The Scottish Government

« Previous | Contents | Next »

Listen

Section 11 Investment

11.1 Our remit

The Commission's remit is clear in its instruction to address the issue of investment in culture.

"The Commission will consider how to … lever growth in the cultural and creative industries."¹

11.2 Our understanding

At the outset of this report we distilled the First Minister's aspiration for access into one goal: that every person in Scotland should share in any cultural activity that is publicly funded. This noble objective, however, is only achievable with increased levels of investment and re-prioritisation of existing budgets, set against a reasonable timescale.

We believe it also requires a fundamental shift in the mindset of public and private funders to support the cultural sector -by regarding it as investment rather than subsidy. This change in thinking is equally applicable to the cultural sector itself.

"The term 'subsidy' has done damage in the arts sector. Public money in the arts is an investment in their research and development, for the benefit of citizens and the arts as a whole."
Scottish Arts Council submission

We believe support for culture in Scotland should be seen as an investment in the current and future health and wealth of the nation.

"Cultural participation is an essential aspect of membership of this society, and the creative, practical support of professional artists, so that they can fulfil their own potential and enrich the lives of all of us, is not a dutiful drain on the public purse, but a positive expression of how we value ourselves."
Scottish Society of Playwrights submission

We recognise, however, that the cultural sector must earn public sector investment and be prudent with it, as much as any other part of society that is publicly supported. We understand that the current public sector support for culture could be used more effectively to lever growth from its own and from other sectors and that this support must extend beyond the purely financial.

11.3 Consultation

The subject of investment in the cultural sector featured in virtually every conversation, submission, meeting and piece of research we received. Without doubt this is seen as the single most important aspect of ensuring a vibrant cultural sector. We agree that adequate public resources are essential to deliver a reasonable level of cultural provision, and considerably more is required to provide and sustain excellence. However, the solution is not as simple as increasing financial support indefinitely.

We hope we have shown in the previous sections ways in which the cultural sector can be better integrated and supported. That often involves a change of mindset as much as budget. We also believe that the greater efficiency a new system will instil will allow expenditure to be targeted better at points of delivery.

The clear weight of evidence presented to us, however, suggested that:

• an appropriate level of investment is an essential element of successful cultural delivery

• it is not currently there in many cases

• the public sector element of investment can be used to greater effect as a catalyst for other investment sources.

11.4 What needs to be funded?

11.4.1 Scope of costs

Prior to establishing how best to increase investment we need to identify the scale and nature of investment required. We believe the main costs required, additional to current spending, fall into the following areas:

Revenue costs

• consequences of entitlements

• creating sustainable careers

• investment in the voluntary sector

• supporting national assets

• supporting non-national assets

Capital costs

• refurbishment/upgrading

• new facilities.

11.4.2 Revenue consequences of entitlements

"We will not change levels of provision or structures overnight, but we can set a course that will, over several years, make a huge difference"
Jack McConnell, St Andrew's Day 2003

The process of establishing entitlements, as the First Minister noted, will not happen overnight. It is, however, implicit that this commitment will require further investment to improve the levels of cultural provision. This was a point the Commission has repeatedly heard throughout its consultation:

"Self evidently, delivering rights requires an adequate level of resources and provision".
COSLA submission

"The overwhelming implication of 'cultural rights' is that significantly increased funding will be required to enable citizens to realise these rights and to take advantage of them. This is greatly welcomed."
Royal Scottish National Orchestra submission

"…there must be a very considerable increase in funding if the arts are to flourish in the way needed to meet the First Minister's publicly stated aim."
Bill Taylor, Chair, Cumbernauld Theatre

11.4.3 Creating sustainable careers

Many creative individuals and creative 'micro-businesses' of 1-3 employees spend too much time looking for funding and repeating that process year by year. There is little slack within the cultural sector. Most organisations and individuals are using great ingenuity in difficult circumstances to simply survive. For example, 38% of visual artists in Scotland are earning under £5,000 and 62% earning under £10,000 gross per annum. ²

Addressing the issue of low pay through tax-emption (promoted in Section 7) could have a beneficial effect for creative individuals (using our definition in Section 7.9.). A method of assessment, such as that used in Ireland, would be necessary to enter the tax exemption scheme. Increased support to creative micro-businesses from the LEC network is also required.

11.4.4 Investment in the voluntary sector

In Section 8.7 we outlined the valuable contribution made by the voluntary cultural sector and the potential to maximise this contribution through modest increased investment. In particular we recommended extending the number of voluntary Arts Development Workers and investment in training. This, combined with capital upgrading of facilities and equipment, would create an exponentially significant return to the level and quality of local cultural activity.

11.4.5 Revenue support of national assets

In Section 7 we identified our national assets as our collections, performance companies, creative individuals, languages and cultural estate. We considered the cost of the latter in 'capital costs' above.

Our proposal above to establish a body to support creative individuals and to consider the creation of an Institute of Scottish Languages are likely to cost several millions if implemented.

Maintaining the real value of the current grant assistance to our national collections would probably present them with few operational challenges. All can identify pressures for increased provision and some are still working through the consequences of recent expansions. They are likely to seek additional resources if they are to increase significantly interaction with the non-national sector and educational and access work. Another significant issue is maintaining a purchasing grant for its original purpose.

All the national performance companies have identified additional sums in their annual requests to SAC to allow them to deliver their programmes better and meet the aspirations of the company and their audience.

Similarly, the Edinburgh International Festival, though not a national company at present, is an international cultural event of considerable standing and considers itself modestly funded compared to other international festivals. It faces annual difficulty in balancing its current budget.

11.4.6 Revenue support of non-national assets

In recent years additional funding provided by the Scottish Executive has been for particular activities and that has affected the overall position. During this period, SAC core funding across all artforms has fallen and, to exacerbate the problem, fallen behind those in England, thus distorting the market.

Excluding the ring-fenced project funding to SAC such as the Youth Music Initiative and the National Theatre and excluding corresponding project funding to Arts Council England such as Creative Sparks, SAC core funding needed to maintain pace with increased levels for Arts Council England ( ACE) and to restore the market is £10.5m. ³

The SAC difficulties affected the theatre sector but additional sums taken from the grant allocated to the delayed National Theatre ameliorated the position to an extent. However, the Boyden settlement in England opened a financial gap with Scottish producing theatre that has had a detrimental effect on this sector. There is also a need for producing theatre in the north of Scotland, probably Aberdeen, which implies funding a new company. Non producing theatres have similar problems e.g. the Kings/Festival in Edinburgh, His Majesty's in Aberdeen and Eden Court in Inverness. The gap is likely to be in the order of several millions.

Museums

The main pressure is in the non-national sector. In 2003, the SMC proposed additional funding of £5m per year for non-national museums to address it. Although this was not based on any audit of requirement, given the level of service and professional capability at some museums in some authorities, this figure is not unreasonable. It is undoubtedly the case that some museums, such as the Maritime Museum, are in serious trouble.

There is also Glasgow's aspiration to additional Scottish Executive support for what they consider to be national functions in the museums service. The Burrell Collection and Kelvingrove indisputably hold collections of significance that serve a population well beyond the city of Glasgow boundary.

11.4.7 Capital costs

We proposed (in Section 7) a more strategic approach to the stewardship of cultural buildings in Scotland. As well as the provision of new facilities, the appropriateness of existing facilities and issues such as upgrading, maintaining and renewing these facilities are major tasks that will need to be addressed.

We propose an audit of the national cultural estate to identify the scale of investment required. Once this is known priorities can be established and an appropriate timescale set for phased implementation. Until this audit is undertaken it is difficult to be precise about the total costs involved.

As a comparator, to estimate scale, we considered a similar recent exercise for swimming pools in Scotland that estimated £554m is required to upgrade the country's pools over the next 22 years. ⁴

Also, in November 2004 Fife Council considered a paper that estimated the repair and maintenance required for their theatre, museums and libraries estate as £45m over 15 years. Extrapolating that figure across Scotland (Fife is 8%) comes to £562m.

We have found that maintenance budgets for public cultural buildings have been cut back severely over the past ten years - and in some places do not exist. When we consider the number of the nation's museums and libraries, the civic theatres and galleries, and the arts centres and small specialist venues, there is need for substantial investment. It is reasonable to estimate that the scale of investment required to repair, upgrade and refurbish existing buildings is at least comparable with that of the swimming pools, and perhaps greater.

Similarly, there are always, rightly, plans to build new facilities. We have seen a recent generous award from HLF for the relocation and redevelopment of the Transport Museum in Glasgow and are aware of the ongoing ambitious plans of the National Galleries and National Museums to extend their cultural estate.

The civic cultural estate will also continue to develop. However, it is worth noting that since lottery funding became available local authority capital funding has declined almost pound for pound. This is obviously an issue of concern and suggests that there will continue to be a need for significant additional investment each year.

11.4.8 The 1% target

The additional amounts outlined above total several tens of millions each year for both capital costs and revenue costs. We believe the total figure is likely to be in the region of £100m per annum. This figure leads us to a proposition.

If cultural services in Scotland were to receive an uplift of £100m, a figure that would equate to £238m in 2003/04, this would represent 1% of the total Scottish Executive Budget. ⁵

This figure is in one sense symbolic, but we have tested whether it is arbitrary above and we believe it does in fact represent quite accurately the scale of the additional public funding, both capital and revenue, required per annum. This target, considered across the full range of government departments and phased in over two or three spending review periods, is certainly achievable with political will.

11.5 Lever growth - but from where?

11.5.1 The main players

The amounts estimated above represent significant additional annual resource. We have been asked to identify from where and how growth can be levered to meet this amount. We believe there are eight sources:

The Scottish Executive

This can be achieved from:

• incremental increases to the existing TCS budget over two-three spending reviews

• identifying cross-cutting opportunities across other spending departments.

The following methods (considered in more detail below) are the most relevant to use:

• incentives

• initiatives

• targets

• brokerage and advocacy

• partnership.

Scottish public sector

Most significantly this will include the enterprise network (building on our earlier recommendation to broaden the Scottish Enterprise remit), but will also extend to agencies in other policy areas, for example health and transport. This is most likely to be achieved by reprioritising existing resources through partnership initiatives instigated through the cultural planning partnerships.

Local authorities

This is most likely to be achieved from:

• increased support from the Scottish Executive

• re-prioritising existing budgets

• cross-cutting opportunities with other departments

• cross-cutting opportunities with other local partners in the public, private and voluntary sectors.

UK government/ DCMS

There is some, albeit small, scope for direct financial contribution towards specific initiatives. However, the main contribution would be made through amending tax benefit legislation. To be achievable, this would require significant support from the Scottish Executive and Scottish MPs.

Europe

The renewal of the Culture 2007 programme and the focus on digitisation and the movement of people and culture around Europe could present opportunities. A far more strategic approach to partnering and on-going projects is required if Scotland is to benefit from these European funds. There may be potential to lever EU funding from other government areas using central government funds. There is a substantial education programme (Socrates, Leonardo, Youth Community Action etc), but this must also demonstrate a need for 'added European value'.

The public

Earned income from entrance or attendance fees could possibly increase - some recent evidence suggests free admission does not generate increased attendance in the medium-long term. However, this is unlikely to be universally applicable across the cultural sector, for example, in respect of many services provided by libraries.

There is scope to develop national initiatives that encourage joint public investment in both capital and revenue projects. We consider some below.

The voluntary sector

Although included in this list it is unlikely the voluntary sector will make any significant financial contribution towards these additional annual costs. They do however continue to provide extremely cost-effective ways of maintaining some types of cultural provision, for example running festivals and staffing independent museums.

The private sector

This is most likely to be achieved by identifying more cost effective ways in which they can invest in capital and revenue initiatives, for example through tax-relief.

Philanthropic giving and sponsorship is always valuable although likely to remain as project-based or for capital initiatives, rather than guaranteed year-on-year revenue funding.

11.5.2 Summary

The table overleaf summarises the levels of additional annual expenditure and the most likely contributing partners in each case.

11.6 Government's role

11.6.1 Infrastructure

Throughout this report we have been aware of the expectations placed on government, and tried to reconcile that with a realistic view of government's ability to deliver. Our thinking and recommendations throughout the report have been informed by our view on government's role in relation to the cultural infrastructure.

Essentially, we believe government should ensure these three elements of the cultural infrastructure are strong and able to deliver the cultural vision for Scotland:

• financial elements

• legislative elements

• built elements.

It is not government's place to provide all the above but to ensure it is provided. They have a duty to take a strategic and long-term view, as in the commissioning of this report, and where there are gaps to provide or encourage ways of addressing them.

11.6.2 Providing incentives

One effective way of encouraging others to provide is by providing incentives, usually financial, to work in a certain way or deliver a certain outcome. In recent years this has been most effective with the funding provided for Cultural Co-ordinators and the Youth music tuition initiative generating increased funding from local authorities.

11.6.3 Leading by example

The value of high-profile support from government should not be underestimated. By identifying cultural activity in the public manner as he did on St Andrew's Day 2003 the First Minister gave the sector an extremely valuable public endorsement. The signals from his speech - and any subsequent positive actions to back them up - send out powerful signals to the private sector in terms of economic worth of the sector; the voluntary sector in terms of recognition of their achievement; and the rest of the public sector in terms of social importance.

11.6.4 The impact of investment

The potential benefits and impacts of additional investment are worth elaborating. In 2000, ACE estimated a 10% increase in their investment in the arts would deliver a 20% increase in activity, and a 20% increase in their investment would deliver a 60% increase in arts activity across in England. For some individual organisations, the return was calculated to be even higher. As a result ACE received uplift in the grant-in-aid from the Treasury of almost 25% over the following three years. ⁶

Similarly, the SAC argues that a relatively small level of increased core funding would allow many organisations to increase their effectiveness and to get out from a situation of financial 'fire-fighting'. Comprehensive figures for all sectors are now available, but the SAC collects data on the net current asset position of all core funded organisations. In 2003/04, the net position of all these bodies was £4.4m in deficit. ⁷

11.7 Current government and local government support

It is worth comparing the additional annual requirement we have outlined to the existing support from the Scottish Executive and local authorities. This should give some indication of how much leverage will actually be required.

11.7.1 Scottish Executive

The following figures show how in a time of positive public expenditure settlements culture in Scotland has lagged other areas and the situation elsewhere in the UK. Funding of culture has not kept pace with the overall increase in Scottish Executive spending since 1997. In 1997/98, the culture budget was 0.61% of the SE budget. In 2005/06 it is 0.44% of the SE budget. Restoring the previous proportion, for example, would require £35m.

Funding for culture in Scotland has not kept pace with the overall increase by DCMS. By this financial year, 2005/06, the DCMS budget had increased 60% since 1998/99. The Scottish Executive culture budget has increased 39% in that time. Within DCMS, funding for the arts has been greatly favoured increasing by 114%, i.e. more than doubling. SAC's funding has increased by a more modest 48%.

These figures do not include the National Theatre allocation as this does not come on-stream fully until next financial year. Also, the funding for instrumental tuition being managed through the SAC is also excluded since this will be spent in schools and not in the cultural sector. Together these amount to £14m in 2005/06.

By comparison, sport has done well. In 1998/99 sport was 0.066% of the Scottish Executive Budget. In 2005/06 it is 0.17%. Between 1998/99 and 2005/06, the SE sport budget has increased by 348% (£10.1m to £45.3m) compared to 163% (£48.1m to £163m) for DCMS sport. In addition there has been significant additional provision for sport through NOF. The £87m package for sporting facilities announced in 2002 is particularly noteworthy, and could set an interesting model for a similar investment in the cultural estate.

Currently, the funding allocated to cultural services is a very small percentage of the overall Scottish Executive Budget. If we include the substantial budget provided to Historic Scotland, nearly £40m in 2004/05, this figure is still only around 0.6% of the total Scottish Executive budget. The disparity between funding for culture and for other public services is huge, as the diagram above illustrates. In 2004/05, health will receive £6.4b or 27% of the total budget; education (central funding) £559m or 2.3% ⁸ and justice £1.29b or 5.4%. ⁹

11.7.2 Local authorities

Local authorities are the major providers of cultural services in Scotland spending £274m on the provision of culture in 2003/04 ¹⁰. In 1995/96 total spend on leisure and recreation was £334m - although the definition at that time would also have included expenditure on sport-centred leisure activities.

Cultural services represent just over 2.5% of total local authority expenditure compared with 36% on education, 22% on social work and 5% on central services. ¹¹

As we saw in Section 3, there are great disparities between local authorities in spending. In 2003/04 this ranged £149 to £20 per capita. ¹² Research undertaken for the Commission by PMP into local authority provision of cultural services also identified this as a key issue:

"It would appear that there is a wide variation in the number and type of cultural facilities that are provided by different councils. This cannot be explained simply by the need to adapt to local circumstances and reinforces the need for a more systematic approach to be developed". ¹³
PMP report for the Cultural Commission

This view was shared by the local authorities' own representative body COSLA in their submission to the Commission:

"…there are significant variations in the level and type of provision made across Scotland. Consequently the extent and the quality of provision and access to cultural facilities is inconsistent."
COSLA- VOCAL submission

If culture is to approach the importance afforded universal health care or education for all, then the current level of investment in cultural services will to need to rise, if not to their level then certainly to represent a larger proportion of public expenditure.

11.8 Sourcing the funds

"For the last two years I have asked our devolved government to focus on delivering better health care, improving schools, creating the infrastructure required to secure jobs, and tackling crime. But focusing on these priorities should not de-prioritise culture. Culture cuts across all of these, in fact all portfolios of government, and it can make a difference to our success in each."
Jack McConnell, St Andrew's Day, 2003

11.8.1 Culture is everyone's responsibility

St Andrew's Day presented a unified Scottish Cabinet, where " every single Minister was not only enthusiastic about our cultural development but thoughtful and helpful about how it could be applied to their own area of responsibility within government. And each made the commitment to use the power and creativity of culture and the arts to help them in their work." ¹⁴ However, this unity of purpose has not always translated to delivery on the ground, as several responses to our consultation suggested:

"There might be failure in not having culture on every organisation's agenda - Scottish Enterprise maximising the economic benefits of a cultured population (cultural industries, creative industries, international connections etc), the NHS promoting the mental health benefits and so on. There would have to be a clear Scottish Executive policy directive on this - I'm not sure that this is the case."
Scottish Enterprise, Edinburgh and Lothians submission

In January 2005, the Scottish Executive's Cultural Policy Department published a report of cross-cutting cultural initiatives, highlighting developments in health, communities, enterprise, rural affairs, justice, transport and education. The report identifies just over £1.4m worth of crosscutting projects and initiatives, a very small figure in public finance terms. However, it does promise the consideration of many future actions. ¹⁵

While this support is welcome the mechanics of how such interactions will be managed have yet to be worked out. Cross-cutting policy, if accorded the status that the First Minister suggested, will be a significant new responsibility for the Minister for Tourism, Culture and Sport.

We cannot stress strongly enough the importance of meaningful cross-cutting dialogue and actions as the being the most effective way to realise the First Minister's aspirations. We believe there is good cause to consider the current composition of the Minister's TCS department and ensure it is sufficiently resourced and configured to lead this cross-cutting initiative with colleague departments.

It is worth noting an international example:

We believe it is also extremely important that developments in central government are reflected within local government. The Commission received a great deal of evidence of cross-cutting initiatives at local authority level:

"Arts Development in Moray Council is beginning to be recognised as a service/resource that can impact on a range of public services - we have been approached by Planning and Environmental Protection to look at including public art in improvement schemes in harbours and school dining rooms."
The Moray Council, Arts Development submission

Our earlier recommendations with regard to community planning and cultural planning across Scotland are relevant here.

11.8.2 Re-defining national significance

The COSLA- VOCAL submission was representative of several that promoted the idea of an audit of library and gallery collections to identify collections of national significance, as has been done successfully with museums. We agree and think it should be extended to include cultural venues and companies as well.

Once identified these bodies of national/international cultural significance should be funded from central government. This would release an equivalent amount of money back to local government to be reinvested in the delivery of cultural entitlements.

Bodies/collections eligible for inclusion in such a scheme could, for example, range from the Burrell and Mitchell Library in Glasgow, to the Aberdeen Archive, DCA, Eden Court, and the Traverse Theatre. We estimate that this approach could eventually identify around £15m p.a. for re-investment by local authorities.

11.8.3 Incentives

Incentives will be useful in encouraging collaborative working, particularly in the setting and delivery of entitlements.

The Scottish Arts Council, COSLA, VOCAL and local authorities have advocated a form of incentivisation funding that would reward organisations or cultural planning partnerships for excellent service. Others have claimed such a system would exacerbate the current disparities. We believe incentive funding can be a valid and valuable way of encouraging good working practice and improved provision and would recommend its use where appropriate, being mindful of the caveats expressed.

Tax incentives

We elaborated earlier on our suggested tax incentives from the UK government. This is a specific area where the UK Treasury could assist cultural growth in Scotland. In addition we believe it is worth exploring the opportunities of encouraging business to invest in cultural and creative enterprises through tax incentives and relief. This may be in the form of reduced business rates (under local government control) or introducing national initiatives that are within the gift of the Scottish Executive's tax governance parameters, in return for business support channelled through cultural planning partnerships.

While we do not necessarily advocate the following submission we are reluctant to dismiss its sentiment:

"Perhaps an additional Culture Tax on individuals and companies, just like National Insurance funds the Health Service. Another 0.25 pence per pound per person, added to a corporate Culture Tax level would make a lot of difference."
Federation of Scottish Theatre submission

The Commission received many suggestions for an exploration of a tax or other incentive based scheme to encourage individual and corporate giving, many citing Goodison review recommendations. In 2004, the Goodison Review ¹⁶ recommended tax incentives for individual or group donors, whereby the gross value of gifts to museums should be off settable against income tax, in instalments over successive year if desired, eliminating any liability to inheritance tax and capital gains tax and also that corporations should be permitted to offset the gross value of gifts of pre-eminent objects against income before liability to Corporation Tax.

Glasgow City Council advocated rewarding local authorities who currently spend over the recommended GAE for culture on a pound-for-pound scheme. While we can see the attraction in this approach we believe it may well exacerbate the current levels of disparity and in some cases act as a disincentive to current low investors.

11.8.4 Capital projects

We believe there are ways in which current funding could be levered to a greater extent. New mutually beneficial partnerships between the cultural sector and commercial partners need to be explored. The development of the Scottish Youth Theatre's new office, rehearsal and performance space in central Glasgow is an excellent example of imaginative, opportunistic partnership working between a cultural organisation and a private developer. A similar example can be found in Barnet in London:

The National Lottery

Major capital investments in Scotland tend to come from mixed sources, with central government, national lottery and private donations making up the major sources. It is clear that each source acts as a powerful lever to encourage further donation. However, as we saw in Section 3, despite overall lottery revenue increasing for the last two years, National Lottery funding available to culture will decline. There is a clear requirement to develop sources of non-Lottery capital investment.

"The funding framework should include funding for capital projects for renewal and development of cultural assets. This should involve a range of funding sources such as the Heritage Lottery Fund, in addition to central and local government. This will be essential to ensure that cultural assets such as museums can meet changing public expectations in Scotland and internationally."
Scottish Museums Council submission

However, Lottery funding is still an essential part of the capital infrastructure of Scotland and any new infrastructure needs to ensure it is maximised. We outline in Section 10 how a strategic approach can be taken.

New ways of borrowing

New ways of spreading borrowing requirements over a set period, such as the PPP initiative, have been introduced with varying degrees of success. The most recent of these initiatives - prudential borrowing - is at too early a stage of development to advocate wholeheartedly. It does, however, seem to present a cost-effective option of funding major capital developments, although it is likely to be of relevance only to those buildings which are capable of generating a relatively significant level of annual revenue earned income.

Another area we believe is worthy of further investigation is that of public issue bonds as a method of involving the public (citizens) as well as the commercial sector in public sector capital investment. We understand the system is particularly prevalent in the USA and we have, as yet, found no legal reason why a similar method may not work here. Essentially, a public scheme is capitalised over a set period, say 20 years, and bonds are issued to the public which have a guaranteed albeit comparatively low rate of return. The benefits are the stability of the asset to the investor and the strategic deployment of exact repayments to the public sector.

11.8.5 Development of funds from overseas

The Commission is aware of the development of the Scotland Funds, a programme to involve the Scottish diaspora, initially in the USA, in the delivery and funding of charitable projects, which will address the issues of deprivation, education, cultural development and economic regeneration. The project is based upon the successful American Ireland Fund, which has raised $111m since 1999 ¹⁷ and is being promoted Jim Mather MSP with the support of the other members of the Scottish Parliament Cross Party Group on the Economy.

11.9 A catalyst for growth

11.9.1 Making the most of what we've got?

Our evidence suggests that we are not yet 'sweating our assets' as a country. This is possibly due to a number of factors: lack of appropriate knowledge or skills within the cultural sector, lack of awareness of opportunity within the private sector and a resilient subsidy mentality within the public sector.

"The commercial model of demand is far better than the paternalistic or subsidy junkie model."
Kilsyth International Carnival Society submission

Again, an international comparison is useful:

More support and advice needs to be provided across the sector to maximise the potential for revenue creation.

"All too often, cultural organisations do not have the financial resource to enable them to strive effectively towards autonomy. Funding bodies [ NDPBs] could provide an advisory service to encourage organisations to maximise their potential - i.e. not just rely on funding applications, but have a more proactive business plan which demonstrates a positive move towards more activities that generate income."
Diageo submission

There are a number of areas that offer the potential for revenue generation including hires/rental, advertising, equipment hire, corporate hospitality and entertainment; creative training and development; retail and merchandising. There are also other opportunities, such as affinity marketing. However, given the high value organisations place on their customer databases, this is a route that has not been exploited in the UK. In the USA, studies suggest that each name in a database could generate around $27 p.a. ¹⁸. From our evidence these are not currently areas being exploited by the cultural sector. We were attracted to one proposal that a challenge fund be established to encourage entrepreneurship.

The cultural sector has arguably been conservative in its approach to business, assuming what is wanted. We received several indications that educational based projects might be particularly well placed to benefit from private sector support.

"Arts and cultural bodies cannot force businesses to invest in the arts but they can become better at understanding and increasing the benefits that support for, and engagement with, culture can bring to sponsors."
Submission from The Royal Mail

The private sector needs to be viewed as a partner in cultural development and involved throughout project development. The increasing commitment to Corporate Social Responsibility may help develop private sector engagement.

11.9.2 An organisational solution

In Section 7.9. we proposed the need for bespoke financial and investment services to the cultural sector. We incorporated these into the Centre for Creativity proposals in Section 10, influenced to an extent by the experience of the work of UK's NESTA and Quebec's SODEC.

The range of services outlined in the section above convince us even more that such services, and such a body, are a prerequisite to successfully develop the levels of investment for the cultural sector required to fulfil the First Minister's aspirations. We strongly recommend its creation.

11.10 Recommendations

We recommend:

1) Acknowledgement of the scale of the current funding gap in capital and revenue provision at almost £100m, and a strategy to address it by the Scottish Executive setting a target of 1% of their annual budget as a floor for their allocation towards cultural provision.

2) An audit to re-define cultural assets of national significance, and a consequent investment of central government funds to support them.

3) Supporting the Goodison proposals to offer incentives for private giving.

4) Introducing incentives, including tax incentives, to encourage public and private sector investment.

5) That a systematic audit to re-define collections and organisations of national significance is undertaken, and implemented with phased support of £20m.

6) The creation of a body to provide bespoke financial, investment, advice and brokerage services for the cultural sector.

« Previous | Contents | Next »