Counting the cost

Staff numbers at Arts Council England (ACE) jumped from 662 to 688 in 2009/10, the same year in which it claims to have made a 21% reduction in staff numbers, sliced 15% off its overall running costs, and promised savings of £6.5m in administration costs. The 2009/10 accounts show that ACE’s grant-in-aid (GIA) support costs rose from £40.9m in 2008/09 to £42.8m in 2009/10, including staff and agency costs totalling more than £26m – the highest since 2005. Part of this increase can be attributed to redundancy payments following a major organisational restructure (AP199). Redundancy packages for five Executive Directors totalled more than £1m, and these, together with payments to other departing staff, meant that 71 ACE employees were paid more than £60,000 last year – up from 23 the previous year. The total cost of the restructuring exercise is now expected to reach £7.9m.

ACE was asked by Government to make 15% cuts to its grant-in-aid administration costs by 2010/11 (AP189), and agreed also to make 15% savings on its National Lottery costs, enabling a total of £6.5m to go back into the arts, year on year. This was factored into its budgets for 2010/11. But despite Chief Executive Alan Davey’s assertions (Letters, AP220) that the target savings have already been made, there is no evidence of this in the accounts. ACE has now told AP that, as the new organisational structure was only completed in April this year, its cost savings and leaner staff structure won’t, in fact, be evident until the accounts for 2010/11 are published, stating that the target savings of £6.5m will be “delivered in full from 1 April 2010.” A spokesperson explained, “£3.75m comes from savings against grant-in-aid and £2.75m from the running costs of our Lottery funded programmes. The £2.75m saved on Lottery running costs is clearly available to be invested directly into the arts. GIA was reduced by 15% over that same three year period with the understanding that DCMS expected us to reduce administrative costs. We found sufficient savings on running costs to account for all of that 15%, so that the £3.75m could also be invested into the arts. So the total saving of £6.5m will go directly to the arts.”
On the basis of their “contribution to the effective leadership of Arts Council England” and having exceeded their performance objectives, six of ACE’s most senior staff are to be rewarded with “relatively modest” bonus payments (described as “variable performance awards” in the Annual Review), though the value of these will not be disclosed until later this month. Although no bonuses were paid in the previous year (2008/09), and the Review acknowledges that “the financial outlook has deteriorated”, ACE’s remuneration committee felt it appropriate to award bonus payments this year. This is justified partly on the grounds that “if the variable pay system did not exist then the Arts Council would need to pay higher salaries to remain competitive”, and partly because it “would be inequitable on the staff concerned to ignore a key element of their remuneration for two successive years.” The basic remuneration packages of those concerned ranged from £115k to £191k.