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Government spending review could lead to NPO funding cuts, warns Arts Council

Theatre auditorium. Photo: Shutterstock
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Theatres and arts organisations could face cuts to previously-agreed funding due to the government’s upcoming spending review, Arts Council England has warned.

In its 2018/19 annual report, the Arts Council highlighted the government’s forthcoming spending review as posing one of the “most significant residual risks” to its ability to fund the arts.

A one-year spending review will take place later this year, and another review of up to five years will take place in 2020. In a spending review, the government sets the budget of each department, including the Department for Digital, Culture, Media and Sport, which funds ACE.

Potential cuts to the grant-in-aid income that ACE receives from the government could result in revisions to agreed NPO funding agreements, the body has warned.

ACE currently has more than 800 NPOs, which receive a share of £400 million a year. The existing funding agreements run from 2018 to 2022.

The annual report said: “A reduction in our grant-in-aid income from 2020 would result in us having insufficient funding to meet our commitments and deliver our plans.

“While we have agreed funding for the 2018-22 national portfolio organisations, we may have to revise agreements for the final two years if the spending review settlement renders the allocation unaffordable.

“We are taking steps to prepare for the spending review, including engagement with the Department for Digital, Culture, Media and Sport, commissioning relevant research and data gathering to evidence the value of public funding for arts and culture, and modelling future income scenarios to understand the possible outcomes.”

A spokeswoman for ACE added: “We can’t speculate on the outcome of a spending review, but naturally a reduction in our grant in aid would have an impact on our budgets. As part of our work on any impending spending review, we model various scenarios for DCMS.”

She added that NPOs are “always made aware that funding agreements are dependent on sufficient funds” being available from the government or from the National Lottery, and highlighted a clause in NPO funding agreements which warns that indicative amounts “may be reduced for future instalments”.

The spokeswoman added that a potential reduction in funding following the spending review was not a new risk, and there had been similar concerns voiced by the Arts Council in its 2014/15 report before the 2015 spending review. When the 2015 spending review took place, money for the Arts Council was increased, also there were cuts to the administrative budget for DCMS.

In the annual report, the Arts Council also identified the uncertainty around Brexit and possible further local authority funding cuts to the culture as significant risks to the funding body achieving its goals around supporting the arts.

HM Treasury declined to comment.

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