Arts Funding Information

I originally posted this on the Third Angel blog back in April 2010 (, so all date references ("this week" etc) should be read with that in mind - i.e. it is pre-election. Marcus asked me to post it here, too, which seems like a good idea:

The VAT Question
At the State of the Arts conference back in January I asked Ben
, Secretary of State for Culture, and Liz
, Chair of Arts Council England, if they (their
organisations, I suppose) knew how much VAT the arts contributed to the
national coffers, in comparison to the amount of subsidy the arts
receive as a whole. I wasn't expecting them to have the figure to hand,
obviously, and I knew that it could only be a best guess figure on the
VAT, because where do you draw the line...? But I was hoping that they
would either know that the figures were known, or that they would think
that it would be useful to know these figures.

I was following up from a pertinent question that Jon Spooner of Unlimited Theatre had just
asked them, which was: how can we, the creative community, help them to
make the case that the Department of Culture, Media and Sport should
have its budget maintained at its current level, what ever the outcome
of the next election? (Jeremy
, Shadow Culture Secretary was at the event, too). With that
in mind, I thought having this information in the public domain might
help our case.

Ben Bradshaw took my contact details and promised to get back to me, and I wrote to him after the conference to more fully
explain my question. The DCMS Public Engagement & Recognition Unit
contacted me this week with the information that is available. So thanks
to Ben and to the DCMS staff who researched this. It's not the whole
picture, but it is instructive.

I had written to Ben:
My question came from a more specific point I had heard about VAT on theatre tickets, as that is more easy to quantify. A well known theatre director, whose name I now forget,
unfortunately, quoted figures in an interview a few years ago, that
suggested that VAT on all theatre tickets – so including non-subsidised
theatre – actually equals or exceeds the subsidy that the Arts Council
has to give to theatre companies. I emailed the Arts Council then to
enquire after the figures, but they didn’t have the numbers.

One of the points of raising this, of course, is that the subsidised arts drive and feed into the
‘commercial’ arts. Many of the artists who work in commercial theatre
shows, on TV and in film, will also work in the funded theatre sector.
The two are inextricably linked.

When this is broadened to the arts as a whole, the effect would be harder to quantify, but that’s because it is more
complex. The arts drive, or at least support, the content of all forms
of broadcast. How much VAT is raised from the sale of TV, video and
stereo equipment? A proportion of that is arguably attributable to the
artistic content available for them. How much VAT comes from pre-theatre
menus in restaurants. Is VAT paid on art works sold at auction?

I understand therefore that pinning down an exact figure for VAT raised by the arts would be impossible, but
it would be interesting to know roughly how it compares to the amount
given to Arts Council England.
This week the DCMS responded:
You are right to highlight the important link between subsidised and commercial theatre; this is one of the strong arguments in favour of public funding for theatre, and the
arts more widely. A large part of this link is in developing artists and
art forms and in widening access to the arts to as many people as
possible, and in encouraging excellence at all levels. Part of it is
also to do with economic impact.
Which is good to hear. But I'd also like to point out here that whilst I believe this is a
valid argument for the support of the subsidised arts, I don't think
the fact that they are an "R&D" engine for the mainstream is their raison d'etre. I make, and go and
see, small scale, "experimental", devised work for audiences of 200 or
less (much less sometimes), because I value the performer - audience
relationship that is achieved at that scale, in that mode - I like the
eye contact, the intimacy, the immediacy. I think it is important. And
that is why it should be funded.

But I know that not everyone thinks that, so I'm interested in being able to counter the 'arts should
be able to support themselves if they're any good' and 'how many
teachers would that pay for?' arguments.

Which makes the next part from the DCMS very interesting:
You are right to say that VAT income on theatre tickets is greater than the public subsidy theatre receives from Arts Council England. Last year, at London theatres alone, VAT on
tickets generated £75m in income. Arts Council England invests just over
£100m in theatre.
One way of reading this would be to say that the government doesn’t subsidise theatre, theatre more than
pays for itself out of VAT alone, and makes a contribution to the
nation’s coffers.

The DCMS only have figures for London theatres, and acknowledge that a further £12m of lottery money went to support
theatre in 2008/09. But the DCMS also point out the wider, and better
known, arguments for seeing subsidy of the arts as investment that
produces a massive return.
However the economic impact of theatre and the subsidised arts is much greater than just VAT. The creative industries, including a number of subsidised sectors, account
for 6.2% of the UK’s Gross Value Added (GVA), £16.6bn in exports, and 2m
jobs. The subsidised arts also play a major role in attracting inbound
tourism, worth £16.3bn, and we know that four million overseas visitors
to Britain went to the theatre, ballet, opera or a concert. The
relationship between subsidised and commercial arts is vital in
maintaining the quality and access that makes the arts, culture and the
creative industries so successful.
As our General Manager pointed out to me when we read that yesterday, 2m jobs are also
going to channel a lot of employers and employees National Insurance
back to the government.

As ever, the thinking is that the arts will have a fight on our hands to maintain the level of government
funding we receive in this year's Spending Review, whatever happens on
May 6th. I recognise that I have a vested interest in this as this is
how I make a living, and I am extremely grateful that Third Angel is an
Arts Council England Regularly Funded Organisation. So for me these
figures are an important part of the argument.

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