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


Supplementary memorandum submitted by the Arts Council



  You asked for information about those organisations receiving lottery funding which have gone over budget. We have taken this to mean those organisations who have been awarded additional funding from the arts lottery fund in order to enable the completion of the project. Of the 1848 projects in our first Capital Programme, 56 have been awarded supplementary funding from the lottery. In financial terms, this means £99,407,869 of additional lottery funding for a programme whose overall budget stands at almost £1.2 billion.


  In March 2001 the Arts Council of England took the decision to move to a single organisation to support the arts by merging with the 10 Regional Arts Boards. At that time, on the basis of an analysis of the savings likely to result from amalgamation and rationalisation of 11 separate organisations into one single body, we calculated that a reasonable target of £8-10 million could be set. In estimating this figure, we took into account the current administration costs of the arts funding system of £36 million. We took the view that savings in the region of 25 percent on this figure was achievable. I must emphasis that this was a target set by the Arts Council of England and not the DCMS. It remains a serious target which the Arts Council of England will test as we develop and implement the restructure.

  There is no detailed structure for the new organisation available ahead of amalgamation, which is due to take place on 31 March 2002. There are extremely good reasons why it was not possible to do this:

    —  Clear legal advice (laid out in Annex 18 of the Transfer Proposal) states that the design of the new organisations structure should be undertaken separately in time from the TUPE transfer. The advice was that the design process should precede or follow transfer. Were they to be pursued simultaneously, any causal links between transfer and changes to employees terms and conditions of employment could entitle members of staff to resign and claim constructive dismissal;

    —  However, ahead of transfer, it was not sensible to expect 11 different organisations, some of which had previously expressed strong objections to the reorganisation in principle to devise a set of detailed proposals that represent the best possible solution for the future, nor to do so in a reasonable time-frame;

    —  On that basis, it was the logical choice to aim for transfer as a first step, and to complete the restructuring as rapidly as possible thereafter, with the considerable benefit of shared aims and objectives, involving all interests fully in the task and with unified consultation structures. There is of course an onus on the new organisation to reach conclusions rapidly to give staff a clear indication of their individual prospects.

  This is laid out in Annex 20 of the Transfer Proposal which gives further background to the savings target. The Transfer Proposal, which I believe reflects extensive business planning, also provides clear and explicit assurances of the basis on which the restructuring will be undertaken. The detailed design of the new organisation will being from 1 April. We remain confident that we will reach the £8-10 million target. We will keep the Committee informed of how we are progressing towards this target.


  Please find a further attachment which I hope goes some way to answering the questions raised in your final paragraph.

12 March 2002

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