Public funding fears cloud Scotland’s optimism

The subsidised arts sector in Scotland is still optimistic about its ability to ride out the recession, despite significant financial pressures. The latest research, commissioned by the Scottish Arts Council (SAC) and conducted in September, reveals that 61% of SAC-funded organisations have recently experienced a fall in income from public, private and charitable sources. Despite this, only one in five describe themselves as “pessimistic” about the future. The rest now expect their income to improve or stay the same, with 43% projecting a slight increase from commercial activity, including catering and bars, and over two-thirds seeing box office receipts growing or remaining constant.

Half of organisations report that non-earned income, and specifically support from sponsors, trusts and foundations, has fallen, and 44% expect a continuing decline in funding from these sources. As for public funding, some are preparing for this to be squeezed, but more than half of those questioned expect their local authority funding to remain the same or improve slightly. In his foreword to the research report, ‘The Impact of the Recession’, SAC Chief Executive, Jim Tough, remarks that “Few of the organisations surveyed here are reflecting the views of other recent analysis which forecasts a significant contraction in Scotland’s public sector finances.” He draws attention to predictions by Audit Scotland that by 2013/14, the gap between planned Scottish Government spending and the money available could be between £1.2bn and £2.9bn. The Chartered Institute of Public Finance and Accounting predicts a minimum £2.5bn cut in Scotland’s public expenditure, and Tough warns, “If health and/or education in Scotland are protected from any cuts this would seriously worsen the size of the cuts in all other services… These are the financial realities that must be addressed.”

SAC has already introduced measures to help its funded clients weather the recession: a £1.3m ‘Resilience’ fund to provide targeted support to 48 Foundation organisations, to help them face the financial crisis and create stability in the sector during SAC’s transition into the new development and funding agency, Creative Scotland. But despite this, 14% of the larger organisations have either already drawn on their reserves to keep afloat, or are planning to. SAC intends to repeat the research in the spring next year, after funders such as local authorities have set their annual budgets.