Select Committee on Culture, Media and Sport Appendices to the Minutes of Evidence


Memorandum submitted by the Department for Culture, Media and Sport


  DCMS welcomes the Select Committee's interest in the reorganisation of the Arts Council of England and the capital development projects of the Royal Shakespeare Company and the South Bank Centre. This memorandum sets out our views on all three subjects.



  1.  The Arts Council of England is a Non-Departmental Public Body of the Department for Culture, Media and Sport responsible for the distribution of Grant-in-Aid and Lottery funding for the arts. It is reorganising the arts funding system in order to reduce bureaucracy within the system, make administrative savings and increase the amount of funding distributed at a regional level. The Government endorses these aims and is monitoring this process closely to make sure that they are achieved.


  2.  The Arts Council published its proposals to create a single arts funding and development organisation in Prospectus for Change on 15 March 2001. That document proposed a new system of support for the arts in England through a new, single, national body that would assume the functions of the present Arts Council of England and the 10 independently constituted Regional Arts Boards. Following the publication of the Prospectus, consultation took place with the Regional Arts Boards and regional partners including Regional Assemblies, Regional Development Agencies and local authorities. The Arts Council subsequently published its follow up to the original Prospectus, Working Together for the Arts, on 16 July 2001. This was followed by a three-month consultation period.

  3.  Building upon the responses received through the second consultation exercise the Arts Council produced a Draft Transfer Proposal in November 2001. This document set out the basis on which Regional Arts Boards were to be asked to finalise their decision to commit to the new, single arts funding and development body for England. The document addressed issues that had been raised by the Regional Arts Boards and was intended to provide the assurances necessary for them to agree to the transfer of assets and staff to the new organisation.

  4.  In January 2002 the Arts Council produced its final Transfer Proposals based on the feedback from Regional Arts Boards on the Draft Transfer Proposals. The Regional Arts Boards have now all considered these proposals and have formally agreed, in principle, to the new, single arts funding and development body for England by transferring their staff and assets to the new organisation.

The Government's View

  5.  The proposed reorganisation is an internal matter for the Arts Council which operates at arm's-length from the Government. The Government's aim is that the new organisation delivers real benefits for the arts and artists. The Arts Council has been trying for sometime to reduce the level of bureaucracy involved in the funding of the arts and the Government also wishes to see a more streamlined and less bureaucratic system.

  6.  The Arts Council's Draft Transfer Proposals were assessed by the Department for Culture, Media and Sport and on 21 December 2001 Baroness Blackstone, Minister for Arts, wrote to the Chairman of the Arts Council firmly endorsing the direction the Arts Council was pursuing in building a new, single arts funding and development body for England (copy of letter attached).

  7.  The Government continues to monitor closely the progress of the Arts Council as it implements its plans for a single organisation for arts funding. It has emphasised it wants to see administrative savings throughout the system allowing increased funding for arts organisations and leading to greater scope in the regions to award that funding in the light of regional priorities.

  8.  The Government believes that this is a sensible way of giving greater power and responsibility to the regions whilst retaining the arm's-length principle of arts funding. In the new funding system, the regions will receive increased funding; they currently receive approximately 40 per cent of all Arts Council funds, in the future it is proposed that they will receive over 70 per cent. They will also retain the autonomy to decide how to apply those resources within a national framework. There will be greater regional accountability by increasing the number of Local Authority representatives on the Regional Councils from two or three to six (two-fifths) and each Regional Council will be represented on the National Council by their Chair. The proposed system preserves the arm's-length principle under which the arts have been funded for over 50 years and, which would be removed if funding were managed by central or regional government. The reorganisation is about transferring power to the regions, while at the same time strengthening links with what will become a smaller, more efficient central National Office. This strengthened national and regional role will deliver a more responsive service to artists and audiences throughout the country.

Regional structures and legal context

  9.  The current Regional Arts Boards are independent, charitable companies which are not directly accountable to Parliament. Their role is to distribute arts funding, to develop and provide advocacy for the arts within one of ten regions. The majority of their funding comes from the Arts Council but they also have access to other funding via local authorities and the Regional Development Agencies. The relationship with the Arts Council is formalised in an annual funding agreement. They are distinct from the Regional Cultural Consortiums, which have a broader remit that include the arts, sport and tourism. For information, a Memorandum on the Regional Cultural Consortiums is attached.

  10.  The Arts Council is also a charitable body incorporated by Royal Charter. In the proposed reorganisation it will become the National Office of the new funding system and will take on the assets and staff of the 10 Regional Arts Boards. It will have a supplemental Royal Charter to reflect the new regional role as well as a new Council in order better to represent regional interests.

  11.  According to the Arts Council proposals, the 10 independent Regional Arts Boards will be replaced by nine regional offices of the new National Office called Regional Arts Councils. These Regional Arts Councils will each have a director line managed by the Chief Executive of the National Office and a chair who will represent the region on the National Council.

  12.  The mechanics of moving to this position are as follows: The old Regional Arts Boards have agreed, in principle, to pass over their assets and staff to the Arts Council from April 2002. They will continue to exist as shadow organisations until such time as a process of due diligence has determined that they have no further liabilities. The supplemental charter will take effect in April and, in May, a new Council will take control of the organisation following appointment by the Secretary of State.

  13.  All staff of Regional Councils, or those with a fixed term contract of 12 months service, will be eligible to TUPE transfer. The new organisation will adopt a standard set of terms and conditions over time as staff move on or are replaced. The Government has no direct responsibility for the staff, they are the responsibility of the Regional Arts Boards and, from the time of hand over, the Arts Council, which is independent of Government. Under the Arts Council's Financial Memorandum the DCMS does have control over some terms and conditions and the annual pay negotiating remit.

  14.  The Government requires that the new National Council reflect the nine Government Office regional boundaries when setting up the Regional Councils. This should enable those seeking arts funding or advice greater access to alternative sources of support for their work. The new Regional Councils will work closely with other regional bodies such as Regional Development Agencies and Regional Cultural Consortia who will also be invited to nominate potential members of their boards.

The Business Case

  15.  The business case for the reorganisation is not based solely on administrative savings. A single organisation will be simpler, more streamlined and easier to manage than the complex system currently in place. This will improve the service to customers, create closer links between policy and implementation and speed up decision-making. In addition, the Government expects to see administrative savings. The target for these has been set at between £8 million and £10 million. Detailed work on the new structure of the organisation will start as soon as staff and assets have been transferred from the Regional Arts Boards to the new National Council; it is not until this stage that an accurate assessment of administrative savings will be possible. At that time the Government will monitor the restructuring to ensure that the administrative savings are not made at the cost of quality of service.


  16.  The Grant-in-Aid allocation for the Arts Council is shown below:


£237.2 million
£252.2 million
£297 million
£336.8 million

Next Steps

  17.  The Regional Arts Boards have now all agreed, in principle, to transfer their assets and staff to the new organisation. The Government wishes to see the new organisation in place as soon as possible. A supplemental Charter, which will underpin the new organisation, will be submitted to the Secretary of State for her approval and representation to the Privy Council by the end of March. The Secretary of State will also appoint members to the new National Council by the end of April. Once the new organisation is in place the Arts Council will submit plans for the internal restructuring which will crystallise the requisite savings. The Government will continue to monitor the process towards delivering improved value for arts organisations and the public.

ROYAL SHAKESPEARE COMPANYRelationship between DCMS and the Royal Shakespeare Company

  1.  In common with other bodies funded by the Arts Council of England under the arm's-length principle, the Government plays no role in determining levels of revenue or capital funding for the RSC. We expect the Arts Council to scrutinise and support its activities in a rigorous and effective manner. However, as one of our principal national companies, the RSC plays a vital role in the delivery of the Government's objectives for the arts. Its wider cultural impact is also recognised in education, tourism, culture-led regeneration and perceptions of Britain abroad.

  2.  The Government therefore properly takes an interest in the activities of the company, in its plans to redevelop its Stratford home, and the major strategy for change on which it has recently embarked. We champion the work of the RSC and other arts organisations within Government, and seek to ensure greater recognition of the contribution of the arts to education, social inclusion, community development and economic prosperity.

Views on the RSC's strategy for change

  3.  Recent changes in the RSC's leadership at board and management level have refocused the company's priorities, though of course Adrian Noble's ongoing personal contribution remains key to the success of the organisation. The Government supports the broad thrust of the strategy for change announced by the RSC last year. In particular, we welcomed the commitment to: develop new audiences and new opportunities for artists by performing in new venues; strengthen touring work to enable as many people as possible, and in particular young people, the opportunity to experience the RSC's work; to strengthen education work; and to develop young talent—whether in acting, writing or the technical professions. As one of our strongest cultural ambassadors, we also welcomed the commitment to pursue international partnerships which build on the high profile and positive reputation the company enjoys abroad.

  4.  While endorsing the admirable goals the RSC has set itself, however, we recognise that this is an ambitious agenda, and it will take sustained and focused efforts by the entire company—artists, professional and technical staff, board and management—to deliver it effectively. There are risks of raised expectations and criticism from those who are resistant to change for a variety of reasons. Throughout this process the RSC will need to ensure its audiences continue to be offered the highest artistic standards, and that the interests of its many stakeholders can be effectively reconciled. In terms of resources, we will continue to work with the Arts Council to reward excellence throughout the arts, but that does not mean that the national companies will be rewarded at the expense of smaller organisations. Even with the additional funding for the arts which has been secured for the next three years, we will not be able to remedy in full the effects of the chronic under-funding of the last two decades.

  5.  The RSC's ambition to engage new audiences and to break down the perceived exclusiveness of theatre is at one with our policies on social inclusion and access. Performing in London venues such as the Tricycle and the Roundhouse will open up the whole experience of theatre to new audiences. This does not mean, however, that its core audience of passionate and committed theatre-goers should be abandoned. The goal should be to increase the audience overall, not to exchange one for another. Artistically, we recognise the need for the RSC and other arts organisations to take risks. Not all of their planned activities will succeed. Indeed there would be grounds for suspicion if anyone in the arts claimed a 100 per cent success rate. Great art is rarely achieved at the first attempt, and a number of failed endeavours will often precede success. Judgement on whether the RSC's changes to artistic programming are a success or not will only be possible once they have been allowed to run.

  6.  It is vital that the RSC continues to strive for excellence with consistently strong productions. Much of the RSC's work reflects the ideas set out in our Culture and Creativity Green Paper and there is certainly a valuable role for the RSC to play in Creative Partnerships, which will give school children and their teachers the opportunity to explore their creativity by working on sustained projects with creative professionals.

Views on the proposed Stratford Development

  7.  The proposals for the Stratford development are both exciting and ambitious. We recognise that this is a once in a generation opportunity to address the shortcomings of the site and to provide an experience which artists and audiences deserve and expect in the 21st century. The prospect of National Lottery funding has enabled the RSC to develop a vision, which is both radical and deliverable. Although they have sensibly planned around a long timetable, it will be important to sustain a positive momentum to the development. There is a great deal of goodwill for the RSC to succeed, as the successful achievement of the plans for the site will not only benefit the company, but the whole of the local and regional economy. Any development of the site must of course maintain a proper balance between public and commercial interests, and take proper account of the historical significance of the site. We welcome the wide consultation the RSC has undertaken so far, and believe that while a consensus may prove difficult to achieve, it will continue to be important for all the stakeholders in the development to be properly involved at each stage.

  8.  We welcome too the close collaborative relationship which has been forged between the RSC and the Arts Council on this project, and we believe this has already enabled the RSC to avoid some of the pitfalls which have beset other Lottery capital projects. £50m is obviously a significant sum to allocate to a single project, and the Arts Council has rightly been rigorous in its assessment of the project so far. The Arts Council now has a great deal of expertise in this area and we are confident that they will be diligent in ensuring that funding is not released without the necessary assurances of what realistically can be achieved within the proposed budgetary projections. It is for the Arts Council to opine on the feasibility study, and we would not want to anticipate the outcome of that process at this time.

  9.  DCMS' role in this process is to ensure that wherever possible, we can identify any potential risks at an early stage and keep other key stakeholders focussed on the issues. For example, it is imperative in the case of the Stratford development that transport and other infrastructure issues are addressed effectively through a joined-up approach by local and regional government and DTLR. We can help to secure this approach.

  10.  Much of the feasibility study centres on the future of the 1932 Elizabeth Scott listed II* Royal Shakespeare Theatre. We recognise the many shortcomings of the current RST. The RSC's preferred option would involve demolition of the building. Given our statutory responsibilities for listed buildings we do not propose to take a view on this issue at the present time. Should that continue to be the preferred option we will take a view in the light of advice from English Heritage and all other relevant parties at the appropriate time.


Relationship between DCMS and the South Bank Centre

  1.  In the relationship between the DCMS and the South Bank Centre (SBC) is consistent with that we have with the other national companies. As bodies funded by the Arts Council of England under the arm's-length principle, the Government plays no role in determining levels of revenue or capital funding for the SBC. We expect the Arts Council to scrutinise and support its activities in a rigorous and effective manner. However, as one of our flagship national arts organisations, the SBC plays a key role in the delivery of the Government's objectives for the arts. It also plays a wider role in the cultural life of London and the nation. Furthermore, in accordance with the South Bank Centre Trust Deed, appointments to the Board are made by the Secretary of State for Culture, Media and Sport. The Government therefore properly takes an interest in the activities of the SBC and its redevelopment plans.

The Government's views on the South Bank Centre development

  2.  The redevelopment of the SBC is one of the biggest capital projects ever tackled in the arts. It is a highly challenging project, but it is a challenge that cannot be shirked. The Government believes the South Bank Centre has the potential to be the best cultural centre in the world, with world-class architecture, providing a varied programme of arts and film for a local, national and international audience. It should also be a model for culture-led urban regeneration, in common with the wider South Bank, from the London Eye and National Theatre to Shakespeare's Globe and Tate Modern, providing a cultural hub which will attract tourists from all over the world, with people using it almost every day of the year.

  3.  The range and quality of the arts at the South Bank Centre stands comparison with the very best anywhere. The diversity of its audiences is equally impressive. It also has an exceptionally strong education programme, which covers all ages from pre-school onwards, and responds to the needs of an enormously diverse local and regional community. The SBC has in our view probably been guilty of under-selling its educational achievements in the past.

  4.  However, despite the strength of the artistic and educational programme, the artists, audiences and wider public are poorly served by the buildings, public spaces and infrastructure which have deteriorated over the last half century. We agree with the South Bank Centre's diagnosis of the problems facing the site set out in their Memorandum to the Select Committee.

  5.  We believe all the key stakeholders share our aspirations for the SBC, but various attempts to redevelop the site have foundered and realising its potential remains a major challenge. Rick Mather's masterplan was rightly commended for its vision, and some welcome progress has been made over the last two years, but as with its predecessors, progress has been limited by planning and funding difficulties and the absence of a consensus on the way forward among the South Bank Centre's many stakeholders. To overcome these problems, the SBC needs to exercise leadership and to work in partnership with the full range of stakeholders.


  6.  The first issue which needs to be gripped is the leadership of the organisation. The pace of progress on the SBC development over the last two years has not been as slow as some critics would have us believe. In particular, improvements to the public spaces around Jubilee Gardens and the Royal Festival Hall have started to make the site more hospitable. Nevertheless, progress has been slower than we would have liked, and this has not been helped by the unfortunate illness of the former Chairman, Elliott Bernerd, who resigned last month. In his absence, exacerbated in the last few months by the absence of a Chief Executive, the two Vice-Chairmen, Maya Even and Edward Walker-Arnott, have done a sterling job in leading the organisation, and we are very grateful to them for doing so. To move forward, however, the SBC now needs to have both a Chairman and Chief Executive who have the skills and energy to tackle the challenges of both the development and the day to day operations of the organisation, and to deliver a high quality cultural programme in a fitting environment.

  7.  Following Elliott Bernerd's resignation on 15 January, and given the ongoing recruitment process for the new Chief Executive, it was important to identify a new Chairman quickly, not least to counter any perception of drift. On 18 February we announced the appointment of Clive Hollick to succeed Elliott Bernerd as Chairman of the South Bank Board. We believe Clive Hollick has the skills and qualities that will be required to lead a difficult and demanding project, by leading the organisation effectively, securing the success of the development and delivering an outcome of which the nation can be proud. His extensive record of success in the public and private sectors is testament to his ability, and his combination of business expertise, strategic vision and focus on delivery will be of enormous value to the South Bank Centre and its stakeholders. His first priority will be to appoint a new Chief Executive. Identifying the right individual will be vital to the future success of the SBC and the development.


  8.  One of the recurring obstacles to the various development plans has been a failure to secure the funding necessary to realise the vision. A more pragmatic approach is needed which involves a vigorous fund-raising campaign, while phasing the development so that it is not an all-or-nothing approach. The proposal to press ahead with the refurbishment of the Royal Festival Hall, developing the rest of the site thereafter as resources allow, seems sensible to us.

  9.  The Arts Council and Heritage Lottery Fund have already earmarked significant sums of Lottery funding for the SBC development. We hope that this will be supplemented by Single Regeneration Budget and Section 106 funding, an appropriate level of commercial development on the site, and additional funds from private donors. Rigorous budgeting and financial control will be essential to the success of the development. We believe the Chairman and board members should take a hands-on approach to fund-raising. This is not something that should be left to the executive management alone.


  10.  We are not in a position to comment on the detail of the various planning applications, nor on the way they have been handled by the London Borough of Lambeth. We would make two observations on the planning process, however. First, we have noted that English Heritage considers the conservation plan for the Royal Festival Hall to be a model of its kind, and that it has also accepted the case for the liner building which will form an intrinsic part of the refurbishment of the Festival Hall.

  11.  Second, the SBC undertook a commendably extensive public consultation exercise in 1999. Rick Mather's Masterplan and subsequent planning applications have taken full account of the views expressed by local residents. We disagree with the contention that consent for the liner building will in itself prejudice any subsequent application on the rest of the site. Such arguments simply perpetuate the Catch 22 situation, which prevents any phased development on the site. We hope that whatever the cause of the delays thus far in deciding on the various planning applications, LB Lambeth will very soon be able to give the consents necessary to proceed with the refurbishment of the Royal Festival Hall.

Working in partnership

  12.  There are an unusually large number of stakeholders in the South Bank Centre development. We agree with the Arts Council that there is an important role for the new SBC Chief Executive in driving forward the development with the collaboration of those stakeholders. While a consensus on the way forward would be desirable, it has become increasing clear that progress will only be made through compromise and we would call upon all parties to pursue a constructive dialogue where consensus cannot be found. As noted above, we would in particular welcome any move to unblock the planning process. Securing a consensus among all these stakeholders will not be easy, but as we do not regard maintaining the status quo to be a viable option, DCMS will support the SBC in seeking to broker consensus where necessary.

Next steps

  13.  We have asked Clive Hollick to report to us within three months of the Chief Executive taking up post on his plans for completing the development and reinforcing the SBC's artistic programme through a focus on excellence, education and broadening public access. Thereafter, we will work with the SBC, the Arts Council and the other key stakeholders to complete the successful development of the site.

March 2002

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