Funding of the arts and heritage

Written evidence submitted by the Art Fund (arts 195)

1. The Art Fund is the UK’s national fundraising charity for works of art. We give grants of more than £4 million each year to enable museums and galleries to buy works of art. We don’t receive government funding; our 80,000 members and 600 volunteers across the country make our work possible. We believe that everyone should have access to great art and that by bringing together the contributions of our members and supporters, we can all play a part in enriching the range, quality and understanding of art for all to experience.

2. We work closely with the bodies overseeing, representing and helping to fund the arts and heritage sector, including the Department for Culture, Media and Sport (DCMS), the Museums, Libraries and Archives Council (MLA) and the Heritage Lottery Fund (HLF).

3. We will restrict our comments to the most relevant areas of the Committee’s inquiry, with a particular focus on the museum and gallery sector. The terms ‘museum’ and ‘museums’ are used to denote both museums and galleries.

The impact of cuts in public funding

4. Museums are a valuable and unique resource, providing knowledge and inspiration while connecting people and communities. They attract audiences from home and abroad, and our major institutions showcase the best of UK culture and heritage to the rest of the world. In recent years many museums have reinvented themselves: using a base of public funding they have been able to generate substantial private investment to rebuild, remain relevant and become truly outstanding. At the same time they have become increasingly popular: over 50% of UK museums saw an increase in visits during 20091. 46.7% of adults now visit a museum, gallery or archive and over three quarters (75.7%) engage with the arts.2

5. The proposed cuts to public spending are likely to have a significant impact on museums across the UK. National museums and galleries receive grant-in-aid directly from central government, which on average accounts for almost 50% of a museums funding3. The rest is raised commercially, or from charitable sources or private individuals. National museums received a 3% cut in funding for this year and have been asked to model cuts to their public funding of 25-40% to 2014/15. National museums use public money to generate £240 million of additional funding, and the planned cuts could severely hamper their efforts to lever money from other sources.

6. The proposed cuts could impact on several fronts, but ‘additional services’ such as education and outreach programmes, which have grown in size and scope in recent years, will be particularly vulnerable. Additionally the ‘blockbuster’ exhibitions we have become used to may be threatened on two fronts - as less money is available within the museum, and as private sector sponsorship becomes more difficult to attract. The policy of free admission to national museums and galleries will be increasingly difficult to maintain. It has been an astounding success, acting as a major boost for tourism and doubling the number of visitors since it was introduced in 2001, but even before the planned cuts are made, government grant-in-aid fails to compensate for the high costs involved. It would be a real backwards step if museums were forced to bring back entry charges in some form, especially as we approach the tenth anniversary of the policy’s introduction.

7. We are particularly concerned that cuts may be directed at curatorial posts and acquisition budgets. When faced with the choice between keeping the lights on and buying new objects, the decision seems easy. But expert curators with the resources and knowledge to buy, display and interpret new objects are vital to the medium- and long-term health and appeal of a museum, enabling it to fulfil its core functions of caring for, researching and developing collections. Our last ‘Collecting Challenge’ research, which explored museum collecting activity 2005-2010, found that curatorial posts and skills are under threat in 20% of museums, and 50% are unable to allocate any money to new acquisitions. New acquisitions bring in new and repeat visitors, and once a museum gets out of the habit of collecting, it is very difficult to start again. We would urge museums not to sacrifice curatorship, scholarship and the strategic development of the permanent collection in order to make short-term savings, and public funders to recognise that the long-term health of these institutions depends on the quality of the collection and the depth of knowledge lying behind its presentation to the public.

8. The National Heritage Memorial Fund (NHMF) is an important source of funding for museums and galleries wanting to acquire significant heritage treasures. Known as the government’s ‘fund of last resort’ for heritage items at risk, it has worked with the Art Fund consistently over the years to help acquire such works as the Vale of York Hoard, Ruben’s Multiple Sketch for the Banqueting House Ceiling for Tate, and Dumfries House and its contents. It currently has £10 million a year to spend: a woefully inadequate sum, especially as we know of so many magnificent treasures coming up for sale, including the sister painting to Diana and Actaeon, Titian’s Diana and Callisto, in 2012. While we understand the pressures in the public purse, we urge the government to retain the NHMF budget at £10 million, and to increase this when finances allow.

The abolition of the MLA

9. Following the decision to abolish the MLA from April 2012, we need to ensure that our museums continue to be properly resourced and supported. The MLA administers a number of important programmes, including Renaissance in the Regions and export controls for works of art. Arts Council England (ACE) would be well-placed to oversee several functions including the Renaissance in the Regions scheme, although we would strongly recommend that museums form a distinct branch of ACE activity, rather than being absorbed into a broader department structure.

10. It would be logical to transfer responsibility for the export control system and the Acceptance in Lieu scheme (which enables individuals to transfer artworks into public ownership in lieu of paying inheritance tax owed) to the DCMS.

Working together

11. A number of local authority-owned museums share space or resources in order to reduce cost and maximise economies of scale. Tyne and Wear Museums and Beamish, the open air museum, operate a joint storage facility on the Beamish site; and Aberdeen City Council is one of many currently looking to build an integrated museums store, to house the reserve collections of all its museum sites.

12. This seems a sensible approach and one that could be taken further. Where possible, museums should be encouraged to work across local authority boundaries to share resources or merge back-office functions, for example storage space, human resources or transport costs. National museums should be encouraged to do the same, to reduce costs and increase efficiency.

13. Museums should also be encouraged to share their collections and to make more joint-acquisitions. Museums have traditionally viewed their permanent collections in isolation, rather than as part of a shared national collection. The Art Fund has helped several museums to work together to acquire objects in recent years, including the Staffordshire Hoard (for museums in the Midlands), Willie Doherty’s Buried for the Imperial War Museum and Wolverhampton Art Gallery; and Titian’s Diana and Actaeon for the National Gallery, London and National Galleries of Scotland. We are also currently sponsoring the UK-wide touring exhibition of ARTIST ROOMS, the collection of modern and contemporary art acquired for the nation from dealer Anthony d’Offay, so that the collection is used to its fullest potential. We always encourage museums to consider working in partnership to acquire and share new objects.

The National Lottery

14. In the last 15 years Lottery money, allocated through the HLF, has helped to transform museums and galleries across the UK. HLF income has declined in the last few years following the creation of the Big Lottery Fund and as Lottery money is diverted to help fund the 2012 Olympics. The government proposes to restore the proportion of Lottery funding the HLF receives back to its original 20%, which will mean an additional £50 million a year. We welcome this, especially at a time when public funding to museums and galleries is being so severely squeezed.

15. To further boost income to the Lottery distributors, the government should also introduce a new Gross Profits Tax regime which would allow the Lottery operator (Camelot) to pay tax after prizes have been paid to players, rather than before. This change would allow the operator to increase prize payouts on Lottery games and stimulate sales; generating an extra estimated £270m for good causes over 10 years 4 .

16. As the funding available is to change, we would welcome a review of policy guidelines for Lottery distributors . In particular we believe HLF support for acquisitions is severely inadequate : last year less than 1% of its budget went to help museums collect , down from a peak of 10% in 1995/96 5 . We would welcome the opportunity to make the case for additional support in this area.

Encouraging philanthropy

17. If state funding for the arts and heritage recedes, money will need to be found from elsewhere. The Secretary of State for Culture is right to want to promote a culture of philanthropy in the UK. But we have a number of concerns.

18. There seems to be some confusion over what philanthropy means, and the lines between private philanthropy and corporate sponsorship are often blurred. Corporate sponsorship is an important element of arts funding (many blockbuster museum exhibitions would not be staged without corporate support), but it is not philanthropic: it is a business transaction. Philanthropy is the donation of cash or objects. The Art Fund is a philanthropic organisation: our 80,000 members and supporters donate money (from £33 each year to thousands of pounds), which is then pooled to buy art for public collections.

19. If the government is really serious about building a culture of philanthropy, there will need to be both an acceptance by HM Treasury that tax incentives have a central part to play, and a review of the whole tax system.

20. The UK tax system has its roots in the Edwardian era and where incentives exist, they are based on offering incentives to sell privately to museums and galleries rather than selling on the open market; it does not promote individual giving or link tax write-offs to gifts. Two schemes exist to encourage the transfer of art into the public domain: Acceptance in Lieu, which allows individuals to settle tax owed with a work of art or land; and Private Treaty Sales, which give tax deductions to those selling art to public collections instead of on the open market. These are important schemes, but neither has a philanthropic element.

21. Even Gift Aid, which is often promoted as a philanthropic tax incentive, is becoming in practice more of a match-funding scheme that anything about incentivising individuals by offering reduction in tax payable in return for donations to charity. While a small number of major donors do use Gift Aid as a tax incentive (particularly benefiting the arts sector), it does not encourage additional giving by the vast majority of people ‘gift aiding’ their donations to charity.

22. There are even fewer incentives currently available to encourage people to donate art and heritage treasures to the nation. The Art Fund has long campaigned for the introduction of a tax incentive to encourage the lifetime donation of art to museums and galleries, as exists in almost every other Western nation. We have submitted a detailed proposal, and both parties in the current coalition government pledged to introduce our scheme in their pre-election manifesto. We urge them to now make good their promise, which would help our public collections to develop at a time when museums are struggling financially.

September 2010

[1] The Art Fund Museum Survey March-September 2009

[2] Taking Part: the National Survey of Culture, Leisure and Sport , Adult and Child report 2009/10, August 2010

[3] This figure varies: 60% of Tate’s funding, for example, is now raised from commercial, private and charitable sources.

[4] Camelot Gross Profits Tax briefing, July 2009

[5] Figures provided by HLF head office