Arts Council England Press Office

Following a meeting of National Council yesterday (25 October) an implementation plan has been agreed to reduce Art Council England’s grant-in-aid budget from its current baseline of £449 million to £349m by 2015. This is a real-terms cut of £457m over four years. The plan includes:

• A 6.9% across-the-board cash cut for the majority of arts organisations in 2011/2012 only

• A 14.9% real-terms cut to the money available for the regular funding of organisations by 2014/15

• Significant cuts to the funding of Creativity, Culture and Education, Arts and Business, and the Arts Council’s development funds

• A 50% reduction to the Arts Council’s operating costs, from the current £22m to £12m (real terms) in 2015

Liz Forgan, Chair of Arts Council England, said:

“These are severe cuts, made worse by the fact that around 80% of them have to come in the first two years of the settlement.

“We are determined to lead the arts through this tough period, using all our knowledge, expertise, and brokering skills, and drawing on the resourcefulness and imagination around us.

“For several months we have been in conversation with the DCMS, our funding partners, arts organisations and artists about how we can best support the arts in dealing with significant cuts. We have had to prioritise, to achieve a 6.9% cut to our portfolio within a 14% cash cut to our overall 2011/12 budget.

“These measures are designed to ensure a strong and resilient future. The country needs its artists at a time like this and we are about building, as well as sustaining, our unparalleled arts and cultural sector.”

National Council had already indicated they would seek to minimise the effect of any cuts to the portfolio of arts organisations. Because the cut is heavily weighted, in the first year of the settlement 2011-12 (15.5% real,14% cash), £62.8m savings have had to be found for 2011-2012 alone – nearly 50% of the cuts to the Year 4 baseline. Around 80% of the cuts required come in the first two years.

YEAR ONE
April 2011 to April 2012 will be treated as a transitional year with the majority of regularly funded organisations receiving a cash cut of 6.9% for 2011/12.

This approach keeps the overall percentage cut as low as possible and gives organisations a quick and fair decision. This allows organisations a degree of stability in a very challenging economic environment, particularly in the context of the large cuts to local authority budgets implied in the Spending Review.

The transitional year will also allow the Arts Council to work closely with its partners and co-funders.

This level of reduction has been achieved by larger percentage cuts to some of the Art Council’s regular clients whose primary purpose is not arts creation or performance. As outlined below:

• The budget for Creativity, Culture and Education (responsible for the Creative Partnerships scheme) will be reduced by half following the Government’s announcement of the closure of Creative Partnerships in the Spending Review. Children and young people remain an absolute priority. The Arts Council will work in closer partnership with its funded organisations to ensure high quality arts opportunities for young people.

• Arts and Business will have its funding reduced by half in 2011/12. The Arts Council has reviewed its position on private and corporate giving in line with the current needs of the sector. As a result we will be redirecting some of our future resource to developing a challenge fund to incentivise donors and building the fundraising capacity of arts organisations. Arts and Business will be given a transitional budget to enable it to fulfil specific activities already committed to and to plan its future operating structure. There will be no core funding for Arts and Business beyond 2012, as the Arts Council will be looking at different ways to support this key area of work.

• Alongside its portfolio of Regularly Funded Organisations, the Arts Council has a budget for strategic opportunities for artistic work. This supports work such as touring, the Cultural Leadership Programme and the Manchester International Festival. The fund will be reduced by £21m (64%) next year. Clearly, in the light of this reduction, difficult choices will have to be made, which the Arts Council aims to do by the end of the year. In future the Arts Council will be asking its funded organisations to take on more responsibility for furthering its strategic goals, particularly in the areas of touring and audience development.

• The Arts Council has also been asked by DCMS to cut 50% from its operating costs over the next four years, from the current £22m to £12m (real terms). Currently, only 3.4% of this is spent on administration, according to the Treasury definition of admin spend. National Council has serious concerns about the ability of the organisation to operate effectively with this level of cut, as it comes on top of a 15% reduction in operating costs this year.

YEARS TWO TO FOUR
As discussed with the sector, from April 2012 to April 2015 decisions will be made on the basis of a new funding programme for organisations. All organisations will be asked to re-apply for funding, and decisions will be made against clear strategic aims.

Some organisations will not receive funding in future, some may receive more, and some less. There will also be the opportunity for new organisations to apply.

Full details of this new system will be announced on 4 November to coincide with the publication of the Arts Council’s new 10-year strategic framework for the arts, “Achieving Great Art for Everyone”. Individual funding decisions for 2012-2015 will be announced by the end of March 2011.

The Arts Council’s purpose has been to create a portfolio in line with its new strategic framework, and in full dialogue with arts organisations, artists and funding partners. Funding cuts will seriously affect its total budget, but not the shape of the Arts Council’s ambition for the sector it serves.

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