Funding fears increase as ACE is told to cut £19m

Theatres and arts centres across the country are under threat of immediate cuts to their subsidies after Arts Council England was ordered to make £19 million of savings to its 2010/11 budget, with ACE warning it cannot guarantee funded organisations will be protected.

It expressed disbelief at the Department for Culture, Media and Sport’s decision to single it out for £19 million of in-year cuts, claiming it does not understand why it has been asked to make greater savings than equivalent bodies and warning theatres and other cultural organisations could be affected.

The cuts come as part of Chancellor of the Exchequer George Osborne’s attempt to curb government spending by £6.2 billion this year. All DCMS bodies and the DCMS itself have been asked to find savings of 3% in their 2010/11 budgets. This would have represented cuts of £14 million for ACE, but it has been told to make a further £5 million of cuts – raising its percentage savings to around 4%.

Speaking after the announcement, ACE chairman Liz Forgan said the organisation did not understand why it had been singled out.

“We all knew this year would be tough,” she said. “We do not understand why we have received a higher percentage cut than other DCMS-funded bodies. Making cuts within the financial year is very difficult. We will now need to carefully assess what this figure of £19 million means. The arts council has already trimmed its own budgets by £4 million in 2010/11, so this takes our total reduction this year to £23 million. We will do our utmost to minimise the impact on the frontline, but we cannot guarantee that there will be no effect.”

Culture minister Ed Vaizey, however, told The Stage he was “confident” the DCMS and ACE could work together to minimise the impact on regularly funded organisations. The DCMS has indicated it wants ACE to dip into its historic reserves to help meet the costs of the cuts – possibly covering significantly more than the extra £5 million.

Vaizey added: “We realise this is a difficult situation but we’ve thought pretty carefully about how to allocate the reductions that the Treasury wanted and think this is the fairest way.”

Sources close to the DCMS were keen to stress the sole motivation behind asking ACE to find the extra £5 million is to minimise the impact on arts organisations. It is understood that asking ACE to dip into its reserves is considered by the department to be the best way to protect frontline arts organisations from greater cuts.

However, Forgan said: “Use of our historic reserves, which the department has not allowed us to use to date, will have to be agreed with our trustees and the Charity Commission and their use will need to be in the best interests of the arts.”

The reserves currently hold £18.4 million, which has accumulated since the regional arts boards merged with ACE in 2002.

However, an ACE spokesman said it was still “under discussion” whether the organisation would be able to access this money and it would be aiming to let companies know as soon as possible if the announcement will affect their funding.

“We completely understand that arts organisations need to hear as soon as possible, so that they can plan,” she added.

“Any changes to their funding would have to be approved by council [ACE's ruling council], but we are hoping that within a month everybody will know. If we can do it sooner, we will.

“We will be looking at all the options. Obviously we’ll look at our running costs again, but we’ve just gone through a huge organisational review, cutting down, so there’s very little room for manoeuvre there.”

National Campaign for the Arts director Louise de Winter expressed concern that the arts appear to be taking the “larger share” of the cuts and stressed that the sector was also likely to be hit hard by savings being made at local government level.

She said: “We don’t yet know how the £19 million of savings is to be found, but these numbers are obviously deeply worrying for the arts community, where relatively small amounts of money make big differences. We understood from the minister that the burden would not fall entirely on the cultural community, but it seems as though the arts are having to take the larger share. Although these are supposed to be efficiency savings, we are concerned that the arts council will not be able to find these savings entirely within their own costs.”

De Winter continued: “Of equal and pressing concern is the £1.16 billion cut to local government budgets. Local authorities have been cutting back on discretionary spending for some time now, which has had a disproportionate effect on arts, culture and heritage budgets, and resulting in a real impact on frontline services offered to the public.

“While we fully understand the economic imperatives that are driving these cuts, we believe that the arts and cultural sector has a positive role to play in rebooting the economy and revitalising our communities, and we will be working with our colleagues across the cultural sector and in local government to ensure that cuts do not fundamentally damage the sector’s ability to deliver a worthwhile cultural service.”

Equity general secretary Christine Payne said she was disappointed that ACE had received what appeared to be a “disproportionate cut”.

She added: “With cuts of this scale, it is inevitable that there will be a knock-on effect on artistic production in our sector.

UK theatres bring enjoyment to thousands of people every year and make an important contribution to the economy. Investment in the arts returns almost as much to government finances in terms of VAT receipts than the subsidies received. Our cultural assets are also a major driver of the tourism industry.”

The announcement of DCMS cuts came less than a week after Jeremy Hunt made his inaugural speech as culture secretary to a gathering of arts leaders at the Roundhouse in Camden. In it, Hunt warned the arts sector of “tough” times ahead, but promised that the sector would not be singled out as a soft target. He also vowed to redirect up to £50 million a year of Lottery cash to the arts annually by 2012.

For more, www.thestage.co.uk/newsblog

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