Funding of the Arts and Heritage - Culture, Media and Sport Committee Contents

3  Heritage funding

149. When we were drawing up the terms of reference for our inquiry, we decided to include both arts and heritage. There are many similarities between the two sectors, including dual funding from Government and National Lottery funds; the distribution of Government grant-in-aid by arm's length bodies; and recent cuts to these budgets.

How heritage is funded

English Heritage

150. English Heritage, established in 1984, is an arm's length body that performs multiple functions: statutory advisor to the Government; designator of heritage assets; technical research and advisory organisation; grant giver; property manager; and membership organisation.[130] It operates at a national level and at nine regional offices and a large number of individual visitor sites (such as Stonehenge).

151. The organisation's budgetary position has deteriorated in recent years. Grant settlements since 1997 have been below inflation resulting in a real terms reduction of £130 million. English Heritage also considers itself disadvantaged by comparison with DCMS support for sports and arts. In the last ten years Arts Council England's budget has increased by 90% and Sport England's by 182%, while English Heritage has been subjected to an 11% cut.[131]

The Heritage Lottery Fund and the National Heritage Memorial fund

152. In 1994, the National Heritage Memorial Fund (NHMF) and its Trustees were given the major task of distributing the heritage share of Lottery money for good causes, which it now operates through the Heritage Lottery Fund (HLF). Both the NHMF and the HLF have wide remits to contribute to safeguarding heritage in the form of collections and objects as well as buildings and landscapes, and operate over the UK as a whole. In the case of the NHMF this is often in the form of emergency acquisitions for the nation, such as the recent retention of the Staffordshire Hoard in the West Midlands, and is the only dedicated source of this kind. Both differ from, for example, English Heritage, not only in terms of wider geographical coverage but also by not being able to assist individual private owners.

The importance of heritage

153. The historic environment comprises assets of enormous cultural, social, economic and environmental value. These contribute to our quality of life and the qualities of the places where we live, work and spend our leisure time and are a vital cultural and educational resource. Heritage sites may be of international significance or of local interest, but all are important to the communities in which they are located and once lost they are lost forever.


154. As with the arts and other cultural activities, heritage also contributes to economic growth, regeneration, education and tourism. A report published by the HLF and Visit Britain in March 2010 revealed the value of heritage for the economy, as follows:

  • Over 10 million holiday trips are made by overseas visitors to the UK each year with 4 in 10 leisure visitors citing heritage as the primary motivation for their trip to the UK - more than any other single factor;
  • Heritage tourism is a £12.4 billion a year industry. This is the annual amount spent not just at heritage attractions themselves (for example the cost of entrance to a historic site or in a museum shop) but also the broader amount of spending that can be reasonably said is 'motivated' by the desire to visit heritage attractions (for example visiting a restaurant or staying at accommodation in heritage sites);
  • Domestic tourism or the 'staycation' is the main component of this expenditure; of the annual £12.4billion spent on heritage-based tourism, 60% comes from UK residents on day trips and UK holidays;
  • £7.3 billion of heritage expenditure is based on visits to built heritage attractions and museums, with the overall £12.4 billion including visits to parks and the countryside as well;
  • The direct GDP contribution of heritage tourism - the wages and profits earned by tourism businesses, such as hotels, restaurants and shops, as well as heritage attractions themselves - is estimated at £7.4 billion a year. Once economic multiplier impacts are added - such as the income earned by suppliers to tourism businesses - the total GDP contribution of heritage tourism is £20.6 billion a year;
  • Tourism has the potential to be one of the fastest growing sectors of the economy over the next decade, and the appeal of heritage will be vital to that growth.[132]

155. Although the Government has acknowledged the importance of heritage tourism to the UK economy[133] and Visit Britain's £50 million marketing budget has been protected as part of the CSR settlement,[134] continuing concern has been expressed about the value government attaches to heritage. The Heritage Alliance, Historic Houses Association (HHA) and HLF have told us that they think the impact and economic potential of heritage tourism has been undervalued by Governments in the past.[135]

156. Edward Harley, President of the HHA, told us that historic houses alone contribute £1.6 billion to the tourism economy.[136] He also told us that in rural areas, the 500 members of the HAA who open their houses and gardens open to the public (which represents more than English Heritage and the National Trust combined) attract 14 million visitors a year and over 300,000 educational visitors.[137] £139 million per year is spent on conserving these historic houses and their contents, largely without public subsidy.[138] Much of this expenditure feeds back into the local economy, including much needed local employment.

157. We are pleased to note the Government's recognition of the importance of heritage tourism to the UK economy by protecting Visit Britain's £50 million marketing budget in the Comprehensive Spending Review.

Spending cuts and safeguarding heritage

158. In a letter to the NHMF dated 20 October, the Secretary of state outlined the impact of the CSR on the NHMF:

    The budget for your organisation will be cut by 54.5% in real terms and will be £20m over four years. This settlement is to enable NHMF to continue its important role as the fund of last resort for acquisitions of heritage at risk of being lost to the nation. Within this settlement and in keeping with my priority to bear down on administration costs, I would like NHMF's administration costs to be reduced over the period. I would like you to make reductions at least in line with those being made for HLF as a result of my request that lottery administration be reduced to 5% of overall costs.[139]

159. Carol Souter, Chief Executive of the HLF told us:

    I think it's clear that the financial impact is significant from the work that we had done, in advance of the CSR, looking at what various percentage reductions might mean. I think we're expecting that maybe £650 million to £675 million overall will come out of the sector using our definition of heritage, which includes natural environment, museums, historic environment, and so on.[140]

160. There is also concern in the heritage sector that the CSR requirements for the HLF and NHMF to reduce administration costs could have an impact in the HLF's funding decisions. The HHA wrote:

    The HHA shares the concerns expressed by the Heritage Alliance about the requirement for Lottery distributors to reduce the proportion of funding for administrative purposes. This could have the negative result of discouraging distributors from making smaller grants which are proportionately more costly to administer.[141]

161. We put this concern to Carol Souter, who responded:

    we allocate budgets to the various sizes of grants and we will make sure that we carry on putting significant amounts of money into the small grants. They are very successful and very important locally, and at a time when you might have expected applications to go down, because people were worried or stressed, or not confident about things, we have good strong levels of applications for the small grants.[142]

162. We asked Loyd Grossman, Chair of the Heritage Alliance, what he thought the impact of these cuts would be for heritage organisations. He told us:

    Heritage funding has been declining very significantly since 1997. Heritage is way behind other sectors which the DCMS has been funding, so this was a particularly savage cut for us to take. In terms of the effect on delivery of front-line services, I'm particularly worried about the many smaller organisations and institutions that are going to be affected, as there is a tendency to concentrate on the big trophy properties and the big national organisations. However, the heritage sector is extremely complex and involves hundreds, if not thousands, of local and regional organisations, all of whom depend for their fundamental well-being on the general health of the sector. These smaller organisations will be damaged disproportionately by the cuts because, of course, they do not have the fundraising ability of the larger organisations.[143]

163. English Heritage compiles and publishes statistics on Heritage at Risk and listed buildings.[144] Heritage at Risk is published annually as a register containing all heritage sights in England deemed to be at risk by English Heritage.

164. The HLF told us that public spending cuts have implications throughout the sector but have particular consequences for Heritage at Risk.[145] English Heritage wrote:

    In 1999, one in six buildings on the Heritage at Risk Register was fully economic to repair. In 2010 that figure has fallen to just one in eight. The "conservation deficit" - the difference between the cost of repair and the end value - of these 1,218 buildings is now estimated to be £465m, a 10% rise on the 2009 figure. Public funding and resources are critical to ensuring these, our most important national assets, are brought back into viable economic use and are not lost to future generations. Reductions in public funding alongside restrictions on credit, falling investment returns and the failure of development companies will make it much harder to find viable solutions for our heritage at risk.[146]

165. Simon Thurley, Chief Executive of English Heritage also told us that a lot of English Heritage's expenditure increasingly focussed on helping people undertake satisfactory maintenance rather than intervening later in a more expensive repair problem, and that this would be more difficult if budgets were cut.[147]

166. Another issue for the heritage sector is the economic impact that VAT has on the maintenance and repair of historic buildings. Our predecessor Committee examined this subject previously in 2006, and concluded that "the issue of VAT-rating for repairs to listed buildings united the sector perhaps more than any other evidence";[148] and that the VAT regime "rewards neglect and works against conscientious maintenance of historic assets".[149]

167. This issue remains a matter of great concern today. Simon Thurley told us:

    We have raised the issue of VAT many times with the Government. In the context of the spending review, the conversation we've had with them has been about the listed places of worship VAT reclaim scheme, which is a sort of substitute scheme for the big decision that we would really like, which would reduce the burden of VAT on repairs to historic buildings.[150]

168. We urge the Government to commission research into reducing the rate of VAT on historic building repairs as a means to better protect them and to act as an economic stimulus.


169. Most of the written submissions we received for our inquiry were made before the outcome of the CSR, although it was, by then, almost certain that DCMS would be administering cuts to the grant-in-aid for all arm's length bodies including English Heritage.

170. In some parts of the heritage sector it will take several years for the full effect of the cuts to be felt. Many of the submissions emphasised that public-private partnership funding was an essential component of the heritage sector and would be severely affected. Lottery awards of over £50,000 require partnership funding of at least 10% with awards over £1million requiring applicants to raise 25%. In many cases this comes from local authorities, which are themselves cutting budgets. Some larger urban regeneration schemes and public historic park projects require 70% match funding from within the public sector.[151]

171. The Institute for Archaeologists stated that, even prior to the recession, cost cutting measures had in some cases jeopardised the future of local authority historic environment services and there were now "very real fears" about their survival.[152] The HLF referred to their concern that the legacy of the Lottery investment of the last 16 years "should not be jeopardised by cuts to those parts of the sector unable to adapt quickly for good reason, or through cuts that are made in too much haste".[153]

172. Both English Heritage and the National Trust are membership organisations. The National Trust has 3.8 million members and makes 31% of its overall income from membership subscriptions.[154] English Heritage has not traditionally had such a strong membership base as the National Trust, but Simon Thurley told us:

    [...] we're about a million members calculated on the same basis as the National Trust does that, which is obviously a quarter of what it has. We've had a very rapid increase in membership. Over the last eight years, it has increased by 62%, which is a very steep increase. We are very keen on it because obviously it is a way of getting secure income. Most people who sign up remain members for at least three years and that is guaranteed income for us. It is really the backbone of what we do. Three years ago, for the first time, we made more money through membership than we did through admissions at the gate, which was an important turning point in terms of the structuring of our business.[155]

173. Unlike other DCMS funded bodies, English Heritage has received grant settlements below inflation since 1997, resulting in a real term reduction of £130 million. It has undertaken economies and efficiency savings over that period to protect and advance its core activities and is collaborating with the HLF to see where overlapping activities might be streamlined. It is nevertheless struggling to undertake all the key aspects of its wide remit. We note that English Heritage has had some success in attracting funding from non-public sources and as a membership organisation and manager of public heritage attractions. We recommend that English Heritage examines ways in which it might extend its commercial activities in similar ways to, and in collaboration with, the National Trust.

174. However, we are concerned that the heritage sector has already suffered disproportionately and is ill-placed to sustain further reductions in funding. We also note that, unlike much of the arts, once lost the heritage can never be replaced. We urge the Government to take strong account of this in future funding settlements.


175. On 22 June 2010, the Government announced the abolition of the nine Regional Development Agencies (RDAs) in England - eight regional agencies through the Public Bodies Bill and the London Development Agency through the Localism Bill.[156] The abolition of RDAs has been raised by the heritage sector as a matter of concern; not least because the new Local Economic Partnerships (LEPs) appear not to have heritage-led regeneration as part of their remit; the geographical coverage of LEPs is not yet comprehensive; nor is funding from bids guaranteed.

176. Heritage-led regeneration supported by the RDAs in co-partnership with local authorities and the third sector has in recent years greatly benefited many projects. The Lancashire and Blackpool Tourist Board drew our attention to the significant leverage effect of recent RDA heritage-related funding:

    [North West Regional Development Agency] investment of £350,000 from 2005-2009 in relatively small heritage attractions (historic houses, mills, and buildings) resulted in more than £1.38m from other sources being invested (primarily private money), creating more than 8 full time jobs and attracting more than 100,000 extra visitors in that period to attractions including increasing the spending of existing visitors. Obviously, subsequently there have been further visitor increases as a result of those investments.[157]

177. The National Trust praised the North East RDA in its role in support of the acquisition of Seaton Delaval Hall in Northumberland where the local community had raised £1 million towards the purchase.[158]

178. Loyd Grossman, Chair of the Heritage Alliance told us that the demise of the RDAs "will spark considerable concerns because they were among the major investors in heritage-led regeneration projects"[159] and cited an example of the detrimental impact where funding had been withdrawn in Bolton.[160] He concluded that the withdrawal of RDA funding was being keenly felt everywhere especially as the Government had not decided what it wanted the LEPs to do. The HHA reiterated this concern because "it is unclear who is going to pick up the pieces".[161]

179. Abolition of Regional Development Agencies will result in the loss of an important funding stream for heritage, and of a catalyst for important regeneration projects. We understand the concerns of the heritage sector at this potential reduction in capacity.

180. We hope that the new Local Economic Partnerships will take account of the benefit they can bring through active intervention in the historic environment by promoting heritage-led regeneration.

Heritage expertise and local conservation officers

181. The issue of local authority heritage skills and training was examined by our predecessor Committee, both in its 2006 inquiry Protecting and preserving heritage and its 2008 inquiry on the Draft Heritage Protection Bill 2007-08. In its 2008 Report it noted that there was already a shortage in conservation officers in local authorities and recommended that "the Government set out a strategy for maintaining sufficient numbers of conservation officers with the necessary skills".[162]

182. Given the cuts in local authority budgets and the removal of ring-fencing for local authority spending,[163] it would seem that once again local authority conservation officers are under threat. We asked Simon Thurley whether English Heritage was concerned about conservation officers. He told us:

    [...] this is a matter of extreme concern. A very important point I'd like to make to the Committee is that while English Heritage obviously plays an important role in channelling some parts of the Government's expenditure towards heritage, the Government's investment in heritage is much wider than the current £130 million that is the English Heritage grant-in-aid. An absolutely vital part of that, as you rightly point out, is the money that is spent on heritage by local government, particularly through the employment of conservation officers, who are the front-line troops in protecting heritage. [...] What we know from our figures—from our surveys—is that since 2007 there's been a 14% decrease in the number of conservation officers. What is undoubtedly happening, and is going to happen more, is that conservation officers are not being replaced when they leave and the type of specialist resource that has previously existed in planning departments is no longer there.[164]

183. He told us what he thought the impact of declining numbers of conservation officers would be. He said:

    Well, it means that the danger is that when planning decisions are made that affect conservation, the local councillors who sit on the planning committees do not have the appropriate advice that will enable them to make sound decisions.[165]

184. We also asked Loyd Grossman what the effect of the loss of expertise associated with conservation officers would mean for the heritage sector. He told us:

    I think there is a danger that a skills base and a knowledge base, which has been built up very carefully over many decades, is going to be eroded very quickly. Rebuilding that skills and knowledge base will be extraordinarily difficult. I think I'm right in saying that I recently saw that Nottinghamshire County Council are proposing a 75% cut to their conservation budget. The long-term effects of cuts to conservation budgets, at local authority level, will be very severe indeed.[166]

185. Other bodies which are a source of planning, conservation and heritage-led regeneration expertise to local authorities are also currently under threat of closure. These include members of the network of local architecture and design centres, supported over the last decade by the Commission for Architecture and the Built Environment (CABE) and which offer expertise, and design review services, at rates far lower than commercial consultancies.

186. DCMS has cut its grant to CABE entirely. In his evidence to us on 1st December, 2010, Minister Ed Vaizey said the decision was "one of the most difficult we had to make in the Department". He praised the body's work in promoting design review and said it would be "regrettable if the learning and expertise that CABE has built up over an extended period were to be lost".[167]

187. Since the minister gave evidence, CABE has been merged with the Design Council and DCLG has offered £2.75m funding for two years only. No commitments have, however, been given about supporting the work of the local centres, which have seen local authority funding cut and grants from soon-to-be-abolished RDAs and regeneration agencies disappear.

188. We are concerned that the Government does not realise that effective management of the historic environment at local level cannot be adequately undertaken without sufficient numbers of local authority conservation officers. The lack of conservation officers was a matter of particular concern to our predecessors in both 2006 and 2008 and we are concerned that the position may deteriorate further in the light of local government spending cuts. This will inhibit protection of the built heritage and hamper proper consideration of development proposals in the planning system when the economy recovers. We urge the Government to remind councils of the need to retain their specialist heritage professionals, an important statutory function.

189. DCMS' decision to end its grant to the Commission for Architecture and the Built Environment (CABE) entirely was harsh, especially given the minister's appreciation of its work and that of the local architecture and design centres CABE has fostered. We welcome CABE's continuation within the Design Council. The severe cuts, however, have given the local centres, in particular, barely any time to re-organise for the future and the danger is that their valuable contribution will be lost. We urge DCMS, the Department for Communities and Local Government and the Design Council to consider as a priority how they can prevent this happening.

Heritage volunteering

190. The heritage sector has made wide use of volunteering and we asked Loyd Grossman how important he thought it was to the sector, and whether volunteers could fill the professional skills gap. He told us:

    Volunteering is hugely important to the heritage sector and I think we estimate there are about 500,000 regular volunteers. But there are a couple of issues around volunteering. One of the chief ones is the fact that volunteering is a complement to professional staff; it is not a substitute for professional staff. I think it's important to bear that in mind. Bearing that in mind, [...] if we expect volunteers to do more—and I think they should because I think our heritage volunteers find the experience tremendously enriching—we have to provide them with the right level of mentoring; we have to provide them with the right level of access; we have to provide a supportive culture for them, not just look at them as cannon fodder that can be thrown into the breach because we have to cut down on the number of professional staff.[168]

191. The National Trust is an organisation that has utilised volunteers probably more than any other. The National Trust operates numerous volunteering programmes including youth involvement, working holidays, regular local group volunteering as well as volunteer posts such as education assistants, car park attendants or cafe workers.[169] The National Trust also operates the Employer Supported Volunteering scheme, whereby private and public sector workers volunteer their time in working hours.

192. We asked the Chair of the National Trust, Dame Fiona Reynolds, whether the National Trust's volunteering programmes could provide an example to the rest of the heritage sector. She responded:

    We have an enormous contribution through gifts of time from our 61,000 volunteers. Again, the Government could make it easier for people to give time—for example by volunteering during work time. There's a very small amount of support for that at the moment and it could easily be expanded. But I think there's a risk that the Government sees the voluntary sector as simply able to pick up all the issues that may fall out—we don't yet know—of the Spending Review. And I think there has to be a word of caution about that because all of us in the voluntary sector are very clear about our obligations and our responsibilities, and we cannot simply take over things that were Government funded without some very, very careful thought.[170]

193. Although volunteers give their time for free, the HLF suggested to us that the spending cuts issued by central and local government would have an impact:

    Cuts will hamper local regeneration and economic development. Finally, if the organisational infrastructure for managing and running activities stagnates, then opportunities for the thousands of people who are enthusiastically involved in heritage projects will be lost. Heritage volunteering, properly managed and resourced, is hugely popular, with very strong, proven benefits for the volunteer's own well-being, as well as for the wider communities in which projects are based.[171]

194. Volunteers cannot plug the skills gap left by a reduction in the number of heritage professionals. Volunteers play an incredibly valuable role in the heritage sector, but Government must not be tempted to think that the success of the volunteer sector can excuse reducing the number of skilled professionals.

195. It is important that the network of volunteers is not damaged by the spending cuts. The Government is promoting the idea of a "Big Society", and nowhere more can this be seen in action, than in heritage volunteering. We recommend that the Government does more to promote heritage volunteering through schemes such as volunteering at work.

130   Ev 141 Back

131   Ev 141 Back

132   Heritage Lottery Fund and Visit Britain, Investing in success- heritage and the UK tourism economy, March 2010 Back

133   Prime Minister's Speech at the Serpentine Gallery, 12th August 2010 Back

134   HC Deb 21 October 2010 col 60WS Back

135   Ev 150, 170, 175 Back

136   Q 324 Back

137   Ev 174 Back

138   Ev 175 Back

139   Letter to Dame Jenny Abramsky, Chair NHMF, from Jeremy Hunt 20 October 2010 Back

140   Q 300 Back

141   Ev 175 Back

142   Q 319 Back

143   Q 301 Back

144  Back

145   Ev 170 Back

146   Ev 141 Back

147   Q 199 Back

148   Culture, Media and Sport Committee, Third Report of Session 2005-06, Protecting and Preserving Heritage, HC 912-I, para 171 Back

149   Culture, Media and Sport Committee, Protecting and Preserving Heritage, para 177 Back

150   Q 200 Back

151   Ev 171 Back

152   Written evidence from the Institute for Archaeologists [not printed] Back

153   Ev 172 Back

154   Ev 133 Back

155   Q 214 Back

156   Localism Bill [Bill 161 (2010-11)] Back

157   Written evidence from the Heritage Tourism Executive for the North West [not printed] Back

158   Ev 134 Back

159   Q 330 Back

160   Q 330 Back

161   Q 331 Back

162   Culture, Media and Sport Committee Eleventh Report of Session 2007-08, Draft Herittage Protection Bill, HC 821 2007-08, para 27 Back

163   "Government announces £6.2 billion of savings", HM Treasury press release 04/10, 24 May 2010 Back

164   Q 205 Back

165   Q 205 Back

166   Q 317 Back

167   Q 412 Back

168   Q 318 Back

169  Back

170   Q 204 Back

171   Ev 172 Back

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Prepared 28 March 2011