MU Welcomes Arts Council England Review

This week, Baroness Margaret Hodge published her review of Arts Council England (ACE).

We broadly welcome the recommendations outlined in the review, many of which the Union has been directly advocating for, and hope the government will respond positively to this thorough and much-needed report.

As part of this process, the MU submitted evidence to the ACE review in writing and met with the Baroness alongside other creative unions. We will now discuss the recommendations with fellow unions and trade bodies as we consider how best to advocate for the government to adopt them.

We can see a small number of recommendations where further work may be needed to assess the potential impact, such as proposals for organisations to pay a share of profits back to the Arts Council on commercially successful shows. Many companies rely on a couple of profitable productions each year—for example, over the Christmas season—to subsidise riskier, smaller, or niche projects. We would not want to see a reduction in commercial income lead to lower fees for artists and music writers. However, overall, we think the review is excellent and hope it will lead to better outcomes for musicians and the organisations they work for.

Below are some of the key recommendations from the Hodge review that may be of interest to MU members.

Orchestra and theatre tax relief

The following recommendations will be welcomed by the theatre and orchestral sectors. We would also like to see the tax relief programme extended to choirs and digital-only events.

• The government should consider amending the theatre tax relief to include the additional costs of touring, such as transport and accommodation costs. This would mirror the orchestra tax relief and help to give a new emphasis to touring to support ensuring much wider access to excellence while at the same time stimulating economic activity in underserved areas.
• The government should consider amending the orchestra tax relief to cover the international costs of touring, which have been exacerbated by Brexit, such as the costs of work permits, visas and transport.
• The government should consider speeding up payments of tax relief to ease cashflow problems. Adopting a system akin to the VAT relief model where payments are made within 30 days should be explored.

Increasing the pot

• The government must consider enabling ACE to offer a wide range of financing options by having a trading arm. This would enable public funding to go further by moving beyond repayable grants and introducing loans, blended finance, social impact investment and equity investment.The government and ACE should consider devising a mechanism to bring money back to ACE when an NPO has produced a show that is a strong commercial success. In those circumstances ACE should enjoy a return through royalties, or a percentage of profits or a fee.
• The government should consider doubling the level of Gift Aid from £0.25 to £0.50 for shows, events and organisations that reach audiences outside London and the South East to encourage philanthropy outside the Capital.
• The government should consider introducing a new tax incentive akin to the French Aillagon Law to incentivise corporate giving outside London.
• The government should consider, when possible, creating a £250 million endowment fund for ACE that is structured in a way that levers philanthropic giving, with ACE raising £1 for every £1 they receive through the endowment. NESTA received a government endowment of £250 million, to invest in the arts and creative industries. NESTA has stopped funding the arts.
• The government should consider deferring the repayment of specific Culture Recovery Fund loans awarded to charitable organisations. Such deferment should be conditional on the organisations proving an immediate need for capital investment and agreeing to a match-funding requirement: for every £1 of loan repayment deferred, the organisation must secure an additional £1 through philanthropic means for investment in their urgent capital requirements. To safeguard against income loss, inflationary adjustments must be applied to the deferred loan amounts.

Other longer term funding ideas, like a local tourism levy, are explored in the report.

Strategy

ACE should replace Let’s Create with a new, less prescriptive strategy that is both ambitious and simple, reflects the government’s ambition of excellence for all, and allows each organisation or individual to apply according to their strengths and the unique contribution they can make to delivering a vibrant and innovative creative sector that is consistent with the overarching strategy of the Arts Council.

The National Portfolio Organisations (NPOs)

• Organisations would set out their unique contribution and the KPIs on which they would want to be assessed. The application would have to meet the ACE strategy and the KPIs would be negotiated.
• National ACE should determine the funding of all the organisations across the country that are nationally significant. The National Board would be advised by sectoral panels of experts. There should also be a stronger role given to ACE’s artform directors.
• All other monies should be devolved to new local and regional decision-making boards. These will comprise local artists, representatives of local community organisations, local education representatives and representatives from local government.
• To provide stability, consideration should be given to enabling longer term planning and reducing bureaucracy. The government and ACE should consider the following changes:
• Lengthening the NPO cycle from three to five years.
• Having a rolling programme of applications.
• Assuring certain organisations that meet the highest quality standards, that they will receive at least 80% of their funding in the next round.

Application processes and reducing bureaucracy

• ACE should radically reform its application and reporting requirements so that they are less bureaucratic and onerous for organisations but still ensure accountability for public money.
• ACE should also review its data requirements to demonstrate that the data it collects has a clear purpose and that the data demanded is appropriate for the different objectives of the different organisations and the different cultural disciplines.
• All DCMS (Department for Culture, Media & Sport) lottery funded bodies should consider working together to simplify and perhaps share their application processes and to agree, as far as possible, a common set of KPIs.
• The government should consider creating a statutory duty for local governments to prepare a cultural strategy every five years which should encompass the arts, culture, and heritage.
• ACE should review, simplify and reduce the number of its funding streams to make it easier and less bureaucratic for those applying for funding.

Funding for individuals

ACE should introduce a new National Programme for Individuals, using money from existing funding streams. The purpose would be to support emerging and mid-career individuals to ensure a diverse talent pool by providing individuals with funding of around £30,000 per year and mentoring support.

The programme should be for individuals from low income backgrounds, under-represented groups and under-served areas. Up to 500 individuals could be supported from existing funding pots and the programme could be expanded through other sources of funding.

Education and skills

• The Department for Education, Department for Culture, Media & Sport, and Arts Council England, should consider working together on a specific project with philanthropists, trusts and foundations to create a joint fund that would support improvements to the cultural offer in schools. This would reinforce the excellent new proposals in the Curriculum Review and could contribute to the cost of training and paying for specialist teachers, and transport costs to visit theatres or museums.
• ACE should leverage its relationships with NPOs and encourage them to strengthen their focus on talent development to ensure good coverage across England. This may include artists in residence opportunities.

Diversity

ACE should ensure that under-represented groups are represented across the organisation at all levels. Work to support and promote diverse groups both within the organisation and in the funded organisations should always be a priority.