Arts and Cultural Organisations

Lord Mawson Excerpts

Wednesday 12th February 2014 Lords Chamber

Asked by

[Lord Mawson]

To ask Her Majesty’s Government what plans they have to help arts and cultural organisations thrive in the current financial landscape.

[Lord Mawson]

My Lords, the arts are currently facing two significant challenges: first, cuts to arts education in schools; and, secondly, cuts in funding, especially from local authorities. This difficult financial landscape within which arts and cultural organisations now sit is seen by some as an irresolvable crisis. For others, however, there are opportunities to create more innovative and entrepreneurial approaches that can enhance and expand arts and culture. I would like to suggest that a new, more entrepreneurial approach is now essential if many arts organisations are to survive and thrive. Worryingly, the evidence suggests that this is not happening at either the pace or scale that it needs to. We must ask ourselves why.

Numerous evaluations demonstrate that the arts have a profound impact, especially on disadvantaged children. I know this first-hand from 30 years of work in east London, where the largest artistic community outside New York lives. I have worked with many talented artists and musicians over the years, developing successful projects and business start-ups with local children and residents in some of the poorest housing estates in this country. Arts organisations are essential to the well-being of our society, and let us not forget that the arts and culture industry is also central to our economy’s well-being. In 2007, the cultural and creative industries accounted for 7.3% of the overall economy of this country—comparable in size to the financial services industry. I and many colleagues working in the arts believe that a vibrant arts and cultural sector relies on a mixed economy and that intelligent public investment is a part of that mix. As the economy shows signs of recovery, I hope that the Government will prudently adopt a long-term approach and constantly review public support of the arts.

What of the present? The majority of arts organisations across this country are struggling to adapt to the Government’s cuts in statutory funding, especially at the local authority level. The Government urgently need to do more to encourage and support arts organisations to think as creatively about their business models as they do about their art. One of the most significant changes in our society over the past 30 years is the rise of the wealthy individual. We are told that 1% of the population now pay one-third of all income tax, yet 40% of the cultural and creative industries receive no private investment. While larger organisations such as the Royal Opera House and the National Theatre, which also receive the largest amounts of subsidy, are successfully cultivating high net-worth donors, smaller arts organisations often do not have the infrastructure to attract this type of donor. They also understandably feel that they do not have a product that is high profile enough for large donors to be interested in.

I understand that one of Baroness Thatcher’s regrets was that the increase in personal wealth during her time in office did not translate into an increase in giving. We all know that the story is very different in the US. It seems that few British arts organisations have the practical knowledge to harness opportunities, such as social investing, to rethink or enhance their business models. We must help them to broaden their appeal beyond trusts, foundations, government and big business to focus on coming up with innovative ways to encourage individuals to support arts and culture, through both philanthropy and social investment.

It has consistently been my experience that individuals involved in building practical projects speak far more effectively on our key social and economic issues than many of our politicians and so-called experts. Perhaps, then, the way to part-address our current cultural crises is to raise the profile and disseminate the practice of arts organisations that have been successful in taking entrepreneurial approaches to diversify their income base. They include organisations such as the Derby Theatre, partnering with the University of Derby as a live venue and training centre; the Albany in south-east London, which bids for contracted services and is now running the library; and the Live Theatre Company in Newcastle, which uses innovative development of capital assets to provide sustainable income streams. These organisations are bucking the trend and taking on board a more entrepreneurial approach.

I am proud to have been recently involved in one such innovative arts project—the Conservatoire in Blackheath, south-east London, and here I declare an interest as chairman of the trustees. I thought that it might be helpful if I shared with the House the journey that this organisation has undertaken during the past year, the lessons we have learnt and the key practical outcomes that we have delivered. I was asked to chair the Conservatoire in Blackheath 14 months ago. This arts charity was founded in south-east London in 1881 and is the city’s oldest multi-arts venue, offering music and art lessons to local children and adults. Each week, around 100 talented tutors teach music and art to more than 1,600 people, ranging in age from six months to 90 years.

In January 2013, the Conservatoire was a week away from handing over its keys to the bank that financed it. Its core business model was unsustainable: the margins on music lessons did not cover the costs, the buildings were neglected and cash flow was critical. The organisation was facing foreclosure and staff and tutors had faced empty pay packets before Christmas. Most organisations would have folded, but the Conservatoire was fortunate. It had a new CEO—an American social entrepreneur called Sydney Thornbury, who invited me to take the helm and bring in a new group of experienced trustees. We entrepreneurs saw the problem as an opportunity for fresh thinking.

Our ambitious plan focused on creating a sustainable business model for the new financial landscape. It included forging a crucial strategic partnership with City Lit, Europe’s leading provider of adult education, and bringing together an American pyramid fundraising model to raise the £175,000 of bridge funding that we needed to get from the old model to the new. In just six weeks, the fundraising campaign smashed its target, raising a total of £220,000. Donors included an angel donor, who gave an incredible £25,000, as well as local children who donated their pocket money. Money quite clearly followed ideas and commitment. The fundraising campaign enabled the Conservatoire to embark on an ambitious plan of building works, renovation and development.

The Conservatoire has positioned itself back in the heart of its community. The community came together in an extraordinary display of support to save the Conservatoire. Now, the Conservatoire can once again successfully serve its community because our strategic plan has provided us with both a long-term sustainable income model and a major enhancement of the organisation’s offer for the community. The new vision positions the Conservatoire as a dynamic arts organisation reaching people from a cross-section of the community through both its paid classes and large-scale social impact projects.

Our plans do not stop there: we are thinking ahead. With the first phase of City Lit classes successfully up and running, the Conservatoire is now embarking on raising the money needed to launch phase two of the plan. This will see the development of the final two studios that are necessary to fulfil its sustainable income model and enable 300 additional classes to run, bringing the organisation to self-sufficiency and beyond. The Conservatoire will source these funds through both traditional fundraising and social investment loans from individuals who want to take advantage of the Government’s new tax incentives for social investing.

The best way to find new and enhanced national models of fundraising for the arts is, first, to demonstrate new thinking locally. The Conservatoire is still navigating deep waters but we hope, in time, to connect our pioneering model to the wider legacy developments to the north in the Lower Lea Valley. This development will, it is hoped, inspire a more creative and entrepreneurial rethink of arts funding nationally.

However, if we are to help the arts sector to survive and learn not just from this project but from the other entrepreneurial projects mentioned previously, the Government need to join in the grown-up, challenging and even radical conversation that we are initiating. How does the sector revolutionise and enhance funding models for sustainability in the “new normal”? This is a particularly important conversation to be had at local authority level, and we want to work closely with the LGA.

Peter Bazalgette, the chairman of Arts Council England, said recently:

“If you can find a way of getting the arts and culture, local government, business and higher education to work together then you have something really powerful”.

I think that he is right, but how do we translate these fine words into reality? First, government needs to value practical people. Civil servants often think their way into action; entrepreneurs are about learning by doing and acting their way into thinking. Let us value, support and publicly recognise pioneers in the arts sector. Secondly, government needs to actively enable an entrepreneurial culture to flourish. The Government’s new tax breaks on social investing, which the Conservatoire plans to put to use in April this year, will do much to develop a vibrant social finance sector. But far more practical support needs to be given to arts organisations if they are successfully to learn to operate in an enterprise economy.

I can see that my time is up. I will sit down with the Minister privately and suggest some practical ways in which we might do this.