1.The Department’s biggest ever single investment in the arts and culture sector will require skilled oversight and management for years to come. The Department set up a Culture Recovery Board to strike the balance between speed, proper execution and robust assessment of applications against the criteria of cultural significance and financial viability. We recognise its achievement, while also noting the scale of ongoing monitoring that will be required to oversee the use of taxpayers’ money. We are concerned as to whether the Board’s expertise and the arm’s-length bodies’ capability in assurance and investment is enough to track and oversee the recipient bodies in the long-term.
Recommendation: The Department should write to us within three months setting out is plans for overseeing the capability and skills in its arm’s-length bodies given their ongoing role in monitoring the Culture Recovery Fund.
2.We are concerned about the Department’s and Arts Council England’s ability to manage the significant and ongoing loan book commitments created by the Culture Recovery Fund. As a result of repayable finance awarded under the Culture Recovery Fund, Arts Council England is now responsible for managing £252 million in loans over the next two decades. Loan recipients will not be required to pay back money for the first four years of the typical 20-year loan term. Arts Council England has no previous experience of managing a loan book and says that the extra financial skills it needs to manage the loans are now largely in place. While the Department believes it can manage the risk of default, and Arts Council England is confident of its mechanisms to alert it to risks of non-payment, neither have sought to utilise the considerable loan management expertise that already exists elsewhere in government.
Recommendation: In its Treasury Minute response, the Department should set out how it will make sure it has the resources in place to take on the new responsibilities for managing loans, and how it has drawn on learning from across government about managing the operation and future risks of its loan book commitments, including risks of organisations defaulting.
3.In implementing the fund during the pandemic, the Department’s need to act quickly to provide funding to applicants while also protecting taxpayers’ money meant some applicants’ experiences could have been better. The Department announced the fund in July 2020, with the intention to pay successful applicants by the end of September 2020. While officials should be credited for working at speed and delivering a programme with low fraud levels, mistakes were made, particularly in relation to the fund’s accessibility. For example, the language used on the grant forms were not well geared to commercial organisations; the Department had intended that the money would be distributed more quickly, unsuccessful applicants did not receive clear feedback to understand why their bids were rejected, and recipients faced continuing requests for information such as proof of bank details for each instalment of a grant, resulting in unnecessary duplication of documents.
Recommendation: In its Treasury Minute response, the Department should set out what more it is doing to communicate with those who were unsuccessful in securing funding and streamline its funding processes to cut out any unnecessary demands on recipients that slow down funding, consistent with protecting taxpayers’ money from fraud.
4.The Department lacks a comprehensive understanding of the coverage and impact of its funding on parts of the sector which found themselves without funds. The Department and its arm’s-length bodies have distributed around £1.2 billion to 5,000 organisations and the Department is confident that all applicants that met criteria for cultural significance and sound finances received funding. But the Department’s analysis of how the funding has been distributed is incomplete. For example, the Department has only partial knowledge about the fund’s impact on freelancers, commercial organisations, supply-chain businesses and festivals. Festivals are making difficult decisions about whether to risk their survival by going ahead this summer, but the Department has not modelled the cost of underwriting festival indemnity insurance.
Recommendation: The Department should write to us within three months setting out what it intends to do to support those that were under-represented in terms of the funding they received from the Culture Recovery Fund such as freelancers and festivals.
5.It remains to be seen whether the Department has achieved its objectives for the Culture Recovery Fund and secured longer-term value for money. The Department and its arm’s-length bodies are looking to build on the new relationships they have made with stakeholders, including many organisations they have not previously worked with or funded. The Department claims that the fund has definitely been value for money already on the basis that it is supporting the survival of organisations and that no organisations that received funding and are “culturally significant” have failed. Yet it could not tell us how it would be measuring the value for money achieved by the fund. The Department’s evaluation of the fund is due to report after the first two rounds have been distributed and round three has been awarded. Capturing what the Department has achieved through the fund and learned about the culture sector will depend on research that has clear value for money criteria, including measures for the impact on jobs and freelancers.
Recommendation: The Department should set out:
6.The taxpayer’s investment in the sector, and the Department’s future role in overseeing it, present a huge opportunity for the Department to step up its support and advocacy for the sector. The Department has gained a lot of new information and understanding about the sector, which it could put to good use. We want to see the Department apply what it has learned from the Culture Recovery Fund to build the economic potential of the sector. In addition to the sector’s importance to the domestic economy, we are particularly thinking about the sector’s export potential and the varying levels of cultural and heritage resources across the country. To make the most of this opportunity requires effective action, oversight and advocacy by the Department.