Funding of the arts and heritage

Written evidence submitted by the National Association of Local Government Arts Officers (NALGAO) (arts 209)

1 Background

1.1 nalgao is the national body representing local authority arts officers across England and Wales. With over 400 members, it champions local arts and artists of all types – professional, amateur and voluntary. nalgao’s members include local government officers at all levels, arts professionals, cultural and creative industry organisations, as well as arts marketing and consultancy specialists. We support local arts and creative development and nalgao has a number of significant national partnerships, including with the Arts Councils of England and Wales, the National Campaign for the Arts and the Voluntary Arts Network.

2 Summary

· nalgao notes two principle related points, one simple, one complex. The first (not yet widely recognised), that as local government spends more on arts and heritage than central government and as its budgets are cut, arts and heritage will be hit twice.

· The second, that local government arts funding underpins the breadth and diversity of the sector. The real threat to grass roots and developmental work will have a detrimental impact on the vibrancy of the ‘higher’ end of the sector. The ‘arts ecology’ will be damaged, as will cultural tourism and creative industries, one of the few growth areas in the national economy.

· That the sums saved are insignificant in the bigger picture yet will damage the sector considerably for years to come. The impact of cuts in local authority arts budgets will be a decline in participation in arts and cultural services, affecting communities most disadvantaged, young people and those economically challenged, with less art for everyone, and only the well-off metropolitan will be able to access cultural provision. The Arts Council’s ambitions for ‘Great Art for Everyone’ will be unachievable.

· The timing of budget reductions will be critical – front-loading cuts will cause damage, back-loading will at least allow organisations to prepare for and in some case replace lost funds.

3 The Impact of funding cuts from central and local government on arts and heritage at a national and local level

3.1 nalgao’s primary concern over arts and heritage funding is the double impact of central government cuts, coupled with local government reductions. Local government is a major funder of arts and heritage – spending more on these than the DCMS. CLG reports1 that spending by local government on culture (excluding community centres, sports and recreation) in 2008 – 09 was nearly £2,500,000,000 against £1,200,000,000 from DCMS.

3.2 Local government funding for arts and heritage underpins the sector in England, but these services are not statutory (excluding some record office obligations and minimum provision of libraries). Consequently, cultural and leisure budgets are under major threat as councils ask what is the minimum they are required to do. Furthermore, these budgets have already been under pressure for some time – there is little room to manoeuvre.

3.3 nalgao’s annual surveys of local authority spending on the arts reveals, in summary, that: -

3.3.1 Arts budgets generally have been at standstill, with little inflationary increase. Factoring in the impact of inflation over the 2008 – 09 period, this equates to a real 5% decrease in arts spending by local authorities.

3.3.2 Spending on the arts by local authorities varies considerably, from below £50k to over £5million. Unitary authorities in general invest more in the arts than county or second tier (i.e. district and/ or borough) councils, an average of nearly £1.5 million against £500k and £200K respectively.

3.3.3 It is smaller councils that have reduced arts spending the most, and that report least confidence in the future. However, only three major cities in early 2010 reported being positive about the future, against a general expectation of severe cuts.

3.3.4 Forty-four authorities have withdrawn all arts funding over the past 7 years, which accounts for approximately 15% of all local authorities with previously active arts services. A quarter of responding councils to our 2009/10 survey expected severe service reduction in 2010 – 2011 but this was in expectation of a deficit reduction policy prior to the general election and so before the likely scale of public spending cuts was known. There is often no major press coverage of local authority arts closures, unlike closures of regional or national arts projects, which may receive press and media interest. The closure of local authority arts services is consequently unreported and often unnoticed by the national arts funding system.

3.4 Local authorities fund the arts in furtherance of council priorities, such as health, education, regeneration, economic development, creating vibrant places and supporting social and cultural inclusion. In doing this council arts service have developed strong partnerships with other council services and external public services, such as health, education and housing associations, while nearly two-thirds have partnerships with the cultural industries sector.

3.5 These partnerships generate additional funding for the arts, and while it is not possible to give a national total for this, a representative sample of 64 authorities reported additional income from these sources at £20,000,000.

3.6 Most council arts services attract other public and/ or commercial funding to spend on the arts, giving a return of at least £1 for £1 invested. However, nalgao notes that this return on investment is considerably lower in 2010 than in 2009, when it was £1.34 for every £1 invested.

3.7 While council arts services and independent arts organisations have been skilful at attracting other public funding for the arts, the in-year cuts in 2010 – 11 to these funding streams have been particularly damaging, not only for being unplanned but already into the funding year with funding spent or committed. For instance: -

3.7.1 Regional Development Agencies have (in some regions) funded the arts, the in-year cuts have resulted in the withdrawal of £1.37million towards the Turnpike Gallery in the North West, where the Liverpool Everyman Theatre has also lost £2.4million promised for redevelopment.2

3.7.2 In the Eastern region, the withdrawal of LABGI funding threatens the future of ADeC (Arts Development East Cambridge). ADeC is a good example of the existing level of innovation and partnership working already present within the arts sector: a charity, ADeC works with a number of local authorities through both grants and contracts, as well as generating income directly, and through trusts and foundations, to deliver arts services and activities directly responsive to local communities’ interests and needs. This is an effective and sustainable model, however, the in-year cut of nearly 10% of its turnover has put it under significant pressure, at a time when work was already planned to manage planned cuts to local authority funding from 2011 onwards. It is notable that ACE made the decision to limit the in-year effect on its core funded (RFO) organisations, but this approach has not been uniformly matched in relation to the more community focused work carried out and funded by local authorities.

3.8 Local government is often a co-funder with Arts Council England for its Regularly Funded Organisations (RFOs), and ACE’s 2006 – 07 survey showed local government’s contribution to be £65.6 million. Funding cuts place this partnership in jeopardy; at considerable risk to both regional and national flagship arts organisations and it will be a rarity for either partner to be able to make good the reductions made by the other.

3.9 The Arts Council and councils also jointly fund activities and organisations outside of the RFO portfolio. These were not eligible for SUSTAIN funding, introduced by ACE to help organisations through the recession, and are vulnerable to cuts. An example of this is the council run New Art Gallery Walsall, which receives grant-aid from ACE, but faces council cuts of between 25% and 40%. It has been calculated that even the ‘best case scenario’ will take ten years to return funding levels to present day rates. The gallery has already had to shut on Mondays; further budget cuts will mean more closed doors.

3.10 However, Arts Council funding and the RFO portfolio in particular, tell only a part of the story of the arts in England. Over 70% of local authorities surveyed by nalgao reported that they regularly fund non-ACE funded organisations.

3.11 nalgao has a particular concern for the diversity of arts activities that take place outside of buildings – we fear for this work as it leaves no "empty building" as testament of lost funding. This area of community outreach and often pioneering development, is particularly vulnerable, especially work with the ‘hard to reach’ groups and communities, work in youth clubs, village halls, community centres, in open spaces and on the street. This also includes festivals, often the lifeblood of community participation in the arts. British Arts Festivals Association (BAFA) reports sponsors are dropping out. For instance, Henley Festival lost £100,000 sponsorship as companies question the ‘wisdom of hosting champagne events when staff are being laid off’ and local authority lost grants, and Cheltenham Festival faced a £220,000 cut of local authority funding.

3.12 In addition to the funding they provide, local authority arts services have a significant role in facilitating the voluntary sector. Support for the voluntary arts sector on the ground is almost entirely carried out through local authorities. This varies from liaison with the licensing and enforcing roles of councils through advice and guidance, and both direct and match funding support to enable applications to third party grant giving bodies. The voluntary sector is a huge part of the whole arts economy across the UK, and the impact, both social and economic, of the removal of local authority support on that sector is wholly unknown.

3.13 We understand the focus on protecting front line arts delivery, the Arts Council’s emphasis on the arts themselves, but the important financial support to capacity and skills development has been an early casualty. The loss of support to the Cultural Leadership programme, Artsmark and Audience Development will all have a longer-term negative impact on the growth of talent and workforce skills – the arts ecology will be damaged.

3.14 Nalgao also fears that – insofar as an emerging arts and heritage policy can be discerned – that it is informed by a ‘high arts’ perspective, one whohc does not recognise or value the breath and diversity of the arts and heritage sector in England.

4 How arts organisations can work more closely together to achieve economies of scale

4.1 There are clear entrepreneurial opportunities and models for the sector –and the hub and satellite model of the museum sector may have lessons for others as well. These will enable greater efficiency and self-sufficiency, and there is good evidence that these are already in development in both council cultural services and the independent sector. However, timing is crucial, and the front-loading of cuts will mean that most services will not be able to develop new income routes and delivery models in time to support a smooth transition. The result will be weakened services, unable to deliver effectively and therefore entirely vulnerable to closure. More careful timing and funding reductions would enable services to move more effectively into new operational models, protecting front-line services.

4.2 While economies of scale might well be beneficial for back office ‘merger’, the diversity of the sector, the ‘character’ of individual organisations will need to be protected as will the ability to maintain specialisms and social values when larger organisations will be in the stronger position and could subsume smaller more vulnerable operations.

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

5.1 Currently the sums invested are modest in the big picture – if the entire cultural sector, (that is arts, museums and libraries) could access just .05% of the health, social care and children’s service budgets, council cultural budgets would go up by 45%3, and yet we have already shown that councils spend more than twice on arts and heritage than the DCMS. The savings to be made – even at 40%, will mean little to the national funding pot but cause considerable damage.

5.2 To answer this question however, the policy and purpose of funding arts and heritage needs to be clear, as does an understanding of the value the funding ‘buys’. If free access to galleries and museums is the nation’s ambition so that our heritage is free to all, not only those who can afford it then that comes at a cost. A cost that includes the fixed costs that come with the statutory duty of museums to conserve and interpret.

5.3 A ‘cultural entitlement’ policy would suggest a different funding level, and no doubt one that is currently not considered affordable. However, a ‘one percent for arts’ policy has been successfully applied by councils in the past and might be a useful benchmark – as well as providing a very clear statement that arts funding is far from excessive.

6 Is the current system, and structure, of funding distribution the right one?

6.1 Analysis of Arts Council funding to RFOs across the English regions (2005 – 06 to 2008 – 09) indicates a considerable imbalance of distribution. While London received over 50% of the funding, the Midlands received 12% and the South East – the most populated region, received only 4%.

6.2 ACE no longer distinguishes between treasury and lottery funding distributed as grant aid, but a similar imbalance is present in grants – with £6,080,000 to London, £1,656,000 to the West Midlands and only £832,000 and £781,000 to the East and South east respectively4. As ACE reports that grant applications are frequently turned down in the lower funded areas due to pressure for funding rather than poor proposals, this indicates the distribution of funds for grant is not equitable.

6.3 The Arts Council has been working to address this imbalance, but there is a lack of equity across the country and, while local priorities and difference are to be acknowledged and celebrated, ACE policy differences have been hard to understand. Funding distribution needs to be transparent and fair – but even for successful fund raisers, the processes are time consuming and the decision making often obscure.

6.4 ACE no longer publishes distribution data related to art form and regions, consequently it is not possible to see who has received Grants for the Arts funding. This leads to the perception – if not the reality – that in some regions, G4A funding is topping up RFO clients, rather than supporting grass roots, new and innovative or developmental work.

6.5 Indeed, ACE’s focus on organisations that require significant levels of regular funding can be counter productive: it has effectively excluded smaller scale, often more flexible organisations, and it also creates a bias against organisations working in communities, which often do not carry the overhead costs of large buildings. It could be seen as encouraging organisations away from routes that would increase self-sufficiency. In this, we welcome the current review by ACE of its funding streams and hope these will in future be more equitable and responsive.

7 Whether the policy guidelines for National Lottery funding needs to be reviewed

7.1 While the hoped-for increase is welcome, it is not due until April 2012, by which point it is likely that reduced staffing will mean arts organisations and council arts services have little capacity to make funding applications. This increase will not make up the budget cuts.

7.2 The ending of the ‘Awards for All’ has negatively impacted on community groups as it was a simple and easily accessed lottery fund, not adequately replaced by ACE’s smaller Grants for the Arts scheme, which remains challenging for small community groups and inexperienced fund raisers who previously were able to learn much by the simpler application process.

7.3 At the same time, larger arts projects have been generally excluded from the Big Lottery which has not generally been able to recognise the value of arts led applications.

8 The impact of recent changes to DCMS NDPBs

8.1 While we would agree that some of the NDPBs needed review to be more effective, the abolition of these with so little consideration of the impact is concerning. Where will support for museums, libraries and archives now come from? How will the nationally important support for the film industry be made?

8.2 Furthermore, there have been considerable changes to these agencies over the past few years n- changes that have led to a loss of human capital and intelligence. Organisations are the sum of the people that inhabit them – not simply a reflection of the balance sheet. Loss of knowledgeable and experienced personnel through repeated restructuring has been destructive of relationships, and certainly in the case of the MLA and ACE, meant a serious reduction in contact, support and effective advise.

9 Whether businesses and philanthropists can play a long-term role in fund the arts at a national and local level

9.1 While it is hoped this would be the case, representative voices have already indicated they are interested in adding value, not replacing public funding.

9.2 Experience has shown that high profile organisations, those in prime locations with fine building – whether traditional or new – those that have something to offer sponsors in either prestige or hospitality or marketing, can do well in this – although sponsorship and patronage have declined in recent years.

9.3 Lower profile, less glamorous work such as criminal justice, activities in less densely populated, rural areas and centres of deprivation, outside of the economically active south east and London have all struggled

9.4 Sponsors and businesses support that which appeals to them, new organisations, developmental and risky projects, volunteer led arts projects – those most dependent on public funding are not generally attractive to private funding.

10 Whether there need to be more government incentives to encourage private donations

10.1 Yes – but it is hard to say how private donations could be generated, beyond a more generous and equitable tax break system. To create a similar spirit of giving to America will take time – at the very least – more like a cultural shift.

September 2010