The following information is intended to provide colleagues across the visual arts with an update on Arts Council England's current position in relation to the in-year cuts. Further updates will be provided as they become available.
Late yesterday afternoon, the DCMS released its statement setting out how it would break down the £88 million, or 4.1%, savings announced in the Chancellor’s speech. The DCMS statement is clear that the Arts Council has been asked to manage a 4% cut. This is this made up of the 3% reduction handed on to all DCMS sponsored bodies, with an additional reduction of £5 million. The Arts Council’s Chair, Dame Liz Forgan, issued a statement soon after.
The DCMS statement refers to the Arts Council’s historic reserves which – in common with Museums and other DCMS bodies – the Department has prevented us from accessing to date. We are now in discussion with the DCMS about the possibility of using these funds in order to mitigate the reductions to our budget. This move would need to be approved by our National Council and the Charity Commission and would have to be in the best interests of the arts.
I’d like to offer some context here. This latest reduction is in addition to the £4 million already cut from the Arts Council’s government funding this year so we have suffered cuts of £23m this year, or 5%.
Following our organisational review, the Arts Council England has already reduced its operating costs this year by £6.5m (Lottery and Grant in Aid). Our operating costs are currently 6.6% of overall spend – of which 3% is spent on management and administration. The remainder is spent on direct support to frontline delivery.
We now have a significant job to do to identify these savings. Only £23m of our overall grant-in-aid budget goes on running costs so the vast bulk of our income goes straight to the arts. It would therefore be impossible to meet a cut of this size from running costs alone.
I want to assure you that we will do everything we can to minimise the impact of this reduction on our funded organisations. However, we cannot be certain at this stage that the 2010/11 budgets to the organisations we fund can be totally protected.
Our priority now is to do our best to protect art and artists, and to make sure that we make and communicate our decisions as quickly as possible.
It’s clear that the coming months will be difficult for us all. We have a tough Spending Review ahead and pressure will continue to bear down on public expenditure. Now, more than ever, we need to work closely with each other to present the arts in the best way possible and to ensure the right steps to be taken from here to settlement.