Spotlight on empty stage at theatre with red seats

Table of contents

On 30 March 2023 the House of Lords is due to consider the following question for short debate:

Baroness Featherstone (Liberal Democrat) to ask His Majesty’s Government what plans they have to support the performing arts sectors throughout England.

1. Performing arts sector

The performing arts include live music, dance, theatre, poetry and other creative activity performed in front of an audience.

In 2022, music, performance and visual arts contributed an estimated £11.5bn to the UK economy. The economic output of the sector saw a large decrease in 2020 because of the coronavirus pandemic. However, by 2022 it had recovered to above its 2019 level.

Table 1: Contribution of music, performance and visual arts to the UK economy
Year Gross value added (£bn)
2019 10.0
2020 6.9
2021 8.3
2022 11.5

Gross value added for arts and entertainment is concentrated in London. In 2019, before the Covid-19 pandemic, the arts and entertainment sector in London added £5.5bn to the economy, out of £8.6bn for the UK overall.

2. Government support

2.1 Ongoing support

Arts Council England (ACE), an arm’s length body of the Department for Culture, Media and Sport (DCMS), is the national development agency in England for creativity and culture. It distributes money from the government and National Lottery to arts and culture organisations across England.

In 2019/20 ACE received £493mn in grant-in-aid and £249mn in funds from the National Lottery. In 2020/21 this rose to £1.2bn in grant-in-aid and £254mn from the National Lottery. In 2021/22 it was £689mn from the government and £254mn from the National Lottery.

Under the ACE’s 2020 to 2030 strategy, ‘Let’s create’, it distributes funding through three “streams”:

  • national portfolio organisations: a core group of arts organisations, museums and libraries receiving guaranteed funding over a specified time frame
  • national lottery project grants: support for one-off projects
  • development funds: support for specific strategic initiatives

2.2 Covid-19: Additional support

In response to challenges posed by the Covid-19 pandemic, the government put in place extra funding for culture and the arts. This was in addition to wider support for employment and the economy.

In July 2020 the government announced the culture recovery fund, which included:

  • a £1.15bn support pot for cultural organisations in England delivered through a mix of grants and loans, made up of £270mn of repayable finance and £880mn in grants
  • £100mn of targeted support for national cultural institutions in England and the English Heritage Trust
  • a £120mn capital investment to restart construction on cultural infrastructure and for heritage construction projects in England which were paused due to the coronavirus pandemic

ACE has distributed the funding relevant to the performing arts. As at 31 March 2022 it had distributed £892mn in culture recovery funding.

The House of Commons Public Accounts Committee conducted an inquiry into the culture recovery fund in 2021. It stated that it “acknowledge[d] the department’s efforts to aid the sector’s survival through Covid-19 and get funds to over 5,000 organisations”. However, the committee reported that it had “uncovered issues” with the fund that had left some organisations in “perilous financial situations”. These included some organisations having difficulties accessing the fund and others receiving no feedback following unsuccessful applications.

In the October 2021 budget, the then chancellor, Rishi Sunak, announced temporary increases in the existing theatre and orchestra tax reliefs. The increases would last from October 2021 to March 2023, then taper down in the 2023/24 tax year and return to previous levels in 2024/25. In the March 2023 budget Chancellor Jeremy Hunt extended the full tax relief increase until March 2025, tapering down to reach initial levels in April 2026.

2.3 Local government funding

Local authorities in England collectively invest £1.1bn annually in cultural services. These include museums, libraries, archives and theatres.

A report by the Creative Industries Policy and Evidence Centre highlights that local government spending on arts and culture decreased between 2009/10 and 2019/20:

The investment in the arts through local authorities in capital and revenue expenditure in the arts in England has fallen by more than 30% in real terms between 2009/10 and 2019/20 in response to an overall decline in local government budgets over this period. Much of this comes from a significant drop in funding to libraries, although excluding libraries we still find a 15% drop in real terms from 2009/10 to 2019/20.

3. Arts Council England funding 2023 to 2026: Regional redistribution

The government has said it wants to improve access to culture and arts across England. In February 2022, the government set out its plans as part of its levelling up agenda. This included a commitment in the levelling up white paper to “significantly” raise cultural spending outside London. The aim, the government said, was to generate more regional jobs in arts and culture and improve access to cultural activities across England.

To achieve this aim, the DCMS said an additional £75mn would be provided by 2025 “to make sure places that have been culturally under-served in the past get a better distribution of arts funding”. It also said that overall cultural investment by the government through ACE to places outside London would rise to almost £250mn by 2025, a 19 percent increase. This increase and redistribution of investment across England would see some arts and culture organisations become national portfolio organisations for the first time.

As part of these plans the government said ACE would be expected to help London-based culture organisations expand or move out of the capital. Additionally, the government asked ACE to ensure its funds were more evenly distributed across London boroughs.

Announcing the recipients of its 2023 to 2026 investment programme, ACE said that in some places its funding had been “too low for too long” and that “this investment programme changes that”. It said that Wigan, Gloucester, Stoke, Blackpool, Mansfield and North Devon were among 78 places where organisations would receive a share of £130mn over the next three years.

4. House of Commons Digital, Culture, Media and Sport Committee report

On 2 November 2022 the House of Commons Digital, Culture, Media and Sport Committee published a report with recommendations to the DCMS on how the government should address geographical funding imbalances across arts and culture to fulfil its levelling up agenda. This report was published two days before ACE released its 2023 to 2026 portfolio funding allocations.

The committee raised concerns that areas beyond London and the south-east were not receiving the necessary investment to support their arts and culture organisations. It noted that grassroots organisations in deprived areas of London and the south-east were also experiencing “serious financial risk”. The committee said this was due to a minority of national cultural organisations receiving significant proportions of public funding.

To address these issues, the committee said the government and ACE should reconsider how they allocate funding by regions. It recommended a new funding model that would have the national cultural institutions that receive the largest levels of investment allocated their funding separately from local and regional institutions. The committee said this would:

[…] allow for better comparisons between genuinely grassroots organisations and ensure those organisations in regions where there is a high concentration of national cultural institutions aren’t indirectly negatively impacted by well-meaning attempts to rebalance spending across the country.

The government published its response to the committee’s report in February 2023. It highlighted developments that had taken place since the committee’s report had been published:

Since the committee’s report was published in autumn 2022, there have been a range of further announcements that will see culture, heritage, and creativity rightly enshrined at the centre of local and regional placemaking and regeneration planning. These new initiatives—such as the Arts Council England’s latest 2023–26 round of national portfolio organisation funding, and the announcement that the north-east of England has been selected to pilot an innovative £2.25mn approach to destination management and development—will have significant and lasting impacts that will make people feel proud of the places they live and the organisations that define, shape, and tell their stories, further helping to bring life back to high streets and town centres, and contributing to local employment and economic growth.

5. Read more

Cover image by Marc Fanelli-Isla on Unsplash.