Mark Pemberton: A tough financial climate just got tougher

It is time for us to have a grown-up conversation about the impact of cuts. The government &#8210 the Department for Culture, Media and Sport in particular &#8210 needs to stop peddling the line that everything will carry on as normal, and the cuts will make no difference. Equally, arts organisations need to stop lobbing insults at ministers. Let’s just be honest: if you cut funding, there is inevitably going to be a decrease in activity.

Arts organisations run on lean management, and there is no fat to cut. In the case of orchestras, most expenditure goes on musicians, and as William Baumol’s ‘cost disease’ analysis explained in the 1960s, orchestras cannot generate productivity or efficiency savings as the repertoire demands a fixed number of musicians. We can’t, as John Whittingdale, chair of the Culture Select Committee, put it to me, ‘just play smaller symphonies’.

As the cuts bite, it’s the musicians who are getting squeezed, and the structural deficit inherent in the business model is in danger of growing, threatening orchestras in the same way as in the 1990s. And in-year cuts are harder for orchestras, operas and ballet companies to implement, as they have to plan two years ahead and have already committed to their artistic programme and ticket pricing.

“The DCMS is seen as low-hanging fruit, an easy target”

We accept that the arts will not be immune from cutbacks to public expenditure, but the arguments around public funding for the arts being ‘investment’ rather than ‘subsidy’ are well-rehearsed. The benefits to jobs, growth, tourism, heritage, urban regeneration, rural communities, well-being, education, civic pride and social cohesion, along with economic impact, need to be properly researched and used by the DCMS to argue the case for the maintenance of Treasury funding, at least at current levels. After all, the Department for Business Innovation & Skills provides Grants for Business Investment to remedy market failure &#8210 proving this government is not opposed to the idea of public investment where it understands the case for it.

However, I have every fear that this is not the last of the cuts. The DCMS is seen as low-hanging fruit, an easy target when other departments such as Education, Health or Defence are putting forward strong arguments for maintaining current levels of funding.

It is now more important than ever that the DCMS and Arts Council England develop a strategy for dealing with local authority cuts. Misery for all may not be the most appropriate option when some organisations are more dependent on local authority funding than others.

Ministers’ declarations that cuts to the arts are offset by the increase in lottery funding are disingenuous: Arts Council National Portfolio Organisations cannot apply for Grants for the Arts, and large amounts of lottery money are, in line with the principle of additionality, being spent on the Catalyst programme or packaged up into ‘commissioned grants’ to deliver specific objectives. What lottery money cannot do is replace the cuts to the core support for Arts Council NPOs.

What we have learnt from the recent wave of digital initiatives (explored at length at the recent ABO Conference) is that this is not likely to create a viable source of income. The significant up-front costs are not going to be offset by the marginal income stream. The digital dividend for arts organisations is extending reach, not monetization.

Finally, at the ABO/A&B fringe event at the Conservative Party conference last October, the Secretary of State for Culture said that arts organisations ‘have to get better at asking’. Where is the evidence that our fundraisers are not good at asking? It would be great if DCMS ministers could stop giving the impression that they think arts fundraisers are bad at their jobs. It is demoralising, and will make recruitment and retention even harder. It also looks like we are being set up to fail. If we don’t achieve the step-change the DCMS are expecting of us, they will point at the Catalyst programme and the three reports they have published, and say it is all our fault. Let’s instead praise our arts fundraisers. They are doing a tough job in a difficult funding climate, and this week what we already knew was confirmed: it will be getting tougher.

Mark Pemberton is director of the Association of British Orchestras.