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

Written evidence submitted by Paul Kelly (arts 176)

1.   Background

  This submission is from Paul Kelly, Senior Lecturer in Arts and Event Management, writing in a personal capacity. The author spent 15 years working as an arts manager in not-for-profit arts organisations followed by 15 years as Principal Arts Officer for a large Local Authority (population 250,000). He is now Senior Lecturer in Arts and Event Management at the Arts University College at Bournemouth.

2.   Summary

  There have already been cuts to arts funding which have had an impact on services and opportunities. Further cuts will have further impact. Whilst it is too early to identify the extent of the impact, we think it likely that activities at community level, in more rural areas and activities outside of the mainstream will suffer most. It is also likely to be harder in future to obtain arts funding and this will disadvantage people who lack particular language or application writing skills, even though they may have good ideas and delivery ability.

3.   What impact recent, and future spending cuts from central and local Government will have on the arts and heritage at national and local level;

  3.1  It is probably too early to try and quantify the impact of recent central and local Government cuts on the arts and heritage sector. But there will be impacts and these will probably have an effect on the availability, accessibility and affordability of arts and heritage activities and opportunities to local people. The Select Committee should also bear the following in mind:

    (a) There has been a well documented loss of local arts services over the past seven years. [add detail of local authority arts cuts] Forty-four local authorities have withdrawn all arts funding over the past seven years. This accounts for approximately 15% of all local authorities with previously active arts services. In addition many local authority arts officers have reported standstill budgets over the past three years. This represents a real cut to arts budgets given that inflation has to be taken into account.

    (b) We know that one County Council is currently examining an "exit strategy" for arts funding which will lead to a complete loss of all arts funding, staff and services. We are not able to put a financial figure on this at this time, but withdrawing all arts spending will undoubtedly hit a number of arts and social organisations in that area, large and small. This may be an extreme case; alternatively it may be the start of a trend.

    (c) The impact is very likely to be greater in areas of lower population density—eg rural areas.

    (d) Owing to a mix of funding policies and management practices, some arts organisations, and it could be quite a large number, are under-capitalised and are either managing deficits or have little in the way of tangible assets or significant cash reserves. This makes them very vulnerable when funding is reduced or withdrawn. It could be that reductions in grants will make such organisations either insolvent or unviable.

    (e) The impact of budget cuts could hit small community projects hardest. These often do excellent work in making the arts more accessible, especially to deprived communities. But they are often low-key with low visibility and lack "sponsor appeal".

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

  Two points here:

  4.1  Arts organisations often have distinctly different artistic traditions, roles and directions, but the management capacities to deliver these—planning, marketing, finance and accounting can require very similar applications. Back office collaborations or mergers might yield financial efficiencies. For example in one Cathedral City of around 100,000, there is a Festival, Theatre and Arts Centre. The artistic directors meet and talk quite often. But each organisation has its own administrative staff. Apart from history, why?

  4.2  In my experience arts organisations treat funding and fundraising as a competitive exercise and do not tend to share information with each other. In one sense that is understandable. But unless and until arts organisations are more open with each other they will not be able to work more closely together and make economies of scale.

5.   What level of public subsidy for the arts is necessary and sustainable;

  5.1  To answer this question you first need to decide whether you are going to operate a "top down" system or a "bottom up" system. A top down system could be expressed as a percentage of government spending with a target figure both for central and Local Government. I believe a figure of 1% of government spending for the arts has been discussed as such a target on occasions in the past.

  5.2  A "bottom up" system could identify what artistic experiences and facilities communities should have "a right" to enjoy. It could look at these in terms of per capita delivery. It could cost those and it could also map what facilities currently exist, what they cost and where they are in relation to population. Both of these are rational ways of establishing a level of public subsidy for the arts. They are also markedly different from the rather irrational way that arts funding has grown.

  5.3  The issue of sustainability is one partly to do with political philosophy (especially around public spending), partly to do with national economic performance (governments may feel willing to spend more if the country seems to be doing well). Sustainability is also affected by population growth and shift; a bigger population both implies a bigger need for funding if a per capita target is to be sustained but also bigger tax revenues. Populations are not static (eg Thames Gateway) and that needs to be factored into sustainability issues. The 10 year census ought to provide useful data for review.

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

  6.1  My response refers solely to the arts funding system. On the one hand the arts funding system has been continually re-structured, Arts Council England (ACE) seems comparatively well-led at present and further structural change at a time of considerable funding reductions might not be wise.

  6.2  On the other hand the decision in 2001 to abolish the Regional Arts Boards and to create a single national arts funding body has led, over a period of time, to a loss of local expertise and commitment and has, to varying degrees, weakened relationships with Local Authorities which have been significant investors in arts and heritage.

  6.3  If the philosophy and policy of devolving power to local level, as set out in "Building A Big Society" is to be applied to the arts, then a further review of the system and structure of arts funding may be needed. It may also be worth re-examining the system that existed until 1990 of independent regional arts bodies, that were a partnership between local artists and arts organisations, Local Authorities and the national arts funding system.

  6.4  In addition the DCMS "sponsored body" system does not properly recognise a growing plurality of funding and interests. It is easy to think that Arts Council England is the arts funding system. But this ignores a significant investment in the arts by Local Authorities. It overlooks investment by the Higher Education Funding Council and possibly the education funding bodies who support arts centres and arts programmes through HE and FE institutions. It also overlooks the more recent role taken up by the sector skills council, Creative and Cultural Skills. All of these are public sector bodies and all re stakeholders in the arts sector. The current system does not recognise this or encourage these complementary bodies to work together.

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

  There will be more money from the Lottery for the arts and heritage and that will obviously be positive, unless the increase in Lottery funding merely fills a gap created by a reduction of Treasury funding. The nature of the impact will also depend on whether lottery funding rules or schemes change or not—see my response to question 6.

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

  8.1  When arts Lottery funding became available it was solely for capital projects. Between 1994 and 1997 arts found themselves with a "revenue drought" and a "capital flood". Between 1997 and about 2006, that flow became reversed and the arts experienced a lottery "flood" and a capital "drought". In addition the threshold for arts lottery revenue and project threshold seemed to climb at both the minimum and maximum levels.

  I have four points to make here:

    (a) I don't think the capital/revenue balance is right. Even though we may be facing hard times, buildings still need repair and improvement, and organisations need better equipment. So, some lottery monies ought to be available for new arts capital applications—maybe 10-15% of arts lottery funds per annum.

    (b) One lesson from the 1990s Regional Arts Lottery Programme is that very small sums of money can make things happen, instil confidence and bring about some quite big differences at local level.

    (c) Within the last 18 months the arts have been more or less excluded from the Big Lottery's Awards for All scheme and this is a retrograde step.

    (d) The arts lottery needs to introduce a scheme for one off projects or projects lasting up to three years that allows bids of, I suggest, between £300 and £1,000. The application process and form needs to be simple (the Awards for All form is actually quite complicated).

9.   The impact of recent changes to the DCMS arm's-length bodies—in particular the abolition of the UK Film Council and the Museums, Libraries and Archives Council;

  9.1  It's probably too early to say. But I would make two points; first, perception counts for a lot and if reports in the press are correct, some senior figures in the film industry believe that the abolition of the UK Film Council is a bad thing. If they believe that then the abolition does not help the film industry.

  9.2  My second point is about human capital. People build relations with people. When I worked for a Local Authority a constant moan I heard from arts organisations about the Arts Council was that the staff there kept hanging. No sooner had they built a relationship with a member of ACE, then that person left. An institution is much more than just a financial cost. Abolish an institution and you lose all the human capital—the trust, the relationships and sector-specific knowledge—that is an intimate part of that organisation. This human capital can be worth far more than the annual financial cost. Abolition is a blunt instrument that may be very damaging and expensive.

  9.3  In addition whilst the Government has broadly identified ways of sustaining support for the film industry, I am not aware of a similar announcement about sustaining support for museums, libraries and archives. All three are vital to our national heritage and also provide crucial source material for our creative industries. The abolition of the MLA has attracted far less press attention than that of the Film Council. On current evidence it seems far less thought through.

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

  10.1  The simple answer to a rather simple question is "yes", but this needs considerable qualification. Two hallmark yardsticks of policy measurement are "efficiency" and "effectiveness". Business and philanthropic support for the arts may increase policy efficiency by diversifying the funding and reducing reliance on the public sector. But suppose we argue that an effective arts policy is one in which all people in England who wish to can access the arts; will business and philanthropic support for the arts serve this objective? The answer is not necessarily. It may be very difficult to attract business support for rural arts projects or for projects working with deprived communities or local projects without high PR profile. Businesses and philanthropists may wish to support specific types of arts projects. Some areas of England will have low concentrations of business with the capacity to invest in arts projects.

  10.2  It is also not quite clear what this questions means by the phrase "can play a long-term role". That could imply changing the arts funding balance over the longer term. Or it could imply investing in endowment funds that generate annual income and thus have a long term impact.

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

  11.1  The British arts funding system is often compared to its American equivalent. In America the arts attract a much higher per capita level of private donations than in England. Though I seen no research on this, it is popularly believed that the high level of private donations in the USA is partly due to the fact that they are tax-deductable. It should also be added that America almost certainly has a higher proportion of millionaires than England.

  11.2  What will incentivise private donors in England? Our Government incentives actual or under discussion seem to include receptions with Government ministers and/or the "Honours System". If that is the level of "incentives" under discussion, it seems to me to be a bit Ruritanian.

  11.3  If the Government is serious about encouraging private donations for the arts, then it needs to reform and market the Gift Aid system—not widely known and complex to operate—and/or to introduce further tax benefits for private donations. The current system is also not very egalitarian. If you happen to have inherited an historic painting worth millions you can negotiate to gift it to the nation in lieu of death duties. But if you wish to support an arts enterprise or creative project with your own hard earned cash there seems to be no equivalent tax break on offer.

September 2010

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