Arts Council England administrative spending increases by 7.5%, with overspend on IT and staff numbers increasing.
Administrative costs at Arts Council England (ACE) increased by 7.5% to £48.3m last year, partly as a result of spiralling costs on its planned IT system, according to the organisations most recent set of accounts. The figures, which cover the year from April 2005 to March 2006, include £4.4m spent on the planned Arena IT system, as well as average increases in staff salaries of 9% over the course of the year. Staff numbers also increased to a record level of 853 before the introduction of job cuts currently being pushed through at ACEs national office. £1.8m was set aside in ACEs 2005/06 accounts to cover these redundancies.
The increase in core spending came after ACE announced a freeze in administrative expenditure for 2005-08 in response to the Governments announcement of standstill arts funding. A major element of the spending increase related to ACEs new IT system, designed to streamline administration across the organisation. A total of £4.4m was spent on this system in 2005/06, adding to the £1.7m already spent in 2004/05. A further £2.2m is now expected to be spent in the current financial year. The system, which is expected to go live next month, is now estimated to have a total cost of £8.3m. This represents an increase of £1.9m on anticipated costs at the end of last year. Questioned last December about the total costs of the new IT system, including training costs for staff and costs in all previous years, an ACE spokesman said, This is a big project and its looking good& This will replace current grants management and contact systems across all offices and establish a new procurement function. The total anticipated cost related to this major project is £6.4m this includes all implementation costs. ACE is now considering investing in new customer relationship management software to bolster the Arena system.
Over the course of 2005/06, permanent staff costs increased and total staff numbers rose by 28. Staff salaries grew by 9% to an average of £31,325 per person, up from £28,743 in the previous year. Other increases included an additional £500,000 spent on rent and rates, and an increase of £116,000 on agency staff. Senior staff salary rises were broadly index-linked although several Executive Directors received salary increases well above inflation. Eight Executive Directors received bonuses; total remuneration to the fourteen Executive Director posts amounted to just over £1.4m, an average of more than £100,000 per post.
The accounts state that ACE exceeded its efficiency targets, set by the Department for Culture, Media and Sport (DCMS), though the one-off costs of change, including IT costs and redundancy payments, were excluded from the targets which were originally set to measure savings achieved through the merger of the Arts Council and the Regional Arts Boards in 2003. Against the DCMS measure, ACE saved £7.3m last year.