Funding of the arts and heritage

Written evidence submitted by the Chief Cultural and Leisure Officers Association (CLOA) (arts 214)

1. INTRODUCTION

CLOA is the professional association for Strategic Leaders in the culture and sporting sector of Local Authorities in England, Wales and Scotland (Vocal). Over many years, professionals from CLOA have worked with central government, Local Government and many national organisations to help influence and inform policy development to ensure the sector contributes fully to local communities.

CLOA has worked successfully with a range of partners and particularly with the LGA, IDeA and with colleagues on the National Culture Forum has continually demonstrated the contribution that culture and sports services make to people lives by improving their health and well-being, enabling older people to be more independent and improving education, the economy, community safety and community cohesion.

We have also been a key partner in helping improve how these services are delivered working in collaboration to implement "A passion for excellence" the sectors own improvement strategy. CLOA and the National Culture Forum, represent and co-ordinate the views of all the sector professional organisations on issues of common concern

2. KEY POINTS

Firstly we commend to you the detailed responses of our member bodies, the Museum Association and the National Association of Local Government Arts Officers (nalgao). Beyond these we’d like to emphasise the following points.

· Cuts in funding from both central and local government will hit all arts and heritage organisations, but particularly those serving our most deprived communities.

· Any budget cuts need to be phased in and agreed between funders and with the organisations involved

· Arts organisations already work well in collaboration with one another, but could do more to combine back room functions.

· Local authorities will need to invest in capacity building across the sector if it wishes to outsource both service functions and assets.

· Current levels of cultural funding a small part of overall public spend. Cuts will mean a diminution of access and outreach work.

· Funding partnerships between Arts Council and local authorities need to be stronger, more consistent and demonstrate better understanding of the different reasons for giving support.

· A proportion of lottery funds should be delegated to consortia of local authorities to meet locally determined priorities, as is the case in Wales through the "Community Chest" fund.

· The proposed restoration of the original proportions of lottery funding for arts sports and heritage is to be welcomed.

· Lottery funding is for special projects, not ongoing programming and currently needs matched funding, which are increasingly difficult to find. The match funding requirements need to be revisited as this does not help the poorer Councils or communities.

· Business and private giving are part of the current mixed economy of the arts and heritage sectors, but they cannot make up for shortfalls in public investment.

· Smaller organisations (outside the major cities) find it much harder to get sponsorship and need locally focussed pools of support.

· The creation of endowments and local community foundations are excellent concepts and the government should do all they can to make these attractive to the private sector, without falling for the idea that they have solved the funding conundrum – this is only part of the answer.

3. IMPACT OF SPENDING CUTS

3.1 It is important to remember that the UK’s cultural organisations are a success story. They attract inward investment, provide pleasure for both visitors and local communities and make a major contribution to our society’s wellbeing. Society has long accepted that it should actively support arts and culture, but at the same time, it is seen as a ‘non essential’ area, ripe for cutting when times are hard. We often look across the pond to see how America supports its cultural activity, and common belief has it that they are much less reliant on public funds. However, recent research has demonstrated that London based cultural organisations (of every size) are more efficient that their USA counterparts in earning income. Larger organisations certainly gain more of their support from the private sector and endowments (41% in New York against 12% in London) but smaller organisations (turnover less than £3.7 m) which are the majority in both countries, receive 39% of their income from public sources in USA against only 36% in the UK. Therefore, it is important to remember that, all over the world, public funding plays a major role in supporting access to arts and heritage.

3.2 Spending cuts in the field of arts and heritage will have major effects. The DCMS is already one of the smallest spending departments of central government. This spending is roughly matched by local authority spending nationwide, but here the average spend by each authority on the whole of the culture and leisure sector is rarely more than 3% of its total budget. However, this is a sector which is both vital to the health of the economy (the creative industries being the fastest growing sector since the early 1990s) and to the social wellbeing of our communities. Cuts of 25 % + on already tight budgets from both central and local government will mean the demise of many smaller organisations, particularly those serving our more disadvantaged communities and a reduction in activity and access from those larger ones which do survive.

3.3 CLOA is in no doubt that it will be very difficult for arts and heritage organisations to sustain their core functions if they suffer the "double whammy" of central and local government cuts at the same rate, and on the same three year timetable. We would argue for the cuts to be phased in so that organisations have time to plan reductions in service and raise other funding. It is also vital that all public funders discuss the phasing of their cuts together with their clients.

4. ARTS ORGANISATIONS WORKING MORE CLOSELY TOGETHER

4.1 Most arts organisations already work very leanly and in partnership with other like minded organisations across the cultural and wider third sector, particularly in the field of co production. There is always room, however, to explore other forms of collaboration. These are likely to be around touring programming and shared back office work. For instance, the Arts Council supported "Thrive" programme has led to a number of audience development/marketing collaborations.

4.2 Local authorities are already looking at outsourcing even more of their arts development delivery to third sector organisations and are encouraging their partners to look at responding to strategic commissioning opportunities, thereby answering local priorities, for example, from children’s services and adult social care. This will require arts and heritage organisations to combine forces to offer the most comprehensive responses to strategic commission. It will also entail local authorities investing in capacity building across the sector, to ensure such opportunities can be taken up effectively, particularly where authorities are also intending to transfer building assets. This issue of the need to improve capacity building is strongly supported by the IDeA and CLOA.

5. NECESSARY AND SUSTAINABLE LEVELS OF PUBLIC SUBSIDY

5.1 Currently, considerable amounts of public funding are spent on widening access to cultural activity – free entry to museums, and education and outreach programmes across arts and heritage, for instance. Widening access costs money and gives few opportunities for earning more income. Performing arts organisations could lessen their reliance on the public purse further by programming more commercially and reducing their commitment to outreach. Public galleries and museums have much less opportunity to increase their earned income, but major institutions could mount fewer, but larger, "block buster" shows, for which they can charge. Such programme reorientation will be possible, but to the detriment of widening community participation and understanding.

6. CURRENT SYSTEM OF FUNDING DISTRIBUTION

6.1 The current system is complex. Outside the major companies most arts organisations receive support from central government via the Arts Council managed and lottery funds and also from local government. These two funding sources have fundamentally different emphases – the Arts Council being most interested in the excellence of the art and local authorities in the excellence of reach to local communities. If this system is to survive it will depend on Arts Council and local authorities working in effective partnership – currently this is very patchy across the country.

6.2 CLOA believes that local people understand local cultural provision best and would argue for distribution to be led locally as far as possible. Current reductions in the number of Arts Council regionally based officers have led to a weakening of connection with local need. Furthermore Arts Lottery distribution is now undertaken from a single base in Manchester. We appreciate that this is a cost saving centralisation, but at the cost of loss of sensitivity to local need. However, for the future we would argue for a proportion of lottery funds to be allocated to consortia of local authorities to support applications from their areas against locally determined priorities.

7. NATIONAL LOTTERY

7.1 The proposed restoration of the original proportion of lottery funds to arts, sports and heritage projects is welcomed. It would be even better if the restoration were not delayed until 2011/12.

7.2 Both the Arts Council and Heritage Lottery Fund are important sources of capital and developmental support for cultural organisations, but this funding has always been additional to core activity and cannot and should not replace managed funds.

7.3 Lottery applications have always required matched funding from local sources. This has often been a hard call, particularly for smaller organisations outside metropolitan centres. With the demise of Regional Development Agencies, trusts and foundations have smaller amounts to give (because of low interest rates, meaning there are now even fewer sources of match funding. These requirements need to be eased, bearing in mind this may well mean fewer projects funded.

8. IMPACT OF CHANGES TO DCMS ARM’S LENGTH BODIES

8.1 The Museums, Libraries and Archives Council (MLA) has, by and large, understood how to work with local government providers, whilst the Arts Council has patchy provision. CLOA is concerned, therefore, at the lack of consultation with local authority partners and the prospect of some of the MLA’s functions going to the Arts Council, whose remit and philosophy has been very different. The Crafts Council has not benefitted in profile or reach by being subsumed into the Arts Council a few years ago. The MLA is a much bigger and a more strategically important fish to swallow. This will only work if the MLA sectors have proper recognition within the reformed organisation and if there is adequate ring fenced funding to ensure the continuance of regional museum support through Renaissance and for museum accreditation generally. In fact ACE could benefit from the MLA’s understanding of the local authority perspective.

8.2 Similarly, although both the Heritage Lottery Fund and English Heritage have ‘heritage’ in their titles they have different remits and we would not recommend amalgamation.

9. THE ROLE OF BUSINESS AND PHILANTHROPY

9.1 Business and private giving have always been part of the mixed economy of cultural organisations, but it is clear that such funders give in the expectation of adding value rather than paying for the core activity. They are also attracted to high profile building and production projects so that income from sponsorship is practically the preserve of large prestige organisations. Even large national organisations do not currently achieve more than 15% of their funding from private sources. This could be increased but it would take a long time and would require a major cultural change, not only in the cultural organisations, but also in business attitudes. There is no quick fix.

9.2 As stated previously, it is definitely harder for small organisations outside the centres of major cities to be attractive to sponsors as it is for many of the community arts engagement projects that they run. The last government found it hard to attract private sponsors to their city academy programme. Arts projects with disaffected young people or in deprived neighbourhoods are an even more difficult to market.

9.3 Long term support for cultural activity requires long term investment – and this is where talk of endowments comes in. We certainly believe this should be explored, but the initial costs of setting up endowments that will yield useful amounts of money for organisations are large. It’s noticeable that, in the USA, even large institutions get little more than 5% of their income from endowments.

9.4 The government could certainly do more to encourage private giving, although this should not be seen as the main solution to a withdrawal of public funding. It would help smaller organisations, in particular, if the government encouraged private giving (through tax breaks, etc) for setting up of local community funds, which could respond to local need. Individual philanthropists have been instrumental in encouraging others to pool their giving for local use. Local and central government could work together to support such initiatives.

September 2010