The Budget and the Arts: Osborne tilts towards private supporters

Yesterday’s Budget, as expected, tilted future presumptions for arts funding firmly towards a higher proportion of private philanthropy with a series of measures to encourage wealthy individuals through tax quid pro quos to donate to arts either in financial support or in actual works of art.

But with a heavy reduction in Arts Council revenue funding due to be unveiled next week, there is not likely to be much benefit for arts activity and organisations facing an average of 10 per cent annual real terms cuts over the next four years.

The Chancellor made the donation of works of art to the nation more attractive, lessened red tape on charitable giving via Gift Aid and legacies, and said he would investigate ways to allow individuals to give to charities and arts via payroll in order to reduce their tax bill.

These measures will be seen as more beneficial to the prestigious major establishments and pet projects that are attractive to wealthy patrons, while the small creative people-led companies in music and dance, in particular, will remain very much at the mercy of the Arts Council’s much-reduced ability to fund them. Culture Secretary Jeremy Hunt has launched a match-funding scheme to split on-going fund of arts from next month between private supporters and the Government, offering up to £80 million in public funds if private patrons can match that.

Yesterday Dame Vivien Duffield, one of Britain’s most significant arts patrons who has given some £200m of her private fortune to British arts, announced an £8.3m donation to leading arts establishments for learning centres to introduce children to arts. Tate Britain, the National Theatre, the Royal Shakespeare Company, Kensington Palace, the Donmar Warehouse, Margate’s new Turner Contemporary Gallery, Kettle's Yard, Cambridge, and Manchester's Whitworth Gallery all receive substantial Duffield cheques to fund Clore Learning Centres. It remains unclear whether this will qualify for Hunt's private-public matching scheme.

The Arts Council will next Wednesday announce the major reorganisation of its funding, reducing spending by some 30 per cent over the next three years from the current year’s £449.4m to £350m in real terms by 2014. The large longterm funded venues and companies - from theatres to orchestras - are expected to shrink by up to 15 per cent annually over the period. It’s been warned that several will close as a result. Meanwhile at the smaller end, dance and theatre companies which have been dependent on annual Arts Council grants to create work for touring around the UK are anticipating the disappearance of many groups already operating on shoestring costs for performers and administration.

The current BBC TV series focusing on English National Ballet revealed the knife-edge economics on which even classical ballet companies operate, where touring actually costs more than it takes, yet is a requirement of its remit. In the US part-year contracts for ballet dancers are common, and it’s feared in some quarters that this may be a measure that UK companies resort to.

Meanwhile, the local authorities on which many regional theatres and companies rely for part of their funding are taking a 30 per cent reduction in central government support over the period, also feared likely to hit school music services. Higher education spending is taking a 40 per cent cut, squeezing the supply of arts and humanities students into cultural fields. Since the local authority grant reduction was announced last winter in the Comprehensive Spending Review, Birmingham, Manchester, Sheffield and Liverpool are four major culture cities who have scheduled seismic decreases in arts spending.

Local authority arts measures known so far:

• Birmingham: Arts spending by the city council cut by £2m to £10m next year, imposing severe reductions of up to 23 per cent on national institutions such as the Birmingham Symphony Hall, Birmingham Rep, Birmingham Royal Ballet, Midlands Arts Centre (MAC) and the national centre for black British arts and culture, The Drum.
• Manchester: City council to cut 2,000 jobs and £109m next year in all spending. Services affected include youth services, libraries and the closure of all public toilets.
• Sheffield: Council cuts of £84m next year threaten closure to the city’s Graves Art Gallery, which had been bidding for the stability of a national museum funding status, and Sheffield Theatres, one of the country’s major hubs for new theatre production, is to take a £104,000 cut. The Lyceum is expected to extend its summer closure and make more of the populist shows to cover this.
• Liverpool: The former City of Culture cuts £1.8m from its arts budget next year, down to £7m. The Royal Liverpool Philharmonic Orchestra, one of the UK’s oldest orchestras, is losing £284,000 of its current £1.42m grant from the city - added to Arts Council cuts, the orchestra will be £450,000 poorer. The Everyman and Playhouse lose a combination of £170,000 council support and £113,000 ACE funding in the coming year.
• Somerset: All council arts funding is being withdrawn, despite a furious local lobbying campaign. A budget half the size has been installed labelled “creative industries”, open to media and marketing and requiring financial profitability, which arts groups say means no reprieve for the socially directed arts in the county. Taunton’s Brewhouse Theatre is the most prominent of the 10 arts organisations now in jeopardy.
• Leicester: Bucking the trend, De Montfort Hall is to get more money from the city council to try to cut its annual running losses. The subsidy goes up from £711,000 to £988,000. The Philharmonia Orchestra’s residency has been reduced to seven nights a year, from nine, and plans were scrapped for a new contemporary art gallery.
• Barnet: Artsdepot, the borough’s only professional arts venue, loses all civic funding for arts, though keeping support for community activities for children
• Croydon: Six of its seven arts officers to be made redundant as the council cuts most of its £650k arts budget. Capital spending £27m  for the Fairfield Halls to be guaranteed.
• Kilburn: Tricycle 10 per cent reduction in Brent Council funding
• Lambeth: A 19 per cent reduction in arts grant budget affects Young Vic and Oval House
• Stratford East: Theatre Royal takes a cut in grant from Newham Council, which will withdraw funding from several other arts organisations.
• Kingston: Rose Theatre grant from the council reduced by £100k to £292k, or more than 25 per cent for next five years.
• City: Barbican Centre loses 7 per cent from City of London Corporation, its chief funder, or £2.1m for the coming year.
• Lewisham: Broadway Theatre protected as the council cuts its arts budget by 5 per cent

Responses to the Budget

Arts Council England

“The necessary change to the Gift Aid regime is something the Arts Council highlighted in our report on endowments in the arts. It will make a real difference to arts organisations, large and small. Anything that improves the ability of the arts to attract income from legacies is also welcome.”

Arts & Business

Alan Davey, Chief Executive: "In his budget, the Chancellor of the Exchequer has made eight important announcements, each of which could have a significant impact on the level of cultural philanthropy in the UK. We welcome the increase in the Gift Aid benefit limit to £2,500 but are particularly pleased to see the Government commit to better guidance on what constitutes a benefit. Confusion in this area has caused problems for both cultural charities and their donors.

"Arts & Business, in particular, hopes that the definition of a 'work of art' includes a writer’s archive and that there is due recognition that the most appropriate final home for a work of art might not be in an established museum.

"Beyond these, we naturally welcome the added incentive on Inheritance Tax and hope that this move will encourage more cultural organisations to develop a legacy campaign… Overall, the steps outlined in the Budget are undoubtedly steps in the right direction."

Royal Opera House

Tony Hall, Chief Executive: “This is good news for all charitable organisations and particularly the arts at this difficult time for funding. It is good for us to be able to acknowledge and thank our donors to a greater degree through the raising of the amount of benefit we can give to donors. Making Gift Aid electronic will also help smaller charities, in particular, and will also enable us to claim the Gift Aid monies much more quickly.

“Changes to the regulations around legacies, which reduces the tax paid after donations have been made to charities, we think will encourage more people to leave legacies and support their chosen charities. These are concrete moves to build philanthropic giving in this country which is what needs to happen.”

Manchester alternative view

Blank Media Collective: “If we start worrying about how the cuts will affect this, that and the other it will spurn creativity even further. Groups should work within their means, continue to create platforms and raise the interest in the fantastic work by the artists they support. We should do what we are good at – think outside the box.”