Funding of the arts and heritage - Culture, Media and Sport Committee Contents


Written evidence submitted by the British Library (arts 87)

EXECUTIVE SUMMARY

    — The following submission from the British Library seeks to answer a number of the questions put forward by the Committee.

    — We have made suggestions as to whether the current system, and structure, of funding distribution is the right one; how arts organisations could work more closely together; whether businesses and philanthropists should play a long-term role in funding arts at a national and local level; and if there should be more government incentives to encourage private donations.

    — In our response we detailed the funding model of the Library and suggested ways for the government to amend the structure of funding distribution, such as allowing the Board to make its own appointments in order to increase fundraising potential. We also detailed ways for the government to encourage more private donations such as simplifying the Gift Aid rules and addressing the tax rules for living authors. We concluded that the Library is very different in its fundraising potential from other cultural institutions and already employs a mixed economy funding model.

INTRODUCTION

  1.  The British Library was established by statute in 1972 as the national library of the United Kingdom. It is one of the world's greatest research libraries—it benefits from legal deposit and is the main custodian of the nation's written cultural heritage. The Library's incomparable collections have developed over 250 years; they cover three millennia of recorded knowledge, represent every known written language, every aspect of human thought and a sizeable sound, music and recordings archive. The British Library plays a vital role in the life of the nation as a cultural heritage resource by:

    — managing, preserving, and ensuring access in perpetuity to the UK's national published archive and the national repository of sound

    — comprising an integral component of both the national research infrastructure and the UK Science Base

    — playing a correspondingly significant role in ensuring the research excellence of the UK.

  2.  The British Library contains a vast array of inspirational material and expertise that supports every sector from the creative industries to science, technology and medicine; small businesses to major pharmaceutical companies; school children to lifelong learners; academics to authors:

    — Through the services of our Business & Intellectual Property Centre, we support entrepreneurs and SMEs in developing, protecting and exploiting their ideas, and in growing their businesses.

    — Through our learning programme we provide £1m worth of resources to 1.2 m teachers and school students who visit our learning website each year.

    — We support the Government's lifelong learning policies by providing resources to everyone who wants to do research; 43 per cent of people using our newspaper collections are personal researchers doing genealogy or local history projects.

    We supply 100 per cent of the world's top 100 R&D spenders in industry with our document supply service.

CURRENT FUNDING OF THE BRITISH LIBRARY

  3.  The British Library is a world class cultural institution. The Library's collections and expertise are used daily by authors, scientists, TV and film producers, business people, academics, genealogists and local historians, making a vital contribution to the UK knowledge economy. For £95 million a year from the tax payer—just £3.72 each—the Library contributes wide ranging economic and social benefit to the UK, supporting all parts of the economy including culture, industry, business, learning, creative industries, international development, science technology and medicine, and higher education. We also help ourselves to the tune of £22 million a year—20% of our total funds—through commercial income and fundraising. An innovative public sector body, we have pioneered new business models to support our public funding. For every £1 of public funding, the British Library generates £4.40 for the UK economy.

  4.  The British Library's main source of funding is the Grant-in-Aid we receive from DCMS. Since the early 1970s, the British Library has supplemented Government funding with other sources of income in a mixed economy including philanthropy, commercial revenue generation, and partnerships (eg from research councils).

  The following points seek to answer some of the questions raised by the Committee inquiry.

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

  5.  The Library believes that cultural institutions need to innovate and plan strategically for the future. In order to do this we would argue that there is need for a more open, mature and constructive relationship as far as central government's relationship with NDPBs and local government is concerned, one that is more long-term and risk-based.

  6.  For the British Library this might include:

    — Secure and stable public funding —the provision of secure and stable public funding over five years (avoiding the trend of annularity and associated micromanagement)

    — Establish pricing and charging policies—the freedom to establish pricing and charging policies without recourse to the Secretary of State

    — Cross-departmental working—enabling more cross-departmental working, breaking down departmental silos

    — Borrow in a responsible way - the freedom to borrow in a responsible way for investment, such decisions to be taken on the basis of cost efficiency

    — Carry-over—the removal of restrictions on carry-over from one year to the next (EYF)

    — Set up trading companies—the power to set up trading companies and the power to establish its own terms and conditions

    — Joint ventures—the removal of restrictions on participation in, and delegation to, joint ventures

    — Capital project expenditure—the removal of requirements to seek specific approval for capital project expenditure / submission of option appraisals

    — Freedom to operate—freedom to operate outwith other existing public sector requirements as appropriate

    — Pay negotiating remit—the full freedom to establish its own pay negotiating remit

    — The Board—the power for the Board to appoint its own members; the full participation of the Board in the appointment of its Chair. This would facilitate more integration and support for fundraising activity at Board level.

    — Reserves—the freedom to use our own reserves

How can arts organisations work more closely together?

  7.  By leveraging our strengths through new business models and innovative partnerships and being open to engagement with the public, commercial and third sectors, the British Library is taking steps to increase innovation, productivity and efficiency.

Developing partnerships

  8.  We have helped ourselves through agreeing a series of partnerships with the public and private sector, including the arts, and have been successful in attracting external investment to supplement our GiA to enable us to digitise important parts of the collection and make these accessible electronically. This has involved innovative working with a number of partners both in the public and private sector. Some examples of these success stories are shown below:

    — MOU with the BBC. The MOU seeks to develop new ways of integrating access to nearly a million hours of BBC TV and radio content and over 150 million British Library items—significantly increasing access to research material across both national institutions for the benefit of researchers and the wider public. It also proposes that the BBC and British Library collaborate to develop viable approaches on important issues -such as rights management, distribution of archive content, digitisation and storage.

    — Society of Chief Librarians. The public library service is an integral part of the wider library network and the British Library fully supports its aim to be vital and relevant in the 21st Century. The Library believes that public libraries have a key role to play: in the free exchange of information and access to knowledge in support of active citizens in a democracy; in supporting literacy and digital literacy; and in informal and lifelong learning.

  We support the public library network through our document supply and bibliographic services and work closely with the Society of Chief Librarians (SCL) to ensure robust representation of the sector through advocating the value of Library services.

    — MOU with the Joint Information Systems Committee. We have attracted £4m of funding from the Joint Information Systems Committee (JISC) and the National Science Foundation (NSF) to increase onluine access to our collections for research education.

    — Online publishing. brightsolid, part of DC Thomson publishing has recently invested in a £40m project to digitise up to 40 million pages of Newspapers from our collection, unlocking the nation's newspaper collection digitally.

    — Digitisation. We worked with Microsoft on a £5m project to digitise 19th century books. These books are now available to download free onto the Kindle ebook reader via Amazon.

    — Commercial publishers including Cengage Gale and Proquest have, over the past 10 years, invested tens of millions of pounds and in kind support for the creation of digitised assets from the Library's collections—now owned by the nation.

    — In kind investment. The British Library Business & IP Centre opened in March 2006 with a grant of £1.2m from the London Development Agency (LDA) with a further £2.4m for the period April 2007—March 2011. The Centre is match-funded by a British Library contribution of £2.3m per year and has helped 150,000 small business people since it opened. The Centre has attracted £8.2m of in kind support since the Centre opened.

    — Centre for Conservation. The Library works with arts and educational organisations to promote conservation skills which are internationally renowned. For example Camberwell College of Arts offers a two-year Book Conservation course developed in collaboration with the British Library. The course has been created to help address the need to increase the number of conservators specialising in the field of book conservation.

How can businesses and philanthropists play a long-term role in funding arts at a national and local level?

  9.  Library fundraising has been established over the last decade to source philanthropic and sponsorship income to supplement our public funding. Our success has been built on developing long-term relationships with a number of individuals, charitable trusts and businesses and we will continue to cement relationships and further develop existing ones. In addition, sustainability is a key issue for corporate, individual and trust funders as they focus on the long term impact of their support. This is an important part of the British Library's mixed economy funding model.

  10.  In the Library's experience donors like to support specific projects which have visibility within the organisation. Fundraising can therefore help us develop our programmes, but they cannot help us fund the core costs of running the Library.

  11.  Examples of our recent successes in philanthropy and sponsorship are:

    — Heritage Acquisitions. We have saved for the nation numerous treasures—for example, Sherborne Missal, My Ladye Nevell's Booke, Sforza Hours—through matching private donations with GiA and grants from the Heritage Lottery Fund (HLF) and the National Heritage Memorial Fund (NHMF). In total, since 1983 we have leveraged £15m from the HLF and NHMF.

    — Greek Manuscripts Online. We have secured approximately £1m from a major Greek foundation to create an online resource of our Greek treasures. In return for the Foundation's support, we have provided some strategic advice to the National Library of Greece and have involved colleagues there in our online project.

    — British Library Centre for Conservation. We were successful in raising the matching sum of £6m towards this state-of-the art facility which opened in 2007 and has helped us to gain international recognition as world leaders in book and manuscript conservation.

    — Manuscript collections. For every £1 of GiA we attract £1.60 from philanthropic sources, linked to Manuscripts, to supplement our income.

    — PACCAR Gallery. We secured a gift of £1m to re-name our temporary exhibitions gallery, after our first, corporate naming arrangement came to an end.

    — The British Library Learning Centre The Library will shortly be opening the Harry M. Weinrebe Learning Centre which has been fully funded through private donations. The Centre will deliver academic excellence by supporting the national curriculum and giving learners the skills to work with original source material in the digital age.

  £500,000 was raised through fundraising activity by the Library's Development Office, which took approximately three years to achieve. With support from the Dorset Foundation, John Lyon's Charity, the Wolfson Foundation, British Library Patrons and an anonymous donor, the Harry M Weinrebe Centre offers an expanded, refurbished and fully digital enabled space to help schools to deliver national curriculum subjects to A-level and CPD opportunities for teachers. It will also be a hub for the community and family programme and will allow the British Library to deliver a national programme supporting the development of digital research skills.

Does there need to be more Government incentives to encourage private donations?

  12.  The following points provide suggestions as to how the government could encourage a more conducive market for giving.

(a)  Gift aid reform

  Simplifying the Gift Aid process would make it easier for donors who are higher rate tax payers to claim the tax benefits due to them. In addition, the current system requires donors to opt in to Gift Aid: encouraging donors to opt-out instead could increase the number of donors signing up to Gift Aiding their gift and simplify administration. We think that a composite rate of Gift Aid will discourage higher rate taxpayers from giving as their tax benefit will be reduced (this is important for us as we estimate that around 75% of our donors will be higher rate taxpayers); in addition, donors could be encouraged to transfer all of the tax benefit to their preferred charity instead of HMRC retaining a portion of it.

(b)  Living Authors

  Manuscripts of modern and contemporary UK authors are finding a ready market abroad, despite the best endeavours of UK public institutions and funding bodies to acquire them for their collections. Authors are at a disadvantage internationally with regard to taxation when selling their papers in the UK. As archives are considered to constitute professional outputs, authors are required to pay income tax on their sale and tax relief is available only to writers' estates, preventing writers from settling their affairs during their lifetimes.

(c)  Recognising donors

  This could include recognising donors in the honours system.

  13.  In November 2005, we formally submitted two proposals to HM Treasury:

    — To extend the douceur arrangement with regard to inheritance and capital gains tax to income tax for living authors selling their papers to a designated UK public institution by private treaty

    — To extend the Acceptance in Lieu of tax scheme to all tax liabilities to enable pre-eminent writers to settle during their lifetimes the permanent location of their archives

  14.  Under the douceur arrangement, tax liability on an estate is waived, and the benefit split between the vendor and the public institution. Acceptance in Lieu is acknowledged to be well-run and effective in encouraging owners of pre-eminent cultural works to sell them to public institutions in lieu of tax liability. We continue to press for these changes and are encouraged that the House of Commons Culture, Media and Sport Select Committee, in its 2006 report on Caring for our Collections, recommends the extension of the douceur to income tax, and the extension of Acceptance in Lieu to benefit living creators. There are tax incentive schemes for cultural property operating in several other countries, however most govern donations by owners, rather than specifically sales by the creator. In the Republic of Ireland, there is evidence that measures there (Section 1003 tax incentives and the Heritage Fund) have led to an increase in acquisitions by public collections.

  We continue to seek resolution for these important issues.

CONCLUSION

  15.  The British Library is very different in fundraising potential from other institutions including those in the arts. We are the only income-generating national library in the world. Therefore a combination of commercial income-generation and fundraising is the model we have focused on.

  16.  The British Library employs a mixed economy funding model, working hard to secure the necessary public funding whilst supplementing this with partnerships with other public, private and third sectors.

  17.  We have recommended ways for the government to amend the structure of funding distribution, such as allowing the Board to make its own appointments in order to increase fundraising potential and have detailed ways for the government to encourage more private donations such as simplifying the Gift Aid rules and addressing the tax rules for living authors.

September 2010





 
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