House of Commons - Work of Arts Council England - Culture, Media and Sport Committee

Work of Arts Council England - Culture, Media and Sport Committee Contents

3 Funding for the arts

18. There are four primary sources of public sector funding for the arts (with the relevant sums given for England in 2011/12):

· Local Government (£439m)

· DCMS grant in aid (£493m)

· Arts Council England grant in aid (£393m)

· Arts Council England Lottery (£211m)

By 2012/13, direct funding from the DCMS had fallen to £447 million. In the same year, Arts Council England made grants totalling £322 million from funds provided by DCMS from Treasury sources. In 2012/13, Arts Council England committed £317 million in Lottery funding.[22] These figures, from the original Rebalancing our Cultural Capital report, might best be described as indicative; for example, the Arts Council told us that their grant in aid spend was £440 million in 2012/13.[23] This figure is about £118 million more than that given in the Rebalancing report, a discrepancy due in part to the exclusion by the latter of funding for music hubs and museums.[24]

19. Behind the bald figures given above lies the simple fact of falling public funding for the arts. Sir Peter Bazalgette referred to a 33% fall in the Arts Council's grant in aid that has occurred since 2010. On top of this comes falling annual National Lottery income, due to declining lottery ticket sales.[25]

20. Many submissions to our inquiry drew attention to the pressures on local authority funding. This clearly is an important factor to be taken into account, not least by the Arts Council. The Audience Agency responded to our call for evidence by observing: "Although the Inquiry is focusing on the work of Arts Council England, we ask it to consider carefully the current erosion—and in some cases 100% withdrawal—of local authority support for culture. This presents a potentially fatal threat to the regional cultural infrastructure—and ACE's capacity to work to lobby against and address such swingeing cuts has been decimated."[26]

21. We were told that public funding for the arts is vital for a number of reasons: it can help widen access by subsidising tickets; it can allow creative risk-taking (with all the easy brickbats that can occasionally attract) that the private sector might shy away from. The Deputy Mayor of London for Education and Culture, Munira Mirza, said: "I do not think in my lifetime we will see a situation where there is no longer state subsidy for opera. It is just inherently a very expensive art form, and I think we should be prepared, as a civilised society, to pay for expensive art forms that are really important, and also to subsidise tickets. The Royal Opera House would be a hell of a lot more expensive if there was no state subsidy, and I for one feel that people of all backgrounds should be able to pay to go to the opera and see the best. So I think state subsidy is inevitable to some extent. Gradually there may be less of it but, importantly, what state subsidy does for those organisations, large and small, is that it allows them to do things that are risky, that are innovative, that do not have to be immediately popular or immediately favoured by sponsors. That is what allows them to be so creative and so world class, because they have a degree of protection."[27]

22. The Department for Culture, Media and Sport directly sponsors, to the tune of £450 million,[28] 16 National Museums which provide free entry to their permanent collections.[29]A majority of these are based in London. Among the exceptions in which we took a particular interest is the Science Museum Group, which is headquartered in London but has a major presence in places in the North of England. Among these is the National Media Museum in Bradford, which we visited in March amid concerns over its future. The significance of the collections there earned Bradford international endorsement as the world's first UNESCO City of Film. Unfortunately, the number of visitors to the Bradford museum has fallen: from 493,000 in 2012-13 to 479,000 in 2013-14.[30] It became clear during the course of our visit that even greater imagination is needed to restore visitor numbers, complemented by a long term commitment from the Science Museum Group to maintain the museum in Bradford and others in the Group. SMG should therefore send a clear signal that it is a national museum group and not merely a local London one. The Group's most recent annual review does appear to acknowledge these concerns and makes reference to a "Masterplan to reconfigure the [Bradford] site as a more recognisable national museum."[31]

23. We welcome the fact that there are very significant national museums based outside London. It is most important that this presence is consolidated and, where possible, built on. The Science Museum Group, for example, has an established and valuable presence not only in London, but also in Bradford, Manchester, Shildon (County Durham) and York.

24. A major destination for Arts Council support is the National Portfolio Funding Programme which was officially launched on 1 April 2012; this provided funding for a national portfolio of 696[32] organisations (a number that has since fallen slightly to 687[33]). Created through an "open-access process",[34] it replaced the Arts Council's regular funding programme, which ended on 31 March 2012. In their first written submission,[35] the Arts Council put the scale of this funding in the context of three strands of investment:

· 696 National Portfolio Organisations which will receive £1.048 billion between 2012 and 2015 (largely grant in aid); this portfolio is balanced using criteria such as geographical reach, diversity and range of art forms.

· Grants for the Arts—an investment of £192 million of National Lottery funding between 2012 and 2015; this includes small grants for individual artists and community groups.

· £573 million of strategic funds (largely lottery funding) between 2012 and 2015 to target specific challenges; these include: Creative People and Places (£37 million to increase participation in areas of low public involvement); Strategic touring programme (£45 million); Capital funding programme (£219 million, much of it outside London); Catalyst (£100 million to help organisations diversify income streams and access private funding); Digital work, including The Space; the Creative employment programme (£15 million to provide opportunities for young unemployed people).

25. The Arts Council's 16 Major Partner Museums, only two of which are in London, will have received £62 million of ACE's grant in aid funding for museums between 2012 and 2015. A new open grants fund for museums, other than nationals and MPMs, will be available from 2015. The latter was announced on 1 July 2014, when the Arts Council gave details of the investment in arts and culture across England over the period 2015-18.[36] This sees the number of Major Partner Museums increased from 16 to 21. The total number of National Portfolio Organisations will fall to 670 though this will still see an investment of around the £1 billion mark from 1 April 2015 to 31 March 2018. On the new strategic funding programmes, the Arts Council refers to a number of planned programmes for 2015-18, with a total investment of £104 million per year. Finally, the level of funding allocated to Grants for the Arts will see a relatively small increase, coming to £210 million over 2015-18.

26. We welcome the Arts Council's decision to increase the budget to Grants for the Arts. We hope this will fund emerging talent throughout the country, not just in areas traditionally well provided for.

27. National Portfolio Organisations and Major Partner Museums have particular responsibilities given their relatively high profile and the relative security of the public funding to which they have access. The Major Partner Museums receive between £500,000 and £2 million each, totalling approximately £21 million per year. The funding is aimed at supporting them to be even more ambitious and contribute to museum leadership across the country.[37] With particular reference to NPOs based in London, Sir Peter Bazalgette told us: "one more thing to say about London is that with its relatively favoured funding position comes responsibility, and we must make sure that all the national institutions in London perform a genuinely national role. They are doing so more and more and we will hold them to that in the new NPO settlements."[38] The new Theatre Tax Relief should do much to encourage touring productions in particular, since a higher rate of relief—25%— applies to these. Plays, musicals, opera, ballet, dance and circus productions which do not tour will still be able to claim tax relief at a rate of 20%.[39] Munira Mirza told us that she thought this new tax relief could be a "complete game changer".[40]

28. We welcome the assurance from the Chair of the Arts Council that the national institutions in London will be required to perform a "genuinely national role" as part of their new NPO settlements. In general, we believe that any National Portfolio Organisation or Major Partner Museum should seek to extend further its reach wherever it might be based. This includes: touring productions and exhibitions (though we recognise that that is expensive); using new media more creatively to widen access (including making whole collections accessible electronically) and developing initiatives such as the showing at cinemas of performances of plays and operas. It also includes pro-actively putting the expertise available to NPOs and MPMs at the service of smaller local organisations.

Partnerships

29. Private sector funding for the arts comes from individual philanthropists, business sponsorship and support from trusts and foundations. In 2011/12, private giving came to £660 million overall, of which 82% went to London-based organisations.[41] Even here, the Arts Council has been able to exert some influence, not least through its Catalyst programme, a £7 million capacity-building scheme for consortia of organisations with limited or no fundraising experience.[42] The Arts Council told us that 218 smaller organisations, mostly outside London, have been awarded grants of £60,000 to £120,000 to build fundraising expertise through this programme. This comes in recognition that it is large London-based organisations that find it easier to attract donors and sponsors.[43] The Minister, Edward Vaizey MP referred to the introduction of the Catalyst programme,[44] but was also forthright in his views about the scope for increased philanthropic giving:

30. John Mowbray of the North East Culture Partnership told us that, in his region, the businesses that can support the arts have reduced significantly: "the big giving that we used to have many years ago has gone completely."[46] It is also the case that private support for the arts is often contingent on the commitment, either continued or new, of public funds.[47] In the context of philanthropic giving, Dame Liz Forgan told us that it is "absolutely inescapable that raising money even in a very prosperous place like Bristol compared with raising money in London is a hugely much more difficult job."[48] Ingenious noted the "re-incarnation of public subscription in the modern guise of crowd-funding" and went on: "Nonetheless the broad features of what Arts & Business (A&B) calls the arts 'tripod' economy have remained much the same. Money comes first from national and local public funding (approximately 41% in 2011-12), second from earned commercial income (approximately 37%), and third from business sponsorship, trusts and foundations and other private sources (approximately 22%). This third category may for convenience be collectively wrapped up as 'private investment'."[49]

31. While there is surely scope for any arts organisation to raise more money through philanthropy, £5 cheques—even lots of them—will only go so far. Any constraints attached to public funding both for the arts in general and for specific projects ought to be informed by a realistic, quantitative assessment of the scope for philanthropic giving and self-help.

32. The Arts Council has clearly adopted a significant role in encouraging philanthropic giving; it also seeks to encourage wider partnerships involving the public sector too. Sir Peter Bazalgette recalled how, in the first speech he gave as Chair of the Arts Council, he had called for a grand partnership: "What had impressed me in my early visits as Chair of the Arts Council to places like Bristol and Liverpool and Manchester, is you had a partnership between the local authority, the Arts Council, higher education, local business … Then you add into that mix also the LEP, the Local Economic Partnership."[50]He went on to tell us that a lot more could be done to encourage such partnerships. Councillor David Budd of the North East Culture Partnership suggested to us that there was more scope for different potential sources of funding to be better coordinated, including different National Lottery distributors.[51]The Arts Council should redouble its efforts at brokering cultural partnerships involving businesses, local authorities, local enterprise partnerships, universities and international organisations, particularly within the EU, which might provide additional funding sources.

Responding to reduced funding

33. One response by the Arts Council to greater constraints on public funding has been to shift the balance between grant in aid and arts lottery funding, notably for National Portfolio Organisations. This has led to questions as to whether the additionality principle guiding the allocation of National Lottery funding is being properly adhered to. Creative Guild told us: "The decision by Arts Council England to use lottery money to support core arts funding in 2015 instead of using it as an additional source of funding, as stipulated in the 1992 White Paper that set up the National Lottery, breaches the additionality principle on which the Lottery was founded."[52] A concern is that this will benefit NPOs to the detriment of non-NPOs that depend on Lottery funding for their arts projects. Peter Stark noted that: "We are now saying, with Liz Forgan, that the lottery is different, right? It was meant to be for new and additional activity and it was initially during the lottery capital funding period—when the Arts Council had not been funding capital for some time—it was clearly solely for, that 'new and additonal' purpose. It has drifted to the point where people are now talking about some national portfolio organisations being funded wholly from lottery funding, and that has to be straight substitution."[53]

34. In their July 2014 announcement on their investment approach for 2015-18, the Arts Council stated that £69.6 million each year of Lottery money will go into the national portfolio, "to be invested in touring and work with children and young people."[54] Giving oral evidence in June, Alan Davey told us:

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35. National Portfolio Organisations that receive Arts Lottery funds should demonstrate how they put this to use in ways that satisfy the additionality principle; examples could include, but need not be restricted to, wider community engagement and new touring activities. The principle of additionality should be adhered to both in spirit and in practice.

36. What is beyond question is that the Arts Council has had to juggle significantly reduced resources. This has inevitably led to difficult decisions being made in respect of funding both generally and in relation to specific projects and organisations. These considerations were very much to the fore when Sir Peter Bazalgette came to the Arts Council as its new chair. He told us of a "couple of very pressing issues" that concerned him on his arrival:

One was that the Arts Council had had its grant in aid, its taxpayer money, cut by around a third, and it had reduced or was about to reduce its manpower down from 540-odd to 420 people and reorganise itself, so I wanted to make sure the Arts Council was fit for its purpose going forward into the NPO round. I think we have come through very well.

37. The Minister, Edward Vaizey MP, described the Arts Council as being now "a much slimmer organisation."[57] He also told us that both he and the Secretary of State would put a very strong case to keep any future cuts to the DCMS budget, "if they are to come", to a minimum,[58]adding that he was "from the school that will argue for as much money as possible for culture".[59] Given the scale of the reduction in grant in aid that the Arts Council has absorbed, we welcome the Minister's assurance that he will seek to protect future funding. While it is essential to acknowledge the prevailing financial climate, we would be disappointed if the Arts Council saw any further fall in its grant in aid.