Funding of the arts and heritage

Written evidence submitted by the British Film Institute (BFI) (arts 211)

Introduction

§ The BFI welcomes the opportunity to submit evidence to the Culture, Media and Sport Select Committee in its inquiry into Funding of the Arts and Heritage, as it is very timely on a number of fronts.

§ The BFI is at a pivotal moment in its history, when the culture of film has never been so important or more all pervasive across society as a whole - something that has been reaffirmed by Government in its recent review of Arm’s Length Bodies.

§ The BFI was founded in 1933 and granted a Royal Charter 50 years later. It has five objectives:

o to encourage the development of the arts of film, television and the moving image throughout the UK ;

o to promote their use as a record of contemporary life and manners;

o to promote education about film, television and the moving image generally, and their impact on society;

o to promote access to and appreciation of the widest possible range of British and world cinema; and

o to establish, care for and develop collections reflecting the moving image history and heritage of the UK

§ We are grant-in-aid funded by DCMS - currently through the UK Film Council until April 2011 - receiving £16 million per annum, a grant that has remained static for the past 6 years, in effect going down in real terms every year. The BFI also receives an additional £1 million levy from commercial terrestrial broadcasters to fund the television element of the BFI National Archive. A further 58% of our total funding is self-generated income, up by 50% compared to five years ago.

§ This Inquiry is timely not just in looking at the impact of the proposed cuts to the arts, but also in the proposed restructuring of how the arts are delivered – including film. Both of these changes have a significant impact on the BFI.

§ Our mission is to ensure that everyone has access to the broadest choice of film. We show and distribute the sort of film that simply wouldn’t be available without the BFI’s intervention. It is this broad spectrum of world cinema presented by the BFI that acts as a catalyst to spark, inspire and influence continued development across the whole of the creative industries.

§ A vibrant film culture is the essential bedrock for a thriving film industry, whether that it is delivered through the BFI London Film Festival which champions creativity and originality by annually showcasing the best of contemporary world cinema, or through BFI Southbank’s dynamic programme of screenings, on-stage talks and events such as Future Film, Dark Fibre or Movie-Con. The BFI is a melting-pot for discussion and debate around film, television and the moving image.

§ The backdrop to this is the BFI National Archive which cares for the national film collections. It is constantly refreshed and the BFI continually drives audiences to it so people can understand and appreciate their own place in society, for instance through TV productions such as the Home Movie Roadshow recently aired on BBC 2 or a major documentary featuring a dramatic film of Scott’s Antarctic expedition due to screen on the Discovery Channel this autumn.

§ Equally, the Archive and collections provide an understanding of film as an art form, equal in stature to theatre, dance, painting or music. It is a unique source of enjoyment and critical appreciation for audiences, and a well of inspiration for filmmakers to gain insight to the work of those who have gone before.

§ The BFI’s evidence to this inquiry is given within the context of our mission and aims.

Response to specific issues posed in the Inquiry

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

1.1. In terms of the Arts as a whole, the cuts, if they are as deep as proposed (25-40%), will have a devastating effect as it is unlikely that private or public sources can come to the rescue in such quantity fast enough. Philanthropists do not favour giving money to plug gaps in funding and there is less money around anyway.

1.1.1. With increased emphasis on financial income, organisations will be inherently risk averse leading to reduced innovation which is essential for creative endeavour.

1.1.2. At a time of recession the arts play a vital part in the confidence and international identity of the national psyche – they also bond communities which will be much needed in the proposed changes across the UK, moving from regional to local structures.

1.1.3. During the Olympics in 2010 a global spotlight will shine on the UK and with this level of funding reduction, the overall programme of artistic excellence, scope and ambition will be significantly curtailed – whether practically in terms of reduced opening hours/days, or the ambition of projects undertaken

1.1.4. Britain’s cultural scene is a major attraction for visitors from home and abroad and it makes a significant contribution to tourism and the economy. Spending cuts are likely to result in reduced output or scope of programming in the arts, which will have a negative impact on arts organisations’ ability to generate revenue as footfall decreases. Arts organisations often work collectively to attract visitors to an area and many businesses local to that area are equally reliant on those visitors.

1.1.5. There are very specific skills that will be lost – and continuity of these skills will be under threat. One example will be conservators and curators – all organisations will be forced to reduce these – curators are the result of years of personal and professional expertise in specific areas.

1.1.6. Organisations which are delivering less, and less able to ‘sell’ themselves will be less attractive to philanthropists. Even small donors like to invest in success.

1.1.7. Capital funding reduction will lead to revenue monies being spent to ‘shore-up’ failing estate and systems which in the long run will be much more expensive for the public purse.

BFI-specific

1.2. The BFI recognises that difficult decisions have to be made in these challenging times and acknowledges that it must play its part in helping to reduce public spending. However, it is important in this context that the Committee understand the BFI’s current funding position.

self-earned income

1.2.1. The BFI has been on the same grant-in-aid (£16 million pa) since 2004. For every £1 it receives in grant, it raises a further £1.50 in self-generated income.

pension

1.2.2. The actuarial deficit on the BFI pension scheme of £15m is costing the organisation nearly £1m per annum in additional contributions.

Screen Heritage Strategy

1.2.3. A report1 published by the House of Commons Select Committee in 2003 said: "The BFI should take the lead within the UK film and TV archive community and champion the whole sector, particularly the regional archives, alongside safeguarding its exemplary reputation amongst international peers. An over-arching national strategy promoting both good curatorship and increasing accessibility should be vigorously pursued."

1.2.4. In response to this, and at the request of DCMS, the BFI developed and is leading the Screen Heritage UK programme. A government capital investment of £25 million announced in 2007 is to fund three core strands: a secure storage and database; identification of significant collections in regional film archives; and digitisation for access.

1.2.5. In the funding cut announced in June, the Government reaffirmed the vital investment needed for new state-of-the-art vaults with the right environmental storage conditions to ensure the preservation and safety of the BFI National Collections. It also reaffirmed funding for regional archive collection identification.

1.2.6. However, a cut of £2.5 million was made to the digitisation and access strand of the programme and this seriously impedes the total success of the whole project in that whilst the national collection is safe and we know what material is in there and in other significant regional collections, the public cannot access the content as originally planned.

BFI Film Centre

1.2.7. The BFI’s business case demonstrates the pressing need for a landmark cultural centre that addresses its very severe and critical estate issues. It would enable the BFI to consolidate its crumbling estate and help make it more economically sustainable.

1. The British Film Industry – September 2003

1.2.8. In June 2010 the Government withdrew its funding pledge of £45m for the BFI Film Centre, which triggered a further cut of £5m that had been pledged by the LDA. This has stalled the BFI’s plans to replace life-expired facilities on London’s South Bank which are struggling to cope with growing public demand for access to their cultural heritage and to world cinema. Given the condition of the BFI’s estate, delaying investment will add a burden to public finances in the long term and considerable ongoing risk to income should the estate fail.

1.2.9. Furthermore, the BFI’s plans included significant partnerships across a range of organisations - from universities to venues - to ensure that the centre acted as a pivotal node in a digitally enabled network across the UK to provide the widest possible public value. The BFI’s ability to achieve this is undermined by the cut in funding for the Film Centre.

Impact of the cuts on the BFI

1.2.10. We have been asked to model 25% and 30% cuts in our grant-in-aid. Taken together with a flat cash grant for the last seven years, the effect of inflation and the additional £1m per annum pension top-up requirement, the total cuts to be found from the BFI are 6.5m by year four.

1.2.11. In the last six years our self-generated income has increased on average by 10% per annum but this is now flattening out. Nevertheless we are looking at new sources of income, particularly in the digital arena and exploitation of the BFI brand abroad.

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

2.1. This must be one of the avenues to be explored, but we are uncertain of the quantum of savings possible. We are already exploring the potential for sharing common services such as Finance, Human Resources, Estates and IT. From our own experience, we are doubtful that there is significant opportunity here as after six years of driving through economies, the quantum of savings we can make in shared services is very low.

2.2. Recent analysis commissioned by the BFI from HP shows that the BFI’s support services are so old, without significant investment it is questionable whether the systems are even migratable to the modern platform needed to gain any benefit from shared services.

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

3.1. This is a very difficult question to answer. Public subsidy is needed to support artistic endeavour and allow such expression to find audiences – endeavour that wouldn’t happen otherwise without public intervention because at the grass root level its market value is unproven.

3.2. Sustainability has to be considered in a much wider context, outside the artistic world. The immediate value of investment in the arts is difficult to quantify, the chain of investment and effect is often long and too complex to track accurately. And yet we all know that the reputation of great cultures and great civilisations rests on the vibrancy of how that culture finds expression through artistic endeavour and the legacy that this lays down to inspire future generations. The reason we know this in this country, is precisely because we have one of the most vibrant, joined-up, wonderfully diverse and significant cultures in the world. The legacy of global reputation speaks for itself.

3.3. Investment needs to be prioritised to achieve the following:

3.3.1. It is important that Britain maintains an international profile culturally and creatively – no more so than in film. It is one of our great global successes and an economic generator. If it is to be allowed to continue to grow and provide increasing contribution to Britain’s GDP then it needs increased and sustainable investment. A vibrant film culture is the bedrock for a successful, thriving industry.

3.3.2. The national collections cared for by the BFI are a vital part of our cultural heritage. The costs of preserving and restoring – let alone distributing – such an extraordinarily complex medium are very high. Once a film deteriorates it is lost forever. However the cost of restoration is very high.

3.3.3. In this digital world there is an audience expectation that they should be able to access the collections online, which requires funding for preservation then digitisation.

3.3.4. Furthermore, it is not always possible due to rights ownership.

3.3.5. There are other things the Government could do which would not increase public subsidy but which might help organisations such as the BFI offset cuts, for example: allowing the BFI to make available "orphan works" held in its collections. Income generated from exploiting these works would be ring-fenced so that rights holders could be paid if they eventually came forward to claim their works.

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

4.1. With considerably less money to ago around, we offer the following considerations:

4.1.1. Streamline funding – we should ask ourselves no matter however painful the implications, how many layers of administration should there be between the money and the audience or artist? Every layer adds additional ‘back office’ cost. Should there be need for more than two layers?

4.1.2. Consider new governance structures for organisations to be freed up so they can take a more entrepreneurial role. The BFI, in designing a new direct relationship with DCMS, is looking at the possibility of a ‘US’ style Board structure, with a two tier Patrons for major donors and a smaller formal Trustee board. We are also seeking structures that will allow a more flexible investment/ borrowing model.

4.1.3. The BFI has benefited, and could benefit significantly more, from co-productions with broadcasters. Publicly funded broadcaster partnerships should be encouraged as they enhance audience take-up, drive revenue and enhance the partner brands.

4.1.4. In seeking a ‘local’ agenda – care needs to be taken not to splinter funds into such small pots that they cannot be sustainable or achieve anything really valuable in themselves. The other danger is that in seeking ‘local’ rather than ‘regional’ structures, more resource is actually spent knitting together these small pots of money.

4.1.5. Lastly, the production of statistics, target information and ‘proof points’ of delivery are expensive. Could they be reduced? Much of the answer to this is how a greater pact of trust can be fostered with the public, where public value is achieved through actual engagement, rather than through KPIs or something similar.

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

5.1. We refer the Committee back to answers given in response to question 4 above. However, we very much welcome the government’s commitment to increase Lottery funding by reducing overheads and providing greater direct benefit to the public with increased share going to the arts.

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

6.1. see answer to Question 5

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

7.1. These are very difficult times and call for difficult decisions to be made. We have to look hard at where value is added and make sure that as much as possible goes to frontline services.

7.2. The BFI is pleased that it will from 1 April 2011 report direct into DCMS. The announcement to this effect has great significance for film culture in Britain as it allows the BFI to have a conversation at a departmental level alongside other national cultural bodies and collections, giving a much needed direct voice for film as an art form. The Secretary of State proposed in his announcement: "establishing a direct and less bureaucratic relationship with the British Film Institute." The benefit will be a new, freer way of working that allows us to explore other governance structures.

7.3. It is interesting that the reaction from the film industry focused on the need to keep funding and tax credits intact. The BFI agrees and was relieved to see in the announcement an absolute commitment from central Government that neither the lottery funding not tax credits were ever at risk, and that going forward its cultural policy and strategy for film will have equal voice and prominence.

7.4. It is critical, however, that specific skills and expertise are not lost along with the arms’ length bodies being closed.

7.5. We refer the Committee to answers in response to question 4.

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

8.1. They already do. There are hardly any of the larger charities that don't have a well developed fundraising department tasked with raising those funds that GiA has, in recent years, failed to cover with diminishing investment, increasing costs and higher ambitions.

8.2. We can see that raising money for projects outside of London can be more challenging, particularly when there is less available money to go around.

8.3. It is commonplace to compare the US model of philanthropy and charity giving with that in the UK. However, there are fundamental differences between the two that require a wholesale change in attitude from the public in the UK, with a tax regime that is as supportive before we are likely to see the same degree of giving.

8.4. Corporate and philanthropic donors do not want to plug gaps in funding, they want to achieve additionality. They are less attracted to investing in organisations that are threatened. They are less likely to invest in the non-attractive projects such as new roofs or drainage.

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

9.1. We would welcome more Government incentives to encourage private donations.

9.2. A review of tax incentives that benefit private donors in a similar way perhaps that Gift Aid does to charities would help the development in the UK of a widespread culture of philanthropic giving. This is akin to the more generous personal tax relief schemes that exist in the US in the philanthropic sector.

9.3. The BFI would like to see the acceptance-in-lieu scheme extended to living donors, not just restricted to the estates of the deceased. In other areas of the cultural sector acceptance-in-lieu has brought over £250 million worth of works into the public domain. We need to ensure that film collections can be preserved intact and saved for future generations to enjoy.

9.4. A similar move should also be considered for the assignation of rights to films and film collections in lieu of tax so that that work can be exploited to provide greater public value without additional burden on public finances.

9.5. We would like to see greater Government support for projects that whilst they do not pledge public funding, the intent and commitment instils a level of confidence amongst others who may be more disposed to invest.

September 2010