Blog/22/6/10
Piggybankgate
I have to say that I am no closer to finding out precisely why the Arts Council’s reserve fund is down from £18.4m to only £2.4m having been permitted by the DCMS to use £9m to offset in the in-term cuts of £19m. Where is the missing £7m? When I asked Alan Davey, he said he had no idea, I’d have to ask the DCMS. I did: “The £7m was from reserves built up by ACE over many years. These are public funds and, given the current climate, are now being used to meet the department’s contribution to the wider government deficit reduction plan” I was eventually told.
It is public funding, but it is dedicated public funding, even though the Arts Council has been forbidden to use it on several occasions when it has asked the department, as it is obliged to. This is because of arcane and complex Treasury rules which mean use of reserves held by non-governmental public bodies has to be covered by other funds held by DCMS. ACE’s reserve was created in 2003 from £10m accrued when the regional arts councils merged with the national body in 2002, and has been added to by interest and other contributions. Some of the money that came from the regional arts councils, for instance, was gifts, bequests, and earnings – what proportion of the reserve was actually public funding and what was not isn’t clear.
The first question is, if ACE had not agreed to the £7m being used, would Treasury/DCMS have allowed the £9m to be used to soften the blow to the “front line services” Jeremy Hunt said would not be affected, or would they now be facing a 3% cut instead of 0.5%? Secondly, if it is really a DCMS fund for it to use as it or the Treasury sees fit, why has it been left with the Arts Council? The third question is, what of other reserve funds accumulated by arts organisations like the national museums, the Royal Opera House and the Southbank Centre – is that money available “to meet the department’s contribution to the wider government deficit reduction plan”, or on the other hand will their grant-in-aid be reduced pro rata? The fourth is, if the reserves are, indeed, devoted to the cultural organisations that have built and hold them, what does this say about the endowment funds the culture secretary is urging arts organisations to create – will they be “public funds… to meet the department’s contribution to the wider government deficit reduction plan” too?
At their press conference last week Alan Davey and Liz Forgan put a brave face on the whole thing, and played the straight bat vital if they are to have any kind of relationship with the Jeremy Hunt and Ed Vaizey after this, but they must furious. I gather that Davey has insisted that £5m of the £7m estreated in this way gets returned in the spending review, but how will we be able to tell?
And the point is…
Meanwhile, A&B have asked me to point out that ACE had it wrong when they announced that they had been deducted £200,000, and there might be an insight here into what can go wrong in public finance. ACE announced a £0.2m cut having rounded up to the nearest decimal point from £0.16m. That might be all right for the Treasury working in their billions, trillions and gazillions, but in the arts the difference of pence can be crucial. So, for the record, A&B have been deducted £1,600,000 of 4%, not £2 million which would be 5%.
