, gift of shares, and tax breaks for social investment funds.

10.3 Finally, more radical solutions may provide more benefit at less cost. For example, unrecoverable VAT is a huge cost to many cultural bodies and we would like to see whether strategic criteria can be established which relieve this burden. Innovation will be required of any arts organisation which has the will to survive and thrive in a very different environment, and we believe the Government should be open to innovation as well.

September 2010