Funding of the arts and heritage

Written evidence submitted by the National Museum Directors’ Conference (arts 206)

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;

The UK’s museum sector has been hugely successful in the last 10 years. Statistics testify to museums’ success in attracting visitors:

· Between 1998-99 and 2008-09 the number of visitors to national museums rose by 70%, with 40,291,579 visitors in 2008-091.

· The Taking Part national survey of participation in culture and sport showed that 46.7% of UK adults and 68.8% of children aged 5-15 visited a museum, gallery or archive in 2009-102.

· The top five UK visitor attractions in 2009 – and eight of the top ten – were museums and galleries3 and three UK museums were in the top five most visited international art museums in 20094.

The NMDC publication Museums Deliver contains more evidence of the success of the UK’s museums, demonstrating the wide-ranging social and economic importance of museums in the UK and highlighting their unique role in society from the global stage to the local high-street.

Funding cuts will put this success at risk. As museums are front line services with large fixed costs of caring for collections and buildings, it is inevitable that cuts will impact on public service. Likely impacts of funding cuts from central and local Government include:

· Negative economic impact – in particular on the UK tourism economy. Cuts will lead to the loss of the UK’s cultural pre-eminence and international reputation through losses of expertise and profile, as well as damage to the ‘UK brand’, all of which will have an impact on incoming tourism.

- Museums play a leading role in attracting tourists to the UK and contribute significantly to the UK tourist economy, the 5th largest industry in the UK. Britain's major museums and galleries earned the country £1 billion in revenue from overseas tourists in 20095.

- Cuts will also impact on the UK’s creative industries – the fastest-growing sector of the economy – for which museums provide a vital resource, inspiring and showcasing creativity and the heritage on which it is built.

· Risk to collections – funding cuts will mean increased difficulty for museums in the effective management and care of the national collections. Government funding is crucial – it is a much greater challenge to secure external funding for collections care work as opposed to more public facing activity.

- Cuts will result in the potential loss of curatorial and research expertise. This will lead to a resultant reduction in capacity for provision of expert advice to Government, the commercial market, scholars, students and the public; risks to the nation’s scientific literacy; and risks to the ability to conserve objects, since conservation expertise is highly specialised and irreplaceable.

- Funding cuts will result in a reduction in acquisition budgets, making it increasingly difficult to secure key objects for museum collections. In particular there is a danger that with the resultant difficulty in securing contemporary items, collections will not reflect today’s society.

· Reduction in access – large funding cuts have the potential to cause a fundamental reversal of building broad, democratic and universal access to culture at a national and local level. They will result in a reduction in access to the national collections, particularly outside London and for hard to reach groups. A decline in visitor numbers to museums will also mean a decline in income from ticket sales and secondary spend in cafés and shops.

· Reduction in programming – particularly education provision and outreach work. The high fixed costs inherent to museums mean that there is very limited ‘discretionary’ spend, meaning programming will necessarily be reduced. Loss of programmes will mean reductions in attendance, particularly of hard to reach groups, as well as a reductions in e.g. media profile and fundraising opportunities.

· Risk to buildings – a reduction in capital funding will mean less investment to effectively and efficiently maintain the buildings (particularly the fabric of historic buildings) and plant within museums’ estates. Many museums already have a shortfall in budgets for buildings and infrastructure improvements. It will then be a challenge to maintain a world-class visitor experience, as well as to run safe and secure buildings. There will also be a loss of ability to invest in measures to reduce carbon emissions, meaning museums continue to use more energy than they need to.

· A reduction in work with regional partners – and an inability to develop new partnerships, which will result in less access to the national collections for people across the UK. Funding cuts at a regional/local level and the subsequent reduction in regional museum capacity will also make it more difficult to work in partnership with regional partners.

· Loss of capacity for innovation and risk-taking within the cultural sector – as organisations will be forced to focus on core business in response to cuts in resource and capacity.

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

· Museums are already extremely efficient – since efficiency is built into the mixed private-public funding model, and the high fixed costs of collections care mean any reductions in funding cuts must be implemented elsewhere – and so little is spent on back office functions.

· Museums are already working together to make efficiency savings. Some examples include:

- The V&A has shared the Natural History Museum’s combined heat and power since 2006, resulting in carbon savings to the V&A of 700 tonnes per year.

- The Natural History Museum, V&A and National Museum of Science and Industry have undertaken a joint procurement exercise for a single service provider for security, worth £50 million.

- The National Gallery and National Portrait Gallery jointly procure electricity and are exploring ways to share services in back-office areas and work more collaboratively.

- The National Portrait Gallery is moving its storage to within a section of Tate’s facility at Southwark.

- Seven national museums are undertaking joint procurement for shared market research provision – to streamline costs and also enabling the exchange of benchmarking data.

· A collaborative approach is already taken by many museums. For example, the NMDC (funded by members) helps museums collaborate on projects and research, share information and best practice.

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

· UK museums have a successful mixed-funding model of public subsidy and earned and donated income (see section 8 below). Public subsidy is crucial to enable self-generated income to be raised. The independence, creativity and innovation afforded by the current mixed funding model is what makes the cultural life of the UK uniquely excellent.

· A necessary and sustainable level of public subsidy is one which enables museums to provide core free public access whilst maintaining buildings and collections in a fit state for future generations. For a sustainable future, we would expect levels of subsidy to stay broadly at their present levels – more investment produces greater returns and public benefit (see section one above for examples of the success of sustained public funding).

· Public subsidy has a direct impact on the tourism economy and is necessary if museums are to remain primary tourist attractions (see section one above)

· Free admission to national museums is key to ensuring access to the national collections – and is a Government commitment. Free admission is impossible without sufficient levels of public subsidy.

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

· There are numerous problematic issues around the current NDPB status of national museums – including restrictions on the freedom to use self-generated income through reserves and complicated and overlapping regulations thwarting efficiency and income generation. Modest reforms would make a big difference, although more fundamental reform would be costly and could put collections at risk.

· For Ministry of Defence-funded museums, the current annual funding round makes forward planning difficult. 3-5 year funding agreements would give greater certainty and clarity.

· Renaissance funding has been a key mechanism for improving and maintaining regional museum provision, and it is crucial that funding continues. NMDC has concerns over how this will be managed following the abolition of MLA (see below).

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

· An increase to 20% would have a positive impact and would restore the imbalance resulting from diversion of Lottery funding from arts and heritage to the Olympics.

· The HLF is a vital source of funding for acquisitions and capital projects – an increase in funds available will have a positive impact on museums’ ability to care for the collections they hold, to act as a vital educational resource, and to continue to attract visitors and offer a world-class visitor experience.

· Lottery funding will be increasingly key as other sources of funding are reduced – however, any increase in Lottery funds should not be used to offset reduced government funding. Whilst Lottery funding is key in enabling projects and acquisitions to happen which would not otherwise be possible, it can never act as a substitute for core public funding.

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

· Policy should reflect the implications of a reduction in government capital funding – Lottery funding will play a more important role in conserving building fabric, refreshing public offer and therefore maintaining the UK museums’ world-class reputation.

· There is a need to ensure arts and heritage funds benefit the entire sector and not just community organisations – the Big Lottery has recently focussed on voluntary and community sectors, excluding statutory bodies. Funds must continue to be available to national organisations and large scale developments – which function as centres of excellence, supporting other sectors and offering broader benefits to the public.

· The HLF should ensure it continues to recognise that science is an important part of culture, and be explicit in its support of this.

· Reduction in bureaucracy – the HLF could reduce the administration burden by taking a lighter touch approach to project management and monitoring, and simplifying the application process.

7. 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;

· NMDC is concerned over the future of MLA functions – particularly Renaissance funding, but also other functions such as Government Indemnity, Acceptance in Lieu, the National Security Advisor role and Accreditation. If these are to be absorbed into the Arts Council, will museum issues be adequately understood/represented? We need to emphasise that museums aren’t just about the arts.

· The MLA has a UK-wide role in relation to various functions (including the National Security Advisor, Acceptance in Lieu and the Portable Antiquities Scheme) and as such there needs to be consultation with the devolved governments as to how these services can be handled transparently and effectively.

· With MLA abolition there is an issue of the strategic leadership/policy function for the sector – particularly with loss of staff capacity at DCMS. The removal of MLA will break the link between national and regional museums from a strategic perspective. There may be a greater advisory role placed on national museums, both from Government and within the sector.

· There is a need to ensure that the risk of core funding being cut under the pretence of administrative changes and efficiencies is avoided.

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

· Yes – but they cannot be a replacement for government funding. The mixed funding model is crucial.

· Raising private funds is difficult for general maintenance and running costs – donors do not want to "repair the roof". A loss of reputation and profile is also likely to affect levels of private donation – donors like to be associated with thriving, world class organisations.

· The extent and timing of support from corporate sponsors and private donors means that it cannot be viewed as a truly sustainable and reliable source of income in the long term For example, the American model of reliance of private funding brings a degree of compromise and vulnerability, and a sudden downturn in private support has recently led to closures of US museums.

· Opportunities for raising funds from business and philanthropy are easier to find for some organisations across the sector and in some parts of the country than others. Major donations and sponsorship are much harder to achieve and rely on outside London. Funding and internal capacity cuts make it harder.

· Donors have expressed concern at the notion that their funds may necessarily be used to ‘replace’ government monies. There are strong indications that a shift to long-term funding support would need to be achieved over an extended period and significantly incentivised, with assurance that donors were not simply underwriting organisations where the level of government support had significantly reduced and or been withdrawn.

· There is an opportunity for growth but it will take time to develop for many organisations and needs Government assistance/incentives (see section 9 below).

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

· Yes – changes to the tax regime to support both regular and one-off giving to cultural institutions would help enormously. Favourable legislation to support the setting up of endowments is potentially even more valuable.

· The 2008 publication by Britain's major cultural institutions, Private Giving for the Public Good, outlines the need for greater support to encourage a culture of giving and wider recognition of the contribution made by cultural philanthropists. Specific strands of activity or policy which would fulfil that agenda include:

- Incentives to encourage gifts to British collections

- Reforms to Gift Aid

- Lifetime Legacies

- Recognition for donors.

- Capacity building in the sector.

· The UK needs to develop a culture where people believe it is right and proper to invest in the cultural sector, regardless of tax incentives. A 5-10 year time-frame is required for the development of a better culture of giving.

September 2010