Funding of the arts and heritage

Written evidence submitted by Newcastle Gateshead Cultural Venues (arts 187)

INTRODUCTION

This submission to the inquiry is on behalf of the 10 principal building-based cultural organisations in Newcastle Gateshead, who regularly act as a formal alliance under the name NGCV (Newcastle Gateshead Cultural Venues). We are The Sage Gateshead, Live Theatre, The Theatre Royal, The Centre For Life, Tyne and Wear Archives and Museums, Tyneside Cinema, Northern Stage, Dance City, Seven Stories (The National Gallery and Archive for Children’s Literature) and Baltic Centre for Contemporary Art. This submission is not intended to replace individual responses from any of the above organisations but rather will endeavour to reflect our particular perspective as an alliance.

A brief summary of our main points

· As an unusual formal alliance of large, building-based cultural organisations we are living proof that steady, long-term prudent investment in arts and culture is of real economic and social value, especially in a region with the particular challenges and successes of the North East

· We have actively tested a number of models of working together, have much to share with other alliances and will continue to collaborate – but do not believe efficiencies can ever outweigh the need for ongoing public investment

· Any new mechanisms of funding must be informed, light-touch, long-term, joined up, and local and regional as well as national

· Lottery funding will be an increasingly important source of future stability and rules on distribution should be relaxed accordingly

· Philanthropy has an important role to play in the cultural economy but this is not straightforward in regions outside London; skills, training and incentives are required and the role should not be overstated

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;

1. a) These ten organisations have been the recipients of significant investment in both our capital infrastructure and the production of world-class cultural experiences as part of a determined commitment by Newcastle and Gateshead to effect social and economic regeneration and educational enrichment through culture. This investment has resulted in a physical infrastructure of an exceptional standard and a thriving cultural sector which makes a difference to local people’s lives, earns the region a national and international reputation and makes a substantial contribution to the economy. Four of the ten organisations are entirely new, created to address gaps not just in the regional but the national landscape. According to a specially-commissioned survey (ERS 2009) every £1 of public subsidy received by our ten venues in recent years has generated at least a £4 contribution to the regional economy and often more.

b) We are concerned that recent Government cuts, pressures on charitable and private sources of funding and future cuts could quickly damage what has been achieved and jeopardise the impact organisations like ours can have.

c) Those of us funded by Arts Council England have already seen a reduction in the ACE budget amounting to £23 million, which includes a 0.5% in year cut to all Regularly Funded Organisations, and a 15% reduction in ACE running costs. This latter reduction could diminish the strength of our regional voice, although we are grateful to ACE staff for their efforts to prevent this. The 0.5% cut will be achievable, but not straightforward given the recent financial climate. The number of major trusts in the North East still willing to dedicate funds to arts and culture is significantly fewer than in other parts of the country; our endowment incomes have reduced as a result of the financial crisis, sponsorship and other corporate relationships as well as our trading incomes have been affected by the recession and have not yet entirely recovered; so the backdrop against which future cuts are being proposed is one of serious constraint.

d) Most of the ten organisations have now been asked to model at least 10% cuts by a number of our principal public funders (DCMS, Arts Council England, Newcastle City Council). In some cases this will be mean a reduction in public investment of 15-20% in total. Those whose principal income streams are from the private sector are concerned that the scale and breadth of cuts to the public sector will, in a region like the North East, have a significant effect on audience attendance and spend. This of course will have an impact on all ten of us. We are all of the view that, given the context in which they are being made, and the fact that for buildings such as ours many of our costs are effectively fixed, these reductions in income will have a direct impact on the reach, ambition and accessibility of our programmes and the quality of experiences we can offer our audiences. To put it plainly, fewer leading artists, performances and exhibitions will be on offer and we will have to consider pricing structures and programmes of work which directly undermine the principle of access to great culture for everyone which has been so successfully demonstrated in the North East.

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

2. a) NGCV is a groundbreaking example of how larger cultural organisations can work together across disciplines in order to become more efficient and effective. We have had an informal alliance for the last ten years, which brought cultural leaders together during a period of intense development. In the last 18 months, (with the help of modest funding from ACE via the Mission, Money, Models programme), we have embarked on a new and much more focussed collaboration as a formal alliance. This has convinced us that there are excellent reasons to work and act together going forward and our joint work strands which are briefly detailed below continue to grow in ambition and achievement. However we have also learnt valuable lessons about collaboration, perhaps most importantly that it needs time and appropriate support structures if it is to be genuinely valuable to all partners.

Our current four areas of activity are as follows:

1. Physical assets: how to jointly finance a range of capital projects which could increase our capacity to generate income.

2. Shared Services: investigating what services and functions we can share, jointly purchase, or approach in a different way in order to be more efficient, save money or time, or achieve more with the same expenditure.

3. Public Engagement: how we can encourage more people to engage with culture. Specifically exploring new ways we can persuade those who are new to cultural experiences to take up opportunities, and those who do come, to take more risks, spend more with us and perhaps give time or money.

4. Digital: how we jointly respond to opportunities in a rapidly changing technological environment in a way that can generate a measurable return on investment.

b) This collaborative approach has already resulted in efficiencies, in a deeper understanding of each others’ business models and working practice and the potential for larger scale gains (financial and artistic) in the future. In these first 18 months we have commissioned an authoritative economic impact study, created a collective business case for future investment, launched a preferred supplier scheme and undertaken qualitative research into audience behaviour. We are committed to continuing to work together, to broadening our joint market and to looking for further savings and better practice.

c) We are all clear, however, that this kind of collaboration is not a "quick win" and will not be able to replace or even substantially reduce the need for public subsidy. It will make us more efficient and responsive but having thoroughly investigated possibilities for avoiding duplication of effort, the total potential savings, whilst significant, but will be no match for consistent long term public investment.

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

3. Whilst we recognise that even across our membership there are very different levels of need for public funding, it is our collective view that rational, sustained funding of cultural production is vital for the sector to continue to contribute to the economic and social health of the UK and offer high quality accessible experiences to audiences at affordable prices. It is not always possible for cultural activities to be profit-making at the point of production without compromising either quality or accessibility. It is well-documented that risk-taking, ambitious cultural projects make a real difference to the economy in the longer-term, if they are given the right investment early in their development. The North East has been a particularly fine example of this logic in recent years. The Angel of The North, The Pitmen Painters, Skellig, our annual Science Festival, Our Friends In The North, The AV Festival, the year-round programmes at the Great North Museum and countless other examples of nationally recognised and locally enjoyed achievements would not have been possible without public investment. They have all brought profile, pride and economic benefit to a region which has some of the UK’s highest levels of multiple deprivation. Even relatively small reductions in investment can damage organisations’ capacity to take risk and thereby the reputation of the sector is quickly jeopardised, locally, regionally and internationally.

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

4. a) The recent reduction in the size of Arts Council England may well have an impact on the organisation’s long term capacity to keep abreast of developments in the sector. However the restructure has been accompanied by a new approach which includes an increased trust of cultural organisations and cultural leaders, and an increased willingness to listen and to be transparent about processes and decision making. If this is borne out through the forthcoming challenging months this will be a positive development enabling more effective and joined-up policy and investment. We have also been impressed by the national team’s commitment to longer-term thinking, enabling artists and leaders to articulate clear objectives to both central government and the public.

b) The arms-length principle has its advantages especially in ensuring that audiences, artists, curators and scientists, on whose behalf ongoing investment is made, remain at the heart of investment strategies. However, as an alliance we are open to the benefits of a range of mechanisms so long as genuine expertise is employed in the service of the sector, not just at a national level but representing regional and local priorities and the very specific challenges of each of our disciplines and so long as bureaucracy is kept to a minimum. These mechanisms must be joined up and able to complement rather than duplicate one another, especially when specialist investment needs to work in concert with local authority funding.

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

 

 5.a)     We support the restoration of the Lottery to its original distribution proportions. Lottery funds have been essential in creating the infrastructure which has transformed Newcastle Gateshead. The region’s cultural venues are a staple of its civic character and vital resources, particularly in areas of higher need, where Lottery ticket sales are often greater.

b) However there have been many significant arts, sport and heritage initiatives of the kind originally supported by the Lottery, with proven benefits to their local communities, which in recent years have lost out by the steady reduction of the funding to those three distribution streams.  If there were any practical way these proposals could come into force sooner than the April 2011 and April 2012 dates proposed, we would welcome that;

c)   Much attention is being directed at present to ways of encouraging philanthropists, and private sector investors to increase their contribution to the arts.  The prudent use of Lottery funds could be a key factor in levering the broadest possible base of support.

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

6. We also believe that some of the original ‘safeguards’ built into the policy guidelines could now be relaxed in the light of experience. Discreet programmes such as ACE’s Grants for the Arts and Sustain have proved that Lottery funds can be used strategically and responsively for wider advantage. If the availability of treasury funding is to be significantly reduced, the re-apportionment of the Lottery funds becomes critical to enable the arts to become even stronger and more self-sustaining over the coming years, and to this end, the restrictions currently placed on the use of Lottery money might be reconsidered so that good intentions may not be constrained by legislation.

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;

7. a) The government’s commitment to maintain and increase levels of support for the UK audio visual sector is welcome. However great care needs to be exercised in the deployment of these funds for maximum public and economic benefit. UKFC has undoubtedly improved the success of UK production sector and it is vital that any successor agency maintains a level of national and international industry experience to make wise decisions on investments. The Regional Screen Agencies, particularly in the North East, have made a real difference to the sector and it is vital that a depth of local knowledge is maintained to maximise access to national networks and commissioning opportunities.

b) We would also urge that any future geographical spread of film and media funding should remain co-terminus with other successful creative industry mechanisms to ensure maximum efficiency and maximum benefit is gained from current and future digital convergence. There are frequent and increasing collaborations on cross-media projects between NGCV partners and the existing divisions of responsibility that see some aspects of projects nonsensically defined and funded from one source as ‘arts’ and other aspects of the same project defined and funded as ‘film’ or ‘new media’ should be tackled sensibly.

c) A key concern with the abolition of MLA is the loss of the high quality regional support which has been provided by Directors of Engagement and their teams. It is clear that many functions of MLA will need to continue (Government indemnity; acceptance in lieu; accreditation etc). It is essential that investment in museums is maintained. This has been in large part responsible for unprecedented levels of people engaging with museums, an increase in visitor numbers and a more diverse audience for museums. It has also changed the nature of engagement with museums from a passive visit to a positive experience which contributes to learning and personal development as well as to health and well-being. Whatever mechanism continues to deliver the essential technical functions of MLA, it is our view that we will continue to need regionally targeted investment (within and without the existing Hubs) and regional expertise to ensure that development to museums can continue and that these major gains are not rapidly lost.

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

8. a) We run organisations which strive to raise as much income from private, philanthropic, charitable and corporate sources as is possible. We are viewed in our region as leaders of businesses which have cultural and social objectives and we strive for innovation, entrepreneurship and efficiency with at least the same zeal as our colleagues in the private sector. We are dedicated to reducing the extent of our reliance on public subsidy, but we are convinced that it remains an essential part of the picture, to enable us to work outside market forces on occasion (in reducing ticket and other prices) to attract funding from other sources (public funding is a vital lever of matching finance, especially when risk taking is required) and to ensure long-term development of artists, scientists and curators and their products.

b) Only public funding can appropriately offer support over a sufficiently extended period to guarantee high standards of cultural production, and thereby secure other investors, or, indeed, philanthropists. Long-term support is rarely possible for businesses as their own priorities and financial success changes year to year if not more often. This has had a direct impact on all ten of us, especially in recent years. There are good examples in our region of long-term business partnerships but where they do exist it is at a relatively small amount that could never replace public investment.

c) Philanthropists are more likely to give to capital or other fixed-term projects so that their contribution is highly visible and time-limited. There are exceptions to this but again at relatively small amounts. Philanthropists in the UK, along with other audience members believe that Government has a role to play in accessible quality culture, and they look on public funding as a vital endorsement of the quality of the organisation or project before they are prepared to give themselves. Individual givers are a very important part of our fundraising activities, but not only do they represent a small proportion of our income but they are fewer and further between in a region such as the North East where other charitable objectives often take precedent.

d) There is a significant paucity of skilled fundraisers in the cultural sector, certainly in the North East and probably in a number of other regions outside of London. This is in part because of the (much) higher salaries available in the Higher Education and other sectors. This must be addressed if philanthropy is to play a greater part in our individual economies.

e) Whilst we believe that businesses and philanthropists both have their part to play in arts funding, we urge you to be cautious not to overstate their role, especially outside of a metropolitan context.

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

9. a) We believe that the Government could improve the incentives and mechanisms for private giving, particularly by easing the claim process for tax relief for individuals. For example 40% tax payers rarely understand how to gift the differential between basic and higher rate back.

b) The current Government’s interest in philanthropy is an excellent opportunity for a concerted campaign to raise awareness about the existing incentives, which are not well understood by the public.

c) Reviewing the rules on Gift Aid so that the taxpayer has less paperwork and considering a higher amount would have a particular impact on lower levels of giving and would furthermore encourage the public to understand that the cultural model often has a charitable element (see d) below). Extending the existing rules for National Trust and other organisations which have attraction status to all the major cultural organisations which have charitable status would allow us to claim Gift Aid on tickets; this would be a substantial contribution to our income streams

d) Our research into levels of public engagement confirms that UK audiences are not always aware of our need for ongoing philanthropic giving and appropriate and well-advertised contributions from central government would act as a lever in this arena just as they must continue to do so for larger donations and corporate support.

September 2010