"It is true that 'the Arts' are taking about a 30 per cent reduction in grant aid from the state; however the drop from £452 to £350 million has been made up by reforms to lottery funding."
The Spectator, 28 November 2012
As Oscar Wilde once said: "When bankers get together they talk about art. When artists get together, they talk about money."
Since the Comprehensive Spending Review in October 2010, many in the arts sector have claimed that they've had good cause to complain. But the Spectator has now suggested that "the thespians, folk collectives and dance troupes" are only "around £12 million shy of their funding levels before the evil cuts were announced."
With the Chancellor's Autumn Statement on the progress of his deficit reduction plan now being analysed, should the artistically-inclined have anything to fear?
What's the reduction in the Government's budget for the arts?
The Spectator does not dispute the fact that the arts have seen a reduction in their funding from central government. It puts this cut at around the 30% mark.
We find this figure referred to in a House of Commons briefing paper and on its website Arts Council England (ACE) confirms that it was dealt a 29.6% cut to its grant-in-aid for 2011-15. The grant-in-aid is the money that the Department for Culture, Media and Sport (DCMS) allocates to the Arts Council, which then distributes money to different organisations.
Howerer DCMS is just one of the bodies that is responsible for investment in the creative sector. The arts also receive money from other public institutions - the European Union, local authorities and the National Lottery - as well as from private donations.
The Spectator calculates that the decrease in grant aid from the state (via the Arts Council) has meant that funding for the arts will be reduced from £452 million to £350 million. (These statistics also appeared in an Evening Standard article two days earlier.) DCMS shows how this reduction will be achieved:
These figures show how the grant-in-aid from government to DCMS has fallen, and will fall, in nominal terms: if we adjust these numbers for inflation, we would see that in 2014/15, the true or 'real' fall in grant-in-aid would be 29.6%: the £349 million grant-in-aid in 2014/15 is worth more like £315 million in 2010/11 prices.
The Spectator suggests that there has been a £102 million reduction in Arts Council grant-in-aid funding. As the Culture Select Committee notes, this is the nominal decrease in funding between 2009/10 and 2014/2015 (£452 million to £350 million approximately). The real-terms decrease is actually closer to £137 million.
According to a footnote to this DCMS table, in 2014/15 the total budget for the Arts Council (grant-in-aid and National Lottery contributions) will be some 5% lower in real terms than it was in 2010/11.
However, as the DCMS notes, the Arts Council has said that its total budget is projected to decrease by around 12% in real terms between 2010/11 and 2014/15.
The Arts Council argues that DCMS originally used a "significantly lower" baseline figure for National Lottery spending in 2010/11, which meant that the increase in funding over the 5 years appears to be larger than it actually is. DCMS uses the Arts Council's draw-down figure (the amount of money it paid out) not its income (the amount of money available to it).
Does National Lottery funding make up for less money from Government?
The Spectator argues that the shortfall is offset by the contribution of the National Lottery, which amounts to some £90 million. But where is this £90 million figure from?
We don't know how the Spectator has sourced this number. But recent DCMS figures show an £80 million nominal increase and a £55 million real terms increase in National Lottery spending, from £182 million in 2010/11 to £262 million in 2014/15.
Are the arts only £12 million poorer?
The Spectator estimates that the current funding settlement means that the arts will receive £12 million less in 2014/15 compared to 2009/10, once the National Lottery money is accounted for. However this sum does not account for inflation.
The Arts Council's real-terms figures show the arts will be worse off by some £82 million (the £137 million loss of grant-in-aid being partially offset by the £55 million increase in National Lottery funds).
As DCMS notes, once we take into account the increase in National Lottery funding, the balance sheet for 'the Arts' looks a little healthier. However, Section 12 of the Lottery Act (2006) states that
"proceeds of the National Lottery should be used to fund projects, or aspects of projects, for which funds would be unlikely to made available by
(a) a Government department [or its equivalent in the devolved administrations]."
This is known as the "additionality principle" - the idea being that the Government's funding decisions shouldn't be influenced by the National Lottery's contributions.
A spokesperson for the Arts Council said that the National Lottery money is designed "to fund something additional, not to fund core running costs of organisations."
By failing to consider the effect of inflation, the Spectator appears to have underestimated the cuts to the arts. The total shortfall in funding is not £12 million, but more like six times that amount.
Flickr image courtesy of humbletree