Crafts Council reports first financial loss in four years

The Crafts Council has reported a loss for the most recent financial year, blaming the ongoing impact of the Covid pandemic for reduced income.

The charity's annual report for 2021/22, published on Monday (23 January), reveals that the organisation had income of £3.83m, but expenditure of £3.92m meaning it made a loss of £91,600. This is the first time it has made a loss in four years.

The report attributes the loss to ongoing difficulties, citing its failure to let spare office space as a factor.

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Following closure due to government-imposed restrictions to tackle the Covid pandemic, the Crafts Council was able to reopen its gallery and offices, and restart its full programme in July 2021. 

But the report states that the effects of the pandemic continued to impact the charity's finances, in particularly the advertising income generated from its Crafts magazine. 

Meanwhile, the annual Collect art fair which ran in February 2022 at London's Somerset House was "placed in jeopardy" due to a surge in the Omicron Covid variant. 

"UK restrictions were fully lifted just before it opened, however continued overseas restrictions meant several international galleries were unable to travel," the report states

"This had an impact on fair income."

Empty office space

Meanwhile, the charity has struggled to sublet office space above its main gallery on Pentonville Road in London that it holds on a lease that runs to 2040. 

The upper floors of Craft Council's Gallery, which measure 800 sq metres, had previously been sublet to a tenant that moved out in early 2019. 

"The space has been marketed continually since then, but we have seen very little interest," the report states. 

It is currently on the market for a rental cost of £361,038 per year.

"We sublet this space on a long lease which runs to 2040," the report states. 

"The space requires investment to bring it up to modern standards, and there is an excess of subprime space available across London."

The charity also has a lease on an adjoining office block which ends in June 2025, at which point the plan is for staff to move back into the main building. 

"We are advised by our property agent that this building is more suitable for a short term [than the upper floors of the Gallery], possibly fully furnished let, so from August 2022 we are offering it for sublet with a view to moving our offices back into part of the Gallery building."

"An ongoing impact from Covid is that the office space we would usually sublet has remained vacant for two and a half years," the report states. 

"Demand for office space remains depressed and continues to represent a significant loss of income for us. 

"This represents one of the key challenges we face going forward."

National Portfolio funding

The charity is also contending with cuts to its funding as a National Portfolio organisation. As part of its investment plans for 2023-26, announced in November, the Crafts Council was offered funding at a reduced level of £2.2m a year, a 13% reduction on the £2.5m a year it previously received. 

However, the report states that the charity ended the year with healthy reserves of £2.62m, the majority (£1.96m) of which comes from the value of its collection of artefacts, as well as £706,000 of unrestricted funds.

"Once again, our financial stability was underpinned by the generosity of our funders and supporters especially those providing recovery funding," the report states. 

"We carried forward designated funds from the prior year to support our programme, some of which were then carried into 2021/22. We ended the year in a strong position on both reserves and cash."

The Crafts Council has been contacted for comment.

* This article was edited on 26 January to correct a factual inaccuracy. The original article stated that the Crafts Council was facing a pension deficit of £21.6m. This is not the case. The figure of £21.6m listed in the annual report is the current deficit for the Arts Council Retirement Plan, a multi-employer defined benefit pension scheme which Crafts Council participates in. Crafts Council has 16 members of the scheme, out of a total of approximately 2,500 members across the sector. This gives a share of debt, as of 2019, of around 1%, equivalent to about £200,000. Arts Professional is happy to set the record straight and apologises for any confusion.