Tight times

Arts Development UK (AD:uk) has just completed its tenth annual local authority spending survey to assess the level of arts spending for 2013/14. The survey shows continued and significant changes to budgets in local authority arts spending. As of August 2013, 133 local authorities in England and Wales have no dedicated arts officer and have no direct arts service. This represents 35.3% of all authorities in England and Wales. The remaining 64.7% have services that are vulnerable to cuts and like the rest of the local authority cultural sector and the majority are operating in reduced financial circumstances.

These findings are drawn from an online survey to all authorities in England and Wales, which this year was undertaken in partnership with the Arts Council of Wales (ACW). We received 73 responses, representing 30% of all authorities in England and Wales with an arts service. This was a comparable response rate to the 2012 survey.The survey enabled us to make a comparison of past trends and it focused on relevant contemporary issues such as finance, priority targets, partnerships and the relationship with other bodies including Arts Council England (ACE) and ACW. Responses to the 2013 survey reveal a dramatic and changing picture of the arts in local communities.

Smaller authorities are more vulnerable to cuts or closure

Jane Wilson, Chair of AD:uk and Director of Arts Development in East Cambridgeshire, commented: “The stand-out issue from this year’s survey is the increasing polarisation of provision, as more and more smaller authorities find themselves unable to maintain an arts service. Individual local authorities are making very difficult decisions, in each case with good reason, but the overall effect is having a critical impact on the potential for arts development at a national level. The skills and resources both to develop arts activities and crucially, to draw down other sources of funding, whether from sponsors, charitable-giving or earned income, are being concentrated in tighter and tighter areas, making the aspiration of great art for everyone far harder to achieve.”

The 2013 survey shows what is important to arts services:

• There is a growing need to demonstrate their economic value.
• They are increasingly important in improving the quality of life for local communities and helping to address social, health and wellbeing issues.

The overall picture is one of declining resources and competition from other statutory and non-statutory services. Arts services are no different to other cultural services provided either directly or indirectly by authorities, and the downturn in the economy over the past three years has enforced major changes to the cultural landscape.

Evidence from authorities that took part in the survey suggests that there has been a further period of short-term stability to arts funding compared to the major cuts felt in 2011, but the downward trend continues with a reduction in arts budgets of 9.66% from 2012/13 to 2013/14. With more local authority budget reductions of at least 10% expected in 2015 as a result of the Comprehensive Spending Review forecast (and non-statutory services are expecting more substantial reductions than this), the situation remains bleak and arts officers are stoic about the effects of further spending assessments.

As with previous years, the trend continues for major internal reorganisation, and an increase in non-specific cultural services (combining arts services with other services such as regeneration or wider community services such as libraries, museums and tourism), indicating a loss of specialism within the arts. Reorganisation seems to ensure greater resilience and security for arts services, with over 60% of respondents commenting that they saw the arts services as less vulnerable as a result of reorganisation, as the arts continue to perform strongly against corporate objectives.

Local authorities are significant funders of independent arts organisations, especially in areas with few or no regularly funded arts organisations. Support for these non-RFOs (in Wales) and non-NPOs (in England) accounts for up to 10.75% of total arts spend. The average spending on RFO/NPOs continues to show a decline with a reduction in support of 9.9% from 2011/12 to 2012/13. But this funding is still substantial, comprising nearly a quarter of the total arts spends of local authorities.

Reorganisation seems to ensure greater resilience and security for arts services

It is pleasing to see that levels of leverage have increased from 2011/12 to 2012/13 with £4.04 now being raised for every £1 spent. This demonstrates the worth of partnership-working, both internal to the authority with other departments and services, and also in more lucrative external partnerships. There is continued pressure on local authority arts services to bring in more funding, as intensive forms of economic indicators are used and the pressure to bring in more partnership and leverage funding is often an additional pressure on already reduced services.

In summary, 2012/13 is the third year under the coalition government’s financial settlement and the survey demonstrates that after a major funding shortfall in 2011/12, which resulted in many closures, we continue to see efforts to maintain short-term stability. However, the continued economic climate has resulted in extreme financial pressure to all local authority services. The full extent of the impact the recession has had on arts services will need to be monitored year on year, as will the impact of the move towards outsourcing and alternative means of service delivery.

The key findings

• Participating authorities in the 2013 survey are projecting service reductions in their budgets of 9.66% in 2013/14, and if inflation is taken into account the loss is nearer to 12.26%. Due to major variations in survey respondents between previous surveys, it is difficult to undertake financial comparisons to previous surveys. This is due to the loss of smaller authorities and also because of the increased number of larger authorities now taking part in the survey.
• By considering comparable authorities that had submitted returns in both 2012 and 2013, the average local authority budget for arts spending was £373,951 for 2012/13, with a projected average arts budget of £361,640 in 2013/14.
• For every £1 spent by local authorities on arts services, leverage from grant aid and partnership working brings in £4.04 of additional funding.
• Over 50% of local authorities responding recorded a standstill budget for 2013/14, with 5% under threat of closure and 15% of authorities telling us that they were considering different mechanisms for contracting out arts services, and 91% of authorities predicting further cuts to arts services in 2014/15.
• Only 3% of authorities projected a funding increase for their arts services.
• Smaller authorities are more vulnerable to cuts or closure. Medium and larger spending authorities are more likely to retain cohesive arts services.
• The average budget on staff has increased slightly from 2012/13 to 2013/14 by 0.1%. Previous years had demonstrated a decline in the average spend on staff costs (a reduction in staff costs of 18% was recorded in 2012/13 in comparison to 2011/12).
• 2012/13 staff costs represented 30.57% of the total arts spend. 2013/14 shows a small increase to 33.41% of 2.8%.
• The median range of arts service staff per authority is two to three (full time), and of those an average of two have job descriptions that include arts policy or arts development work (with at least 30% of time spent on this work).
• Local authorities continue to support partnership funding for regularly funded and national portfolio organisations (RFOs/NPOs) with Arts Councils in England and Wales, with 23.9% of their funding spent in this area. The overall amount of funding has however declined by 9.9% from 2012/13 to 2013/14, indicating the level of NPO closures as a result of recent ACW and ACE funding reviews and resultant closures of some organisations.
• Local authorities are significant funders of independent arts organisations, especially in areas with little or no NPO/RFO provision by ACE or ACW and support for non-RFO/NPO arts organisations accounts for up to 10.75% of total arts spend.
• Capital spending on projects is resuming, although it is focused in specific areas rather than being spread across all regions. 42 of the responding authorities registered no spending at all on capital projects.
• Over 60% of all arts and cultural services have been restructured in the last two years. Of those that responded positively, many felt that this had made their service less vulnerable to cuts.
• Relationships with both ACE and ACW have improved this year, with more authorities receiving grant aid through Lottery funds. 52% of local authorities have an active and developing relationship with their regional ACE or ACW office. 31% of authorities responding have a neutral relationship with their regional office. The survey demonstrates a marked improvement compared with relationships shown in the 2012 survey.
• Comments suggest that the major reviews undertaken by both ACE and ACW have been well managed, although resulting in more officer time within local authorities given to organisations affected by reductions or cessation of NPO/RFO funding. In many cases the review has had positive outcomes although there are general concerns about the lack of staff time within ACE and ACW that may be now available for regional development.
• Partnership-working has been affected by the recession with fewer partnerships developed than perhaps two or three years ago. Partnership development is 14% down on last year and this might reflect the decline in major regeneration funding at a national level. With fewer staff employed in the sector there is also less time to develop strategic partnership practice.
• Partnerships are financially important to arts in communities. Partnerships internal to authorities resulted in an average of £119,817 per partnership with over 70 partnerships recorded. External partnerships are more lucrative, resulting in an average of £571,151 per partnership from over 39 partnerships reported.
• Grant aid features more and more in local government arts funding, with the average fundraising accruing £36,566 per authority from recipients responding to the survey. Central government grants show a marked decline of 24% while funding from the EU is up by 9% on last year.
• Earned income is a major factor in balancing arts budgets and 57 authorities declared a total income of £15,680,477, with an average of £275,096 per authority.
• Financial priorities are increasingly keen, with 22% declaring the need to maximise external funding, make partnerships and secure additional income. A further 19% stated the need to demonstrate the value of services provided and how they provide a return on council investment.
• The survey demonstrates the continued support by arts services of shared priorities within the localism agenda, and arts services contribute substantially to wellbeing, regeneration and local economy. They also contribute to children’s services, promoting equality and inclusion as well as supporting safer and stronger communities.

Pete Bryan is Administrator and Company Secretary of Arts Development UK.
Judi Hughes is a freelance arts consultant and Administration & Finance Officer of Arts Development UK.

AD:uk/Arts Council of Wales Local Authority Arts Investment & Partnership Survey 2013/14