Operational effectiveness of the UK’s arts and culture funding model at risk if the government were to make draconian cuts to the arts budget
A former chairman of the Young Vic Theatre Company, Martin Smith, has warned that the operational effectiveness of the UK’s arts and culture funding model would be put at risk if the government were to make draconian cuts to the arts budget in the 2010 Comprehensive Spending Review. He argues that across-the-board cuts of 20% or more would lead to the loss of new work and disinvestment by the private sector.
Arts Funding in a Cooler Climate is an analysis of the arts funding system in the UK, which the author characterises as “structurally robust by international standards, but also potentially vulnerable”. 53% of the income received by the arts sector comes from public funding, an income source which increased by five per cent during the worst of the financial crisis of 2008-09, when private investment declined by seven per cent. It is also an exploration of the challenges faced by arts organisations in an increasingly digital world of converged entertainment platforms.
Martin Smith said: “I believe strongly that more should be expected of the public pound in terms of its capacity for drawing in private money. Private philanthropy can and should, as ministers have recently suggested, contribute more to the funding mix. But the balance between public and private money in our system is an exceptionally delicate one. Corporate and private investors want to be associated with box-office and critical success. Such success flows from innovation – the constant experimentation with new work that only public funders will generally support.”
“If public funding is hacked back too far there will be no innovation or new work and therefore no stream of critical successes for private investors to back”, he added.
Smith is critical of the way in which much of the debate about arts funding has been conducted. He argues that the case for ring-fencing made by some arts professionals is often self-serving, and that the relationship between the subsidised arts and the wider creative economy – in film, TV, music, games, live entertainment, and publishing – is poorly understood. He believes that a lack of relevant data and analysis leads to weak policy-making across the creative sector as a whole.
"Although", says Smith, "the UK punches well above its weight internationally as regards the nurturing of creative talent and the export of cultural products and services, we know far too little about how public funding through the arts councils, the BBC and colleges of art and design, for example, seed funds and fertilises the performance of the commercial creative economy." He calls for the establishment of an Office of Cultural Economics, funded by a combination of public and private money, to remedy this weakness. "Investing in the arts produces economic as well as intrinsic social benefits”, he adds, “as the export performance of the music, theatre and design industries clearly shows.
"The problem is that we don’t really understand how these successes are generated, and the mechanisms through which public money delivers ultimate taxpayer benefits."
Smith argues that most arts organisations need to generate new revenue streams through better financial management and more imaginative exploitation of cultural assets. He calls for the development of more sophisticated approaches to managing risk, for continuous innovation in terms of audience access and content distribution, and for redoubled efforts to draw in new investment.
Arts Funding in a Cooler Climate argues that the broad structure of the arts funding system should be retained but that more diversity in approaches to backing artists and cultural entrepreneurs should be explored alongside current models. Smith proposes that a proportion of current funding should be put aside in the form of Cultural Entrepreneurship Funds to enable more experimentation and evaluation of new business models to take place.
"We need to be radical without throwing the baby out with the bathwater”, said Smith. “We also need to remind the Secretary of State of what he said just two months ago. In his first major speech on the arts as incoming Culture Secretary on 19th May, Jeremy Hunt assured us that:
"Ed (Vaizey) and I will champion the value culture brings – economic value, value to society and to individuals, value as a nurturing ground for the creative industries."
We must keep keep ministers’ feet to the fire on all these issues of sustaining public and private value in the arts and culture sector and the wider creative economy."
Martin Smith is managing director of West Bridge Consulting and a policy adviser to Ingenious Media.
Download the pamphlet Arts Funding in a Cooler Climate: subsidy, commerce and the mixed economy of culture in the UK, published by Arts & Business, 28 July 2010