Budget 2024: Impact on the cultural sector

Approximate read time: 15 minutes

On 14 November 2024 the House of Lords is scheduled to debate the following motion:

Baroness Sater (Conservative) to ask His Majesty’s Government what assessment they have made on the impact of the budget on arts, heritage and cultural organisations.

1.   Funding the UK’s cultural sector

1.1 How is the cultural sector funded?

In the UK, public funding is available to cultural and creative institutions.^[1] It includes:

• central, devolved and local government funding
• the national lottery funds for ‘good causes’
• creative industry tax reliefs

In the UK government, the main funder for the arts is the Department for Culture, Media and Sport (DCMS).^[2] It sponsors:

• 15 museums and galleries based in England
• Arts Council England, which supports the arts, museums and libraries
• Historic England
• The British Film Institute
• The British Library

The core sponsorship from DCMS for UK arts and cultural organisations is known as grant-in-aid funding.

The Scottish government, Welsh government and Northern Ireland executive also provide funding to their own public bodies which support art and culture.^[3] Across the UK, there are differences in the way these bodies are established and the responsibilities they have. Further information about the key public bodies in UK arts and culture is available in a report from the Campaign for the Arts and Warwick University on the state of the arts in the UK in 2024.^[4]

Various cultural organisations also receive funding from private sources.^[5] This can include contributed income from donations, sponsorships and grants from trusts and foundations. It also includes earned income which comes from ticket sales, food, drink and merchandise sales as well as space hire.

1.2 What funding has the cultural sector received?

In recent years, the public funding available for the cultural sector has decreased. Grant-in-aid funding for UK arts and cultural organisations fell 18% between 2010 and 2023.^[6] This increased reliance on funding from private sources and in 2023–24, 51% of museums increased their earned income. However, 32% saw their funding from local authorities decrease or stop entirely compared to the previous financial year.

Earlier this year, the Campaign for the Arts and the University of Warwick published a report which examined the state of the arts in the UK. This report set out details on funding in the cultural sector since 2010.^[7] It argued that the UK has one of the lowest levels of government spending on culture among European nations and was one of the small minority of countries to reduce total culture spending per person between 2010 and 2022. It reported that between 2009/10 and 2022/23, per person in real terms:

• Local government revenue funding of culture and related services decreased by 29% in Scotland, 40% in Wales and 48% in England, alongside rising cost and demand pressures on statutory services (especially social care).
• DCMS core funding of cultural organisations [grant-in-aid] decreased by 18% to 0.17% of total public spending per person.
• The Arts Councils’ core government funding decreased by 18% in England, 22% in Scotland, 25% in Wales and 66% in Northern Ireland.^[8]

The report also found that over the same period:

• Tax relief for the creative industries increased by 649%. In 2017/18 this investment exceeded the DCMS’ core funding of cultural organisations for the first time.
• The BBC’s total public and grant funding decreased by 23%.
• National Lottery funding for arts and heritage projects increased by 19%, but fluctuated considerably over the period and was lowest at the start of the pandemic.
• The income mix of Arts Council England’s ‘national portfolio’ changed significantly. Public funding went down by 10 percentage points, while contributed income (from private donations/sponsorship) and earned income both went up by 5 percentage points.^[9]

In addition, the report said that between 2009/10 and 2020/21, per person in real terms, spending on British public libraries fell by 53%.^[10]

1.3 What concerns have been raised about levels of funding?

Concerns have been raised about the financial state of civic museums which are often reliant on local authority funding. Since 2020, the Art Fund has published annual research on the views of museum directors about the challenges their organisations are facing, their current priorities and opportunities for the future. The most recent edition of this research, published in June 2024, reported that visitor numbers have been on the rise, with over half of venues at or above pre-pandemic levels.^[11] However, it also found that local authority reliant organisations were in a “perilous and uncertain state”. Post-pandemic financial fragility, real-terms funding cuts, ageing buildings and increased overheads were all found to be placing these organisations under “enormous strain”. In addition, the impact of the cost-of-living crisis on both staff and audiences was recognised as the biggest collective challenge facing organisations, with both increased outgoings and falling income identified as problems for the sector. Based on these findings, the Art Fund said it was advocating on some clear policy areas for the next government. These areas were sustainable funding, public access to collections and cultural education.

1.4 What did cultural organisations hope to see in the budget?

Prior to the budget, the Museums Association, the Art Fund, the Association of Independent Museums, the English Civic Museums Network and the National Museum Director’s Council made a joint submission to HM Treasury’s call for policy suggestions for the autumn budget.^[12] The submission argued that museums could help deliver the government’s five missions but also highlighted challenges faced by UK museums.^[13] It said that:

After over a decade of austerity and with the cost of living crisis and legacy of the pandemic continuing to bite, museum budgets at both national and regional levels are stretched to breaking point, with many local authority-reliant museums now in a perilous financial position.^[14]

To address these issues, the sector bodies outlined a number of proposals they said would support UK museums.^[15] These included emergency funding for civic museums, long-term funding settlements for local authorities, maintaining funding to Arts Council England, capital investment for all UK museums, devolved museum funding, retaining free admission to UK national museums and maintaining the higher rates of museums and galleries exhibition tax relief.

2.   Autumn budget 2024

On 30 October 2024, the chancellor, Rachel Reeves, delivered her first budget to the House of Commons.^[16] Overall, she announced a significant increase in public spending, financed by a combination of tax rises and higher borrowing.

2.1 Settlement for the Department for Culture, Media and Sport

The budget contained details of the government’s settlement for the DCMS.^[17] It set out that the settlement provided total departmental expenditure limit (DEL) funding of £2.3bn in 2025/26 and that this was equivalent to an average annual real-terms growth rate of 2.6% from 2023/24 to 2025/26. The Treasury argued that:

This settlement prioritises support for the creative industries and funds cultural institutions and sports facilities so that they continue to be world leading.^[18]

Setting out further detail, the Treasury said that the settlement included funding for the creative industries, one of the government’s eight growth-driving sectors in the government’s industrial strategy green paper, ‘Invest 2035: The UK’s modern industrial strategy’.^[19] It outlined that the create growth programme, which aims to support creative businesses to secure commercial investment opportunities, and UK games fund, which supports the games development sector, would receive continued funding. The Treasury also said there would be an expansion of the creative careers programme worth £3mn. This programme aims to raise awareness of opportunities for work in the creative economy.

In addition, the Treasury said that it would increase support for arts and culture by raising the grant-in-aid for the national museums and galleries to “help support their long-term sustainability”.^[20] It also said that it would provide a package of cultural infrastructure funding to build on existing capital schemes, “with additional capital investment to support cultural organisations across the country”.

The Treasury also highlighted that it would provide funding to deliver major events and ceremonials as part of the settlement.^[21] It said it would fund a programme of ceremonial activities for the commemoration of VE and VJ day and launch a programme of activities to commemorate the lives lost in the Covid-19 pandemic.

On elite and grassroots sport, the Treasury said that it would invest in multi-use facilities across the UK and scale up work so DCMS can deliver on plans for UK and Ireland to host the 2028 UEFA European Football Championship.^[22] In addition, it said it would provide UK Sport’s Olympic and Paralympic programme with an increase in funding of over 10%, “providing £9mn a year extra”. It noted that this multi-year investment would mean a total of £344mn is invested over the next cycle.

2.2 Sector tax relief

Within the budget, the government confirmed that from 1 April 2025, the rates of theatre tax relief, orchestra tax relief and museums and galleries exhibitions tax relief would be set at 40% for non-touring productions and 45% for touring productions and all orchestra productions.^[23] It said that these rates would apply to all of the UK. The measure was initially announced at the spring budget 2024 and had been legislated for.

2.3 Other relevant measures

The Treasury made other announcements in the budget which could affect the cultural sector. These included changes to national insurance contributions (NICs), with the rate of employers NIC to rise by 1.2 percentage points to 15% from 6 April 2025.^[24] The level at which employers start to pay NICs for each employee was also changed from £9,100 to £5,000. In addition, the chancellor announced an increase in national minimum wage.^[25] From April 2025, the national minimum wage for 18 to 20-year-olds will be £10.00 per hour, an increase of 16.3%. The chancellor also said that local authorities would receive a real terms increase in core spending power of around 3.2%, including at least £600mn of new grant funding to support social care.^[26]

3.   Sector reactions to the budget

Stakeholders from the cultural sector gave a mixed reaction to the budget. Increases in grant-in-aid funding and capital investment were widely welcomed; however, various stakeholders also voiced concerns about funding for civic museums. Concerns were additionally raised about the impact increases in national minimum wage and employer national insurance contributions could have on the sector.

3.1 Museums

Many stakeholders welcomed the increase in grant-in-aid funding and capital investment but raised specific concerns about the financial status of civic museums. For example, Sharon Heal, director of the Museums Association, said she was pleased to see the increased investment for national museums in England and more capital investment.^[27] However, she expressed disappointment that “the urgent needs of local and regional museums have not been addressed”, arguing that they are already facing redundancies, site closures, reduced public access and the threat of sale of collections or insolvency. Lucy Bird, policy and research lead for the Art Fund, made similar comments.^[28] She welcomed the increases in national funding and capital investment but warned that the budget “did little to address the urgent crisis facing civic museums”. Ms Bird highlighted that prior to the budget the Art Fund had called for the government to make available £20mn of emergency funding for the civic museums most at-risk of closure. She said that while she recognised the challenging fiscal climate, “we are disappointed that this need has not been addressed”.

Ms Heal also noted the increases to the minimum wage and employer national insurance contributions, welcoming the support for the lowest-paid workers.^[29] However, she argued that they would put pressures on “already over-stretched budgets” and mean that “many civic museums will be worse off”. Lisa Ollerhead, director at the Association of Independent Museums, agreed. She said that while these measures were welcome for lower-paid workers they would “add further pressure to already extremely tight budgets”. She also argued that there were limited options to offset these costs. Darren Henley, chief executive of Arts Council England also noted this issue, stating that the increases would have “significant implications for cultural organisations”.^[30]

Sue Ferns, senior deputy general secretary of the Prospect union, raised many of these concerns.^[31] Ms Ferns also argued that the increase in grant-in-aid funding for museums and galleries was “long overdue” and would provide “stability after some difficult years”. However, she said that it was unclear how much would be available to support current budgets “which are critical to recruiting and retaining the sector’s expert and dedicated staff”. Overall, she said that it remained “a tricky time for the sector” arguing that it remained “underfunded despite the huge cultural and economic benefits it brings”.

Stakeholders from the civic museum sector confirmed the concerns raised by others. Sara Wajid, co-CEO of Birmingham Museums Trust agreed that the budget had left her organisation worse off.^[32] Tony Butler, executive director at Derby Museums, said that there did not appear to be any assistance in the budget to address the “financial crisis facing regional museums”. He also argued that the increases in minimum wage and national insurance contributions would put “even more pressure on already fragile museum organisations”. Both Ms Wajid and Mr Butler said that they looked forward to further discussions with the government about the situation of regional museums.

Looking forward, Ms Heal called for a government-led strategy for sustained investment in civic museums and said that the sector would continue to work with government to make the case for “adequate and long-term investment” in all UK museums.^[33] She urged funders, such as Arts Council England, to consider the extra pressures on museums in their funding agreements.

3.2 Wider sector

Responding to the budget, the membership organisations UK Theatre and the Society of London Theatre (SOLT) said that they recognised the difficult decisions the government had to make to “balance a range of competing and urgent demands”.^[34] However, they argued that 40% of venues are at risk of closure over the next five years without significant capital investment and that there is “a critical need in our sector which must be addressed”. Focusing on the chancellor’s decision to change the fiscal rules “to unlock capital investment”, the organisations said that the change “provides an opportunity for developing a long-term sustainable model for investment in theatre buildings”. They said that they would work with both its members and the government to develop investment models as part of the upcoming comprehensive spending review.

UK Theatre and SOLT also raised concerns about the impact the increases in employers’ national insurance and national minimum wage could have on the theatre sector.^[35] They said that the sector was already dealing with “significant financial pressures with production costs continuing to rise faster than inflation, energy costs up 120% since 2019 and wage pressures”. As productions and venues set budgets sometimes years in advance, they said that the unplanned costs would put additional pressures on the sector.

The Heritage Alliance, a membership body of over 200 independent heritage organisations, published an analysis of the budget.^[36] On the culture and creative industries, the Alliance welcomed their inclusion in the government’s industrial strategy. However, it argued that it is important that the contribution of heritage is recognised in the government’s definition of this industry and in their skills development plans. The Alliance also welcomed the increase in grant-in-aid funding, but highlighted that the heritage sector “does not yet have an equivalent core funding structure”.

The Alliance said that the announcement of capital investment funds responded to “a dire need for funding for repairs and maintenance” that it had previously outlined in its ‘On the brink: Heritage in the cost of living crisis’ report.^[37] However, it said that details of the funding had not yet been released. It also welcomed the funding announcement for the commemorations for the 80th anniversary of the end of the second world war due to take place in 2025. It said it would engage with DCMS to explore how heritage organisations can engage in the events. The Alliance also noted the absence of news on the future of the listed places of worship grant scheme beyond March 2025, but said it understood that this would be determined by the DCMS in the coming weeks. This scheme gives grants covering the VAT on repairs of over £1,000 to listed buildings used as places of worship.^[38]

4.   Read more

• Department for Culture, Media and Sport, ‘Funding for the UK’s growth-driving creative industries confirmed in the budget’, 1 November 2024
• Parliamentary Office of Science and Technology, ‘Cultural and creative industries: Resources, funding, support and future’, 15 October 2024
• Neil Puffett, ‘Government delays planned review of Arts Council England’, Arts Professional, 12 September 2024
• Art Fund, ‘Survey highlights huge public support for UK museums’, 9 May 2024
• Museums Association, ‘FAQs’, accessed 7 November 2024

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