A UK-wide international success story thanks to 15 years of sustained investment
Thanks to 15 years of sustained support, including the introduction of the Lottery in 1994, the arts are thriving. We have visionary leaders; entrepreneurial business models; a global reputation for excellence and innovation; enhanced facilities; a transformational Olympics opportunity; and a growing cultural economy built on a new spirit of creative confidence.
The arts budget is tiny; the return on investment is huge
The arts budget is tiny; it costs 17p a week per person - less than half the price of a pint of milk. In return we have: world-class arts and artists; a sector that gives Britain an international edge as a dynamic place to live, work and do business; a sector which fuels the creative industries and generates future jobs in one of the fastest growing parts of the economy; and a sector with a proven track record of regenerating towns and cities and contributing to a cohesive and engaged society.
The story is clear: small amounts of public money work hard and stimulate a mixed economy culture that is admired the world over and delivers a real return for the country in economic terms, and in terms of the kind of society we want to be.
Sustained support of the arts will allow them to play a vital role in Britain's economic recovery
Arts investment plays a vital role in the journey from talent to the creative industries, which are fundamental to the future competitiveness of British business and are seen as our best route out of recession. Between 1997 and 2006 the creative economy grew faster than any other sector, accounting for 2 million jobs and £16.6 billion of exports in 2007.
Arts and culture are central to tourism in the UK: this was worth £86 billion in 2007 - 3.7% of GDP - and directly employed 1.4 million people. Inbound tourism is a vital export earner for the UK economy, worth £16.3 billion to the UK economy in 2008.
Liverpool 08 was the most successful European Capital of Culture ever, with 15 million cultural visits and £800 million worth of local economic benefit.
Artistic enjoyment and creativity has never been more universal, more innovative, more easily distributed, shared and exchanged. The UK has the largest creative sector in the EU, and relative to GDP probably the largest in the world.
The arts are central to a government that places a healthy society at the heart of its agenda
Arts leaders and organisations occupy a major place in the 'Big Society': as civic leaders they contribute to the cohesion of their local communities, civic pride and quality of life.
Any cut to the arts will have a disproportionate effect for a relatively tiny saving to the public purse
For every £1 that the Arts Council invests, an additional £2 is generated from private and commercial sources, totalling £3 income. At a local level our investment can lever five times its worth.Arts Council investment acts as a stamp of approval that draws in funding from the private sector and philanthropic sources: philanthropy follows success.
We have developed a modern and progressive model for cultural organisations, bringing together public funding and private enterprise - a truly public-private partnership. But it is a finely balanced economy: if public funding is significantly reduced, the knock-on effect will be profound and the private sector will not make up the shortfall.
There is no firewall between the public funded arts and the private sector: the success of the commercial arts sector and the creative economy depends on both.
Spending Review
The Arts Council has already had a 5% Grant-in-aid in-year cut. DCMS share of the Government's in-year reduction is 4.1%, or £88 million. The Department has reduced the budgets of all the bodies it funds to help meet this reduction. The Arts Council's original 2010/11 budget has been reduced by a total of £23 million from £468 million to £445 million.
Arts Council England has also made a £6.5m a year saving on its overall support costs (Lottery and Grant in Aid). Support costs are currently 6.6% of overall spend - of which 3% is spent on management and administration. The remainder is spent on direct support to front line delivery.
While the Arts Council received a 5% reduction in funding, it limited the funding reduction to RFOs to just 0.5% through the exceptional use of £9 million of historic reserves (access to which was previously blocked by government).
The Arts Council has now been asked by DCMS to model a 25 - 30% cut across four years (along with other DCMS funded bodies). A 30% cut would, if passed on equally, amount to a reduction in the Arts Council's budget for regularly funded organisations of £134m a year. This would mean the loss of many arts organisations - large and small.
While the proposed return of Lottery money to the arts will be greatly welcomed, Lottery money will only be phased in over time. Any increase in Lottery funding will therefore not mitigate the impact of grant-in-aid cuts in the early years, and Lottery cannot substitute for government funding because of the important principle of 'additionality'.
Any cuts need to be spread intelligently over four years so that they can be managed in the best way. Any dramatic cut in funding in 2011/12 will hit organisations hardest in the Olympics year and it will take many years to recover.
The arts sector recognises the need to contribute to the economic recovery - and has already sustained significant cuts (£112.5 million of Arts Council Lottery funding has been diverted to the Olympics, in addition to the in-year Grant-in-aid cuts). From a business point of view there is a point at which the operating models of many organisations will have to be radically reappraised, and some will not have that option. There is a tipping point of 10-15% for most arts organisations.
Cuts of this magnitude will have a real impact on the frontline and will cost far more that the extremely small sums they save government overall. This is because cuts in local authority funding, a reduction in private sector support and escalating running costs will create the 'perfect storm' for many successful organisations who operate on the mixed economy model.
We will all have to get better at new ways of doing things - for example, making philanthropic giving much more effective for the arts. However, this cannot be done overnight and there will need to be changes and incentives to really take advantage of this.
Remember: the arts are valued, they really matter, they are essential to our quality of life
The financial climate is tough, but the arts remain a compelling case for public investment. Work with us to put that case as loudly and clearly as possible to government in advance of the next spending review so that we can minimise the potential damage.
We know that arts organisations are already finding new approaches to arts funding and to partnerships, collaboration and delivery - there are great examples of organisations thinking differently within this changing context. This is even more important given the challenges of the current economic climate: we must be as resourceful as we can and work together.
The arts broaden horizons, stimulate new thinking, provide pleasure and raise aspirations - they inspire and sustain the spirit. More people are enjoying the arts than ever before (76% in 2008/9)
The considerable benefits the arts can bring in other areas - social, economic, and to general well being - begin with the quality of the art itself. And this country has invested in artistic excellence for the long term.
We are committed to ensuring that public funds are used in the most cost effective way to deliver the greatest public value. In addition, we see the need to think of the long term.
We want to make the most of a range of extraordinary opportunities around the Olympics, to substantially build the digital and innovative capacity of the arts, and to ensure that everyone has the opportunity to access the very best of the arts and that the arts continue to thrive. This is why the Arts Council is developing a 10-year framework for the arts that will deliver the mission of great art for everyone.
As an Arts Council we will work with the sector to ensure the entrepreneurial genius of the arts continues to thrive.
We have evolved into a strong, efficient, outward looking organisation, and will continue to drive down costs while maintaining the quality and effectiveness of our advice, support and expertise.
Since 1 April the Arts Council's overall operating costs are down to 6.6 per cent (reduced from 11% in 2001/2), and of that only 3% is spent on administrative costs. DCMS has asked the Arts Council, along with other Non Departmental Public Bodies, to model a further 33 - 50% cut to its administration costs. If a cut of this size is implemented, the Arts Council will no longer be able to operate effectively on behalf of the sector, or manage the profound change to the sector that will be required over the coming years.
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