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Debate on contribution of the Arts to the economy and the society, House of Lords, 1 February 2024

The arts make a significant contribution to the economy and society. The LGA’s Commission on Culture and Local Government drew together evidence of its contribution to resilient places, economic recovery, social mobility and addressing health inequalities.

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Key messages

  • The arts make a significant contribution to the economy and society. The LGA’s Commission on Culture and Local Government drew together evidence of its contribution to resilient places, economic recovery, social mobility and addressing health inequalities.
  • Councils have a key role to play – they are the biggest public funders of culture, spending over £1bn a year and running a wide range of other services. They are also place shapers and have a convening and supporting role in setting the context in which the arts can flourish. The arts are discretionary, but councils invest because they see the value to local people.
  • Councils face ongoing inflationary and pay pressures alongside spiking demand and market challenges in areas such as children’s social care and temporary accommodation. In particular, the pressure from increased demand for social care support is squeezing councils’ ability to spend on other services. Besides decreases in core funding in real terms, there has been a rise in the amount of funding allocated through bidding process or ringfenced grants.
  • Research published by the New Statesman on in December 2023 revealed that since 2010, four in ten councillors (42 per cent) said their council had made cuts to libraries. Nearly half (45 per cent) said culture, events and tourism had been cut back. This means that, on average, more than a third (38 per cent) of councillors mentioned cuts to recreational, leisure and cultural services.
  • We need a long-term, sustainable, multi-year funding settlement for local authorities if they are to continue investing in these vital community services.

The value of the Arts to the economy

Inclusive economic recovery

Local publicly funded culture is essential to our national economic recovery, particularly in relation to the growth of the wider commercial creative economy and in levelling up economic inequalities between regions.

In 2019, the creative industries contributed £115.9 billion to the UK, accounting for 5.9 per cent of the UK economy and accounted for 2.2 million jobs. They grew at four times the rate of the rest of the economy prior to the pandemic and are geographically dispersed in more than 700 micro clusters across the country.

Public funding is an essential part of the ecology of the arts and culture in the UK. In 2020, for every £1 generated in the arts and culture, an additional £1.23 gross value added was generated in the wider economy.

It was estimated in 2015 that Arts Council England’s share of public expenditure was 0.1 per cent but the publicly funded arts contributed 0.4 per cent gross value added.

Economic renewal of town centres

As we see the pandemic and subsequent change in working patterns exacerbating an existing decline in high street retail, the experiential offer on the high street becomes more important. Local publicly funded culture can play an important role as part of a wider offer that includes leisure and hospitality. According to the Arts Council England’s research, half of adults (50 per cent) would like to see more cultural experiences on their high streets. This 50 per cent rises to 54 percent among those aged 25 to 34 years of age and 57 per cent among black Britons.

The long-term sustainability of the creative industries cannot be delivered without public funding of culture, which underpins the development of the wider creative sector. There is ‘symbiosis’ between publicly funded arts and the creative industries, for example between the performing arts and the film and TV industries or the commercial stage, particularly in relation to the development of a talent pipeline. The publicly funded cultural sector provides incubation space for the development of creative practitioners and can support them through local supply chains.

A vibrant cultural environment creates places where people want to relocate their businesses and workforce. Creative Industries PEC research into the relationship between larger publicly funded institutions and the growth of creative clusters found that representatives from creative industry businesses reported that the presence of larger anchor cultural institutions supported the character of their local area and made it a more attractive place to visit and work.

Culture is essential in driving a healthy visitor economy

The visitor economy is one of this country's strongest performing sectors. Culture, and particularly heritage and the historic environment, is a key draw for most visitors. At least 40 percent of all tourists worldwide can be considered cultural tourists. Cultural tourists provide more economic benefits because they tend to stay longer than other tourists. At the same time, cultural institutions need visitors to provide the spend that makes cultural institutions more viable. In areas reliant on the visitor economy, culture can help to extend the season, encourage visitors to stay longer and return to places.

Research by Visit Britain has underlined the fundamental relationship between culture and ‘Brand Britain’: culture and particularly heritage is the main driver of the majority of inbound visits and the basis of Britain’s reputation overseas as “a place where history meets modernity and a range of sites and (‘must-see’) experiences are offered within easy access”.

The value of the Arts to society

Resilient places

Local publicly funded culture can promote civic pride and change perceptions about a place, contributing to improvements in wider social and economic outcomes. Heritage in particular can be seen as driving up civic pride. It also helps with ‘democratisation’ by helping people to realise they can take part and make a difference.

In the Great Place programme, Arts Council England and the National Lottery Heritage Fund worked together to “enable cultural and community groups to work more closely together and to place heritage at the heart of communities" - an example of this being in Tees Valley, where along with growing economic outputs a key outcome was to grow the shared sense of place and identity.

In Lowestoft, East Suffolk Council is leading work to address a 'culture of disappointment’ through regeneration inspired by the town’s maritime history.

Big Local is focused on giving people resources and support to do things in their communities over long timeframes – this was cited as an example by stakeholders we spoke to. It is aimed at enabling ‘resilient, dynamic, asset-rich communities’ that are better places to live.

Social mobility

Local publicly funded culture can help to address educational and skills inequalities and challenges around social mobility.

Students from low-income families who take part in arts activities at school are more likely to:

  • get employment and stay in employment
  • three times more likely to get a degree
  • twice as likely to volunteer
  • 20 per cent more likely to vote as young adults
  • young offenders who take part in arts activities are 18 per cent less likely to re-offend.

Creativity is a national resource

As we face significant labour market and skills challenges and we must capitalise on opportunities created by green growth, automation and new global markets, which should be actively cultivated through our national and local strategies for education and skills.

To maximise our investment in culture and creativity, we need to draw on the widest pool of talent we can find. Public investment in culture and local cultural partnerships and collaborations are essential in bridging the gap between communities and creative learning, developing clear pathways of engagement for those who might otherwise have poor access to creative opportunity and employment.

There are many examples of cultural programmes contributing to social mobility. Arms-length bodies, such as ACE, the NLHF and Historic England have all (and continue to) invested heavily in social mobility programmes to address inequalities, and many cultural services and organisations have an excellent track record of delivery. 

Addressing health inequalities

Local publicly funded culture can challenge health inequalities and the impact of loneliness exacerbated by the COVID-19 pandemic.

Publicly funded arts and cultural services made enormous contributions to our daily lives and wellbeing during the COVID-19 restrictions. They have a role to play in supporting health at various levels in society, from contributing to general wellbeing across a population, to helping to prevent specific forms of ill health and providing treatment for acute health conditions (see the Power of Music report). The challenge now is to ensure that the value of arts and culture continues to be recognised during the post COVID recovery period, and benefits from publicly funded investment and support.

Cultural programmes have been shown to have specific benefits in clinical treatment of conditions such as dementia and depression as outlined in UK Music and Music for Dementia’s report The Power of Music.

Helix Arts who ran the Better Connected Project in Tyneside, to improve the mental health of 350 carers through arts and cultural activities.

More broadly, good cultural infrastructure and universal provision of cultural services at a population level has been shown to be beneficial to community wellbeing, promoting networked resilient communities. Engagement in cultural activity can play an important role in addressing issues of loneliness, exacerbated by the pandemic.

It is important to note that economic growth and enhanced wellbeing are closely intertwined and are not separate competing objectives. Wellbeing has been shown to be linked to higher levels of productivity.

The role of councils in supporting the Arts

There is no statutory requirement for councils to provide these services but they do so on a discretionary basis because they recognise the immense value of these services and infrastructure to their communities.  

The continued existence of cultural infrastructure relies on a network of funding and support from a mix that includes national and local government, arms-length bodies, foundations and trusts, civil society organisations, volunteers and the private sector, among others.

Councils run a nationwide network of local cultural organisations - libraries, museums, theatres, castles, amusement parks, monuments, historic buildings, parks and heritage sites. This core funding keeps the civic infrastructure of culture running within places.

For councils, cultural spend is a small part of their wider offer, which is increasingly dominated by the rising cost of social care, alongside the many other vital services delivered by local authorities. But although culture is a small part of what a council does, they remain the biggest public funders of culture nationally. In particular, the Levelling Up Fund has earmarked £100 million for cultural investment across the country.

The erosion of this support would have a significant impact on our cultural offer as a nation. Publicly funded culture at a local level underpins a much wider cultural ecosystem, including supporting growth in the commercial creative industries and underpinning visitor economies.

Local cultural services seldom draw the same levels of national media and political attention as national cultural institutions and industries, but they are of vital importance to local communities and provide the foundation on which our national culture is built.

  • Harlow Council has secured £20 million from the Levelling Up Fund to develop a new Arts and Culture Quarter, including a gallery and arts-led pavilion.
  • Reading Council has invested £13.7 million in upgrading the Hexagon Theatre, including £12 million from a successful Levelling Up Fund bid. 
  • Councils are also able to take non-financial decisions to support their services. For instance, Worcester Council recently extended the lease of a historic museum in the city to 999 years to help secure its long-term future. This provides the museum with the ability to more effectively fundraise.

Systemic problems in the funding of the Arts

The pandemic and subsequent cost of living crisis exacerbated pressures on the UK's arts and entertainments sector, which was one of the worst hit parts in the pandemic, according to the Office for National Statistics. While for many the Culture Recovery Fund and wider support packages for councils plugged immediate gaps and income projections were beginning to recover, other factors has continued to undermine the financial resilience of the cultural sector.

Councils now face ongoing inflationary and pay pressures alongside spiking demand and market challenges in areas such as children’s social care and temporary accommodation. This is happening at a time of low financial resilience across the sector following a 27.0 per cent real-terms reduction in core spending power from 2010/11 to 2023/24.  Councils are currently facing funding gaps of £2.4 billion in 2023/24 and £1.6 billion in 2024/25. These gaps relate solely to the funding needed to maintain services at their current levels.

The pressure from increased demand for social care support has led several councils to highlight the way in which the proportion of budget available for other services - including culture, tourism and sport - have been affected. This is squeezing councils’ ability to spend on other services. Ultimately spending is increasingly concentrated on fewer people, so councils are less able to support local and national agendas.

Besides decreases in core funding in real terms, there has been a rise in the amount of funding allocated through bidding process or ringfenced grants. While councils welcome additional funding for culture, bidding for and administering these types of funds is energy intensive and requires a certain level of local capacity. This can constrain council’s ability to be flexible with their money and achieve better outcomes at a local level, as well as increasing the proportion of the money that must be spent on administrative costs.

Nottingham City Council received a s114 report in November 2023. It has agreed a public consultation on reducing grants made to external cultural organisations in the city, saving £198,000. However, it will retain ownership of the Theatre Royal and Concert Hall. £9,000 will be saved from the Museum budget and the service itself will explore alternative delivery models. The library service will also be reviewed.

Suffolk County Council has not received a s114 report but has identified £74 million needed to protect the most vulnerable over the next two years, and the need to make £64.7 million savings over two years. Proposals published include £0.5 million of savings by stopping core funding to Art and Museum sector organisations (100 per cent reduction). To assist with the transition, £528,000 of COVID recovery money will be made available to arts and museum sector organisations for 2024/25 which will fully cover the funding reduction for one year. The council will also achieve £140,000 of savings by centralising Suffolk Archives to ‘The Hold’ and closing the branches in West and East Suffolk.


Hannah Sadik

Public Affairs and Communications & Communications Improvement Graduate

Email: [email protected]