Funding of the arts and heritage

Written evidence submitted by BECTU (arts 208)

1. BECTU is a trade union for workers in the audiovisual and live entertainment sectors. Many thousands of our members work in areas affected by arts and cultural funding, especially theatre, as well as film and independent production. We therefore have a strong interest in the issue of arts funding.

SUMMARY

2. The arts is an economically significant sector within the UK economy, with a powerful multiple effect in ancillary sectors such as tourism.

The scale of the potential cuts in arts funding could result in widespread closures or potential closure of theatres and other such organisations.

The consequences for the workforce in a very labour-intensive sector would be severe, including a significant reduction in employment and skill levels and a reversal of recent progress in backing endemic low pay, exploitation of young people and lack of diversity.

The abolition of the UK Film Council would be very harmful to the film industry, especially in the key area of indigenous medium-budget UK film production.

Philanthropy can never be a remotely adequate replacement for public funding of the arts.

THE ECONOMIC SIGNIFICANCE OF THE ARTS

3. The arts constitute part of the UK’s creative industries sector, which is one of the most significant components of the UK economy, as the Government’s own statistics indicate:

· The creative industries, excluding crafts and design, accounted for 6.2% of UK gross value added in 2007.

· They grew by an average of 5% per year between 1997 and 2007, compared to an average of 3% for the economy as a whole.

· Exports from the sector amounted to £16.6B in 2007, which was 4.5% of all goods and services exported.

· Creative employment (ie jobs in the creative industries and ancillary sectors) reached 2m in mid-2008, with an average growth rate of 2% per year, compared to 1% for all employment.

· The creative industries encompassed over 157,000 businesses in 2008, representing 7.3% of all companies on the Government’s Inter-Departmental Business Register.

· In sum, the UK Creative Industries constitute a greater proportion of GDP than of any other country in the world.

4. The arts are a central component of our creative industries. The arts sector’s most distinctive asset is its skilled workforce – with creative, craft and technical skills to match any competitors in the world. Many of these skilled workers move back and forth into adjacent components of the creative industries (such as fashion, broadcasting and advertising), contributing their skills, creativity and experience. To a significant extent, therefore, trends in the UK arts sector have a broader impact on our creative industries as a whole and thus on entire economy.

5. Within the creative industries, the arts is an economic success story in its own right:

- For every £1 invested by the Arts Council, an additional £2 is generated from private and commercial sources, providing £3 in total investment. Public funding for the arts also has a powerful multiplier effect, stimulating economic activity in ancillary sectors including tourism.

- Two-thirds of the adult population of the UK make use of our arts, cultural and heritage facilities in any given year.

- Arts and culture are thus vital to the UK tourist industry, which was worth £86b or 3.7% of GDP in 2007 and directly employed 1.4m people.

- Theatre specifically achieves a direct and indirect economic impact of £2.6b per year. It should be noted that the subsidised and commercial theatre sectors are closely interlinked, with established patterns of collaboration by which the subsidised sector develops productions which subsequently transfer to the commercial sector eg to West End theatres.

6. In short, the arts are a vital component of the UK economy and a key element in any economic recovery from the current crisis triggered in the financial services sector. We can only agree with the Arts Council that ‘The arts represent the creative future on which Britain’s economy depends’. This makes the proposed cuts in arts funding a matter of very serious concern – not least because they are a potentially self-defeating barrier to economic recovery.

THE IMPACT OF DRASTIC CUTS IN ARTS FUNDING

7. The Committee requests views on ‘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’.

8. We note the extremely serious nature of the possible future cuts in arts funding:

- DCMS have asked the Arts Council and other funded bodies to model a 25-30% cut over the next 4 years.

- ACE is already asking regularly funded organisations to model for a minimum 10% cut in funding for 2011-12, with a warning of possible more painful cuts in 2012-13 to 2014-15.

9. Already in 2010-11:

- ACE has been required by DCMS to make cuts of around 4% and the ACE’s original budget has been cut by £23m to £445m.

- VAT will be raised from 17.5% to 20% in January, which could have an impact on theatre ticket prices and therefore audiences.

10. Other additional factors:

- £112.5m of ACE Lottery funding has already been diverted to the Olympics (representing part of an estimated total contribution of £322m from the cultural sector to the Olympics).

- Local Government, which has in the past contributed at least as much money as ACE to the arts (and currently contributes about £230m per year), is itself facing very serious proposed cuts of £1.1b. There is no statutory requirement for local councils to fund the arts, so a disproportionate impact on this sector is anticipated.

11. We also note that, in the overall context of public spending, the arts sector is completely insignificant, with an arts budget of an estimated 17p per week per person. UK public spending on the arts has historically ranked below that in comparable European economies such as Germany, France, Sweden and Holland.

12. The specific impact of the cuts is obviously impossible to outline in detail at this stage. However, it is already clear that their sheer scale is likely to have severe consequences:

- ACE has estimated that a 25% cut could result in as many as 200 regularly-funded organisations losing all public subsidy (constituting almost a quarter of all such organisations). A 30% cut could lead to a reduction of £134m per year in ACE’s budget for regularly funded organisations – small in the context of the economy as a whole but potentially devastating for the arts sector.

- This could lead to the closure or partial closure of leading theatres, galleries, museums and other arts organisations. The financial operating model of many arts organisations will simply not be able to sustain cuts on the scale proposed. For many, there is a tipping point (into non-viability) of 10-15% of funding.

- Short of closure, other theatres will simply stage fewer productions; hire fewer technicians, craft people, designers and performers; and tour less.

- Broader education and community initiatives stemming from the arts sector are also likely to be seriously affected, as is the long term development of new work and talent for the future.

- The scale and urgency of the cuts required also threatens a repetition of the problems of implementation experienced in a previous ACE spending review, including inadequate notice of the cuts, decisions based on flawed information and unclear criteria – all of which compound the financial problems of the cuts themselves.

13. We believe the proposed cuts will:

- Reverse the gains made in recent years in the international standing of UK arts and cultural organisations.

- Lead to a loss of vital expertise and, for a whole generation of young people, to significantly diminished access to arts and culture.

- Inflict severe structural damage to our arts sector’s internationally-admired and emulated model of mixed (public/commercial/private) funding.

- Represent a return, of unprecedented severity, to the stop-start-stop pattern of arts funding that the UK has only recently sought to reverse.

- Impact negatively on the economy as a whole through economic multiplier effects and the interlinking of the arts with the creative industries/tourism/and other ancillary sectors.

THE CONSEQUENCES FOR THE WORKFORCE

14. The arts generally and theatre specifically is a very labour-intensive sector. The sector essentially depends on its human resources rather than on fixed capital – despite historically unacceptable levels of low pay and casual employment.

15. Cuts on the scale proposed will therefore have a direct and disproportionate impact on employment in the sector – with a severe and immediate effect on jobs, increased casualisation and an insidious longer-term impact in terms of the loss of talent and skill.

16. As well as the serious quantitative impact on employment levels, the cuts will also have the following effects:

· The limited progress which has been made to address pay-levels in this largely low-paid sector is likely to be reversed. The ‘silent subsidy’ (in terms of low pay even for many skilled workers) from the arts workforce will thereby increase rather than diminish.

· The investment in skills development – from training organisations such as CC Skills, from trade unions (including our own promotion of skills in collective agreements and through union learning representatives) and from some employers – could be reversed.

· The already unacceptably high levels of internships and unpaid work in the arts sector – leading in a number of cases to the exploitation of young people eager to enter the industry – could increase further. As a side effect, this leads to a structural bias towards individuals from better-off backgrounds, where families can afford to subsidise them while entering the industry in an unpaid capacity.

· Yet further serious obstacles to addressing the relative lack of diversity in a workforce where, for example in theatre, there is a significant under-representation of black and ethnic minority workers. BECTU has been active in this area through our TUC award-winning Move On Up initiative and in discussions with ACE. Any limited progress which has been made could now be reversed.

THE ABOLITION OF THE UK FILM COUNCIL

17. The Committee specifically asks for views on the proposed abolition of the UK Film Council.

18. We firstly note the economic contribution of the film sector a key component of the UK creative industries – and as verified by the recent independent report by Oxford Economics.

- The film industry contributes £4.5B per year to GDP with £3.6B of this arising from inward ie foreign investment.

- £1.2B is raised for the Exchequer, compared to film tax relief of only £110m.

- The industry directly employs 36,000 workers and supports a total of 100,000 direct and indirect jobs. The industry workforce has a worldwide reputation for its skills and experience.

19. However, we also know that the film industry is extremely fragmented, with a workforce that is almost entirely freelance, and a predominance of SMEs and single-purpose vehicles (ie companies formed to make a single film) rather than significant, permanent corporate structures. In this context, the strategic role of the UK Film Council has been vital, acting for the industry and bringing coherence to its relations with the outside world in a way that no other body is in a position to do – campaigning for inward investment; representing the industry in discussions with government (for example, on modifying the tax break); channelling lottery funding into successful productions; investing in training for key workers in the sector and new entrants; developing the national network of digital cinema screens; promoting diversity in the industry’s workforce; and campaigning against piracy/copyright theft.

20. The UK Film Council would have had a particularly valuable role in the coming period, as we face a crisis in indigenous UK medium-budget film and TV film production, with growing concern about production levels in this sector. This is the long-term heartland of our truly British film industry – without which we risk being left as

a) a facility to service international productions (for which key strategic and investment decisions are taken elsewhere, especially in Hollywood, and for which there is a trend to bring in non-UK workers under the points-based migration system) and

b) an unsustainable training ground for new entrants mainly working on micro-budget productions.

We continue to welcome inward investment but we also know that without an indigenous sector of wholly/predominantly British-originated productions, we face an uncertain future. This is the key sector where our technical and creative film talent is developed and employed and which in turn underpins our skillsbase and our ability to attract international productions.

21. This sector of film production now faces significant structural difficulties arising from the reduction in investment from broadcasters/financial institutions/private investors; from the lack of pre-sales; from the falling-off of the DVD market; and from the lack as yet of any new business model for the emerging digital environment. This is precisely where we need a national strategic agency to explore future policy solutions and to campaign for them on behalf of the sector. If the UK Film Council is abolished, there will be nothing in place to undertake this role. We might well pay a price in terms of the long-term viability of our film industry.

PHILANTHROPY: A BOGUS ALTERNATIVE FOR THE ARTS

22. The Government has expressed the view that private funding for the arts from business and philanthropists should be encouraged as a means of compensating for severe reductions in public funding.

23. This is not, in our view, a remotely serious and viable alternative to public funding for the arts.

24. All the evidence is:

- That the amount of funding generated from business and philanthropic source has never remotely matched secure public funding levels.

- That business funding of the arts has actually decreased in the past year and that significantly increased business funding at time of economic crisis is simply an unrealistic expectation (as is born out by experience in the US).

- That such business and philanthropic funding as exists is typically tied to matched public funding rather than standing alone.

- That such private funding tends to be geared primarily to London; to larger institutions; and to artistically safer rather than innovative events and productions.

25. Business and philanthropic funding is welcome but – unless we wish to see a permanent diminution of arts activity in the UK – it can only ever act as a supplement rather than as a substitute for long term public funding.

26. Finally, the suggestion that tax breaks for philanthropists would encourage increased donations seems truly perverse. Foregoing revenue to the Exchequer in order to attempt to resolve a problem arising from reduced Government finances makes no economic sense, although it may provide comfort to small-state ideologists.

NATIONAL LOTTERY REAPPORTIONMENT

27. We welcome the proposed reallocation of the arts apportionment of National Lottery funding to its original 20% level by 2012. However, set besides cuts in public funding on the scale proposed, this change in the distribution is of marginal benefit. It will simply be totally outweighed by the negative consequences of significant reductions in public funding.

CONCLUSION

28. We believe that cuts in arts funding on the scale proposed will harm economic recovery; are unjustified given the very small proportion of public funding allocated to the arts; will do long term strategic damage to the arts (and, in the case of the UK Film Council, to the indigenous film industry); will have a severe and immediate impact on the workforce in such a labour-intensive sector; and can never be balanced or compensated for by philanthropy.

29. We believe that the proposed cuts are ideologically – rather than simply economically – driven, which thereby compounds the problem of developing broad agreement on any future strategy for the arts. We anticipate conflict rather than consensus in this area.

September 2010