Press Release

New Research shows who pays for the Arts

New research published today by the independent Policy Studies Institute reveals for the first time how large the UK cultural sector is and how it is funded.

The study - Culture as Commodity? The Economics of the arts and the built heritage in the UK by Bernard Casey, Sara Selwood and Rachael Dunlop - shows how £1.7bn was spent by central and local government, businesses, trusts, foundations and private donors in 1993/94 in support of cultural activities which would not otherwise have been funded by the market alone. It shows for the first time who pays, how much they spend and where the money goes.

Among the findings, the study shows that:
  • Overall, the cultural sector employs nearly 0.5m people - more than high-street banking and nearly twice as many as the motor industry. About a quarter of these people are employed in the supported sector, which has a turnover of over £2bn.

  • The Department of National Heritage (DNH) and the equivalent departments in the Scottish, Welsh and Northern Ireland Offices provide £0.9bn a year - or half of all support that the cultural sector receives. This sum is slightly more than the Department of Trade and Industry gives as grants to the nuclear electricity industry and about the same as the Department of Transport gives to London Transport.

  • As much as a quarter of central government support comes from departments not immediately responsible for culture, like the Ministry of Defence, the Home Office, the Department of Health and the employment arm of the Department for Education and Employment.

  • The cultural sector plays an important role in urban regeneration. As much as 98% of European funding for the sector came via the ‘structural programmes' rather than via cultural programmes. In 1993/94, the Department of the Environment spent £39m on the cultural sector within the context of its various ‘urban programmes', of which the City Challenge accounted for over £5m.

  • Across the board, organisations and individuals in receipt of support raise half their own income through commercial activities like merchandising and catering as well as charging admissions. However, a third operate at a loss, and the overall loss they made in 1993/94 was in the order of £100m.

The study, launched at Christie's on Monday 16th December, provides a comprehensive account of the cultural sector in terms of employment, audiences, income and expenditure. It looks at the sector as a whole, including that part which operates largely on a commercial basis, before looking in more detail at the part of the sector in receipt of support. It found that 50% of the total £1.7bn funding for the cultural sector came from the DNH, Scottish Office, Welsh Office and Northern Ireland Office; 14% from other government departments; 24% from local government; 5% from Europe; 4% from business and 4% from charities and trusts and voluntary contributions.

Although most government support came via the DNH, other ministries spent considerable sums on cultural activities. The Ministry of Defence, for example, spent £13m in 1993/94 on military museums and music schools, the Department of Education and Employment, £6m on skills training in the sector, and the Home Office, £700,000 on arts activities for people in prison or on probation.

The Treasury also supports the sector through tax relief, particularly for the heritage sector. Zero-rated VAT for alterations to listed buildings was worth £64m in 1993/94 and conditional exemption - which frees outstanding heritage objects and properties from inheritance tax - was worth another £60m.

The study showed a strong London bias in the distribution of support for culture. A quarter of all supported organisations and individuals, and over a third of those in performing arts, are based in London, yet the capital accounts for only one eighth of the UK population. Half of business support for the performing arts goes to London based organisations, and nearly three quarters of that going to museums and galleries. This concentration of support on the capital is despite the Arts Council's intention to ‘decentralise and disperse the dramatic and musical and artistic life of the country'.

‘Like public transport or nuclear energy, the cultural sector is an industry subject to market failure' said Bernard Casey. ‘A considerable share of it would not exist, at least in its present form, without the support of the state, business or private patrons. However, as well as assisting the sector for its intrinsic qualities, governments have also recognised its extrinsic qualities - that it is a source of employment and of urban regeneration.'

‘Nevertheless, government support is by no means secure. The National Lottery might be a new source of funding, but its initial concentration on capital rather than revenue grants could mean that we have excellent theatres and galleries without events or objects to fill them. And if organisations are required to raise more from admissions, it might radically change what they are able to offer. There are downsides as well as upsides to making culture more "popular"'.

The research was sponsored by the Monument Trust and the Department of National Heritage.

Contact:

Neil Churchill 0171 468 2236 (Direct)
0171 468 0468 (Switchboard)
0374 756920 (Mobile/Voicemail)
Bernard Casey 0171 468 0468
Sara Selwood 0171 468 0468
Rachael Dunlop 0171 468 0468

Notes for Editors:

  1. Culture as Commodity? will be launched at 6.00 pm at Christies on Monday 16th December. To attend the launch, contact Neil Churchill.

  2. The study examines: the performing arts (drama, opera, dance, orchestras, music); the combined arts (including arts festivals); museums, galleries, crafts and the visual arts; the media (including literature,film and video) and the built heritage (including historic buildings, monuments and sites).

  3. Culture as Commodity? is available from Grantham Books on 01476 541 080, priced £19.95.

  4. PSI is an independent research institute and registered charity and is not associated with any political party, pressure group or commercial interest.

  5. Bernard Casey, an economist, is a senior fellow at PSI. Sara Selwood and Rachael Dunlop are research fellows in PSI's Cultural Unit.
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