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“Cultural levelling up”: Behind the government's arts funding dilemma

At times almost half of ACE grant money has gone to the capital (Alamy)

11 min read

The 2023-2026 round of Arts Council England funding provoked debate after clear winners and losers emerged from the process. But in tough economic times, what does fair distribution of cultural funding look like? Andrew Kersley investigates.

London’s Gate Theatre has always seen itself as a “talent incubator”. Many of the brightest and best of the country’s theatre scene, from Paterson Joseph to Kathy Burke and Jude Law, have come through its doors at some point. 

Now it’s facing closure. In November, it was informed that it would be losing 100 per cent of the grant it had been receiving from Arts Council England (ACE) for over a decade.

That grant had made up 45 per cent of its income, and had allowed it to stage more of the risky, early career theatre that would struggle to make huge commercial income elsewhere. Now its managers are reliant on receiving transitional funding from the Arts Council to keep them going while they work out what happens next.

“We were at a delicate moment, with a move to a new borough, leadership changes and applying for the new round of funding,” says chief executive Nicola Clements. “Now we have to consider what the world loses if the Gate shuts. I don’t want to be the CEO to close the Gate.”

It’s far from the only case. The 2023-2026 new round of Arts Council England grant funding has seen a large number of organisations in London in particular miss out in an effort to “culturally level up”. Most people know about the shift because of a bungled proposed move of the English National Opera (ENO) to Manchester that made headlines back in November. But what happens next, for the ENO and the rest of the United Kingdom’s entire creative arts sector, could shape the future of the biggest cultural industry in Europe.

“I think it’s pretty shocking that we’ve had 11 culture secretaries in the last 10 years”

The problem is an obvious one – at times almost half of ACE grant money has gone to the capital. And while culture has always been London-centric, that existing divide was only worsened by the years of austerity – the Arts Council’s £341m a year grant-in aid budget is 30 per cent and 50 per cent of its real-terms value in 2010, while cash-strapped local councils have cut arts spending by £860m, or 38.5 per cent, in real terms in that time.

That all particularly hurt culture outside the capital, where organisations struggle to attract alternative income from tickets or wealthy donors. The cuts to council funding have also meant that the Arts Council is basically now the only option to help redress the balance. One estimate suggests £700m extra needs to be spent on northern England to redress its imbalance with London.

And so the government response – increasing ACE investment outside London by 21.8 per cent in the latest ACE funding round alongside an extra £594m in the latest levelling up fund to “restore local heritage sites” – makes some sense. “Culture has an instrumentalist force; it can make a place somewhere people want to live in, work in and invest in,” explains Lord Neil Mendoza, the government’s commissioner for cultural recovery and renewal.

But the problem is more complicated than it first seems. The concentration of cultural institutions in London has its benefits, for one thing. The agglomeration of so many bits of culture in one place not only forms the basis of the global prestige and tourist appeal of the capital, but massively increases the impact on the wider economy. The West End, for example, has the size and global impact it does precisely because of how concentrated it all is, rather than spread across disparate towns and cities.

So the “100 million dollar question”, as one interviewee put it, is that given that it seems unlikely that council or Digital, Culture, Media & Sport (DCMS) budgets are going to skyrocket back to 2010 levels in coming years, how do you make redressing the imbalance a non-zero-sum game? How do you subsidise industrial museums in Manchester or historic steam railways on the York Moors, without places like the Gate having to lose out?

For a lot of those The House spoke to, that issue was embodied by the ongoing drama around the ENO’s potential move to Manchester.

“I think we are already in a period of managed decline”

Back in November, it was revealed that the organisation’s entire annual £12.8m grant was set to be scrapped if it didn’t move outside of London – something reportedly done at the direct request of former culture secretary Nadine Dorries (though this is contested by those in government).

The ENO itself, which had spent the last few years trying to reform its management and increase its reach outside of the capital, was blindsided by the decision. The organisation’s chair said the move would force it to shut down permanently. In Manchester too, a city already served by its own successful opera company (Opera North), the reaction was equally confused. Mayor Andy Burnham even said the ENO “doesn’t understand us and therefore it doesn’t deserve to come here”.

As it stands, it seems the ENO has received a seeming stay of execution, after it was reported in January that it would be getting a £11.46m fund from the Arts Council to sustain its work in London for the next year, before any future move out of the city.

When The House asked DCMS, The Arts Council and various politicians what was going on behind the scenes with the ENO move, we received three completely different answers. But there was a sense among many we spoke to that the ENO drama reflected the kind of lose-lose scenario where “cultural levelling up” would harm London’s cultural scene, while failing to actually help the regions it was moving to.

“I think the way that the government have done it is very heavy-handed,” says crossbench peer and composer Lord Michael Berkeley. “It’s like using a sledgehammer to crack a nut.” Mix that uncertainty with the fact that a shift is coming as a result of the cost of living crisis, and the after effects of Covid and Brexit stopping many groups from touring, Berkeley says, and you risk endangering the whole ecosystem.

For its part, the government is less concerned about the risk. “Whenever you have a fund, and you have bidders, in any field you have winners and losers,” as Lord Mendoza put it to The House, before adding that more than three times as many organisations received first time funding in the latest round than saw their grant disappear. “Perhaps, you can go more slowly. But if you want to make a difference then you need to go fast.”

Many we spoke to were concerned that there was a lack of coherent culture strategy from central government. Stories like the ENO decision or the potential closure of the Oldham Coliseum after losing its Arts Council grant (despite being in a priority location for the government’s Levelling Up Fund), encouraged this view.

“I think it’s pretty shocking that we’ve had 11 culture secretaries in the last 10 years,” as one former minister put it. “Culture is still seen as a stepping stone to other things in politics. So I don’t think the government takes it seriously, by any stretch of the imagination.” Before it lost the digital element of its remit (which happened when this issue was being published) DCMS held the ignominious record of having the highest churn rate of secretaries of state of any ministerial department since the Conservatives won power in 2010. There had been more culture secretaries since 2014 than in the department’s entire 31-year history.

Without a wider strategy, the worry for many is that the changes in ACE grants won’t come in conjunction with other kinds of spending – education, transport links, infrastructure, as just a few examples – that are needed to ensure new cultural investment actually helps an area.

“You can’t just suddenly say ‘alright, we’ll give this company so much, and we’ll take it from that company’, it’s not as simple as that. You have to have all kinds of things feeding into it,” as Lord Berkeley puts it. “It’s like a plant. You have to put the roots down and let them travel, and only then does it bear fruit.”

And there’s certainly a good list of cases where it’s gone wrong. Take The Public arts centre in West Bromwich, which was supposed to be part of regional regeneration, but was labelled a “monument to ill-conceived ambition” and ended up closing in 2013, just five years after first opening.

One idea that has proved increasingly popular with everyone from Gordon Brown to various think tanks, and not ruled out by the government, is actually devolving those culture spending powers to the regions (as is already somewhat the case in the nations).

“The government was slow to support freelancers and arts venues during the pandemic, and now the cost of living crisis is biting hard, with no prospect of extra funding for the creative industries,” West Yorkshire Mayor Tracy Brabin told The House. “Complacency and a failure to support and invest in this area, which outperforms most others in terms of growth, is a short-sighted, wasted opportunity and puts the sector at risk.”

Brabin has been a big proponent of devolving cultural funding since her election, which she fought on the basis of funding the region’s growing cultural industries and creating a “cultural economy”. West Yorkshire is currently the UK’s fastest-growing creative sector outside of London, adding about £2bn to the local economy.

“The best way to make most decisions is on the ground because you can maximise your investment by making sure it works with other pots of local funding,” says Ben Cooper, a senior researcher at The Fabian Society who penned a report for the organisation looking into how to break London’s cultural stranglehold. “A centralised system of funding can’t do that best because they don’t know what the local community needs.“

Another added benefit to devolving culture budgets is that it would circumvent the eternal problem of increasing investment being blocked by the Treasury. Many of those The House spoke to said arts and culture funding in particular was at risk of the issue – while it can have a transformative impact on the local economy it is often in a way that can be much less obvious, direct and immediate than, say, subsidising a new factory. “The Treasury aren’t equipped to think about those kind of wider or long-term benefits,” says Jack Shaw, a senior research fellow at the Institute for Public Policy Research. “They are more equipped to talk about jobs… But that may not, for example, be the thing that give meaning to a place, or allows it to thrive in the long term.”

Whatever the solution may be, the stakes are already high. Hundreds of theatres, museums, galleries, music venues shut down in the years before and during Covid. Now, nine in 10 of the theatres, museums and other heritage sites that are still open fear for their future amid staff redundancies and sky-high energy prices.

“For grassroots arts and culture, I think we are already in a period of managed decline and now there’s a possibility it could turn into a doom loop,” says Cooper. “What’s the impact of that going to be? Well, we’re not going to know for some time.”

The DCMS was contacted for comment.

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