Item 6 on the agenda this afternoon is a debate on the Culture, Welsh Language and Communications Committee report, 'Building Resilience: Inquiry into non-public funding of the arts'. I call on Dai Lloyd to speak to the debate on behalf of the committee—Dai.

Motion NDM6878 Bethan Sayed

To propose that the National Assembly for Wales:

Notes the report of the Culture, Welsh Language and Communications Committee, 'Building Resilience—Inquiry into non-public funding of the arts’, which was laid in the Table Office on 22 March 2018.

Motion moved.

Thank you very much, Dirprwy Llywydd, and I’m very pleased to open this debate on the Culture, Welsh Language and Communications Committee’s report, ‘Building Resilience’, which discusses non-public funding of the arts.

The arts are an indispensable part of Welsh life. As a nation, we rightly celebrate an enduring and rich history of artistic endeavour and output. We've long had a wealth of talented and passionate individuals who have helped to create a sector that brings wide-ranging benefits to us all. From their economic and practical benefits, to their use in addressing public policy matters, whether that be within the education system or addressing health issues, the arts are an invaluable part of any healthy and prosperous society. And there is wide recognition that participation in the arts promotes community cohesion and reduces social isolation and exclusion.

Despite this, real-terms public funding of the arts has declined substantially in Wales over the past five years. The vast majority of the Welsh Government’s budget allocations for the arts are for the Arts Council of Wales. In the 2017-18 budget, out of the £31.7 million allocated in this area, £31.2 million was allocated to the arts council. However, between 2011-12 and 2017-18, Welsh Government funding of the arts council has declined by 18 per cent in real terms. The arts council’s share of lottery proceeds has also decreased during this period. Additionally, as local authority budgets have tightened in recent years, the funding the arts sector receives from this area has also decreased. To illustrate this, local authority funding of the Arts Portfolio Wales, which comprises the arts organisations receiving annual funding from the arts council, has reduced from £11 million in 2011-12 to £5.1 million in 2016-17.

Given the wide recognition of its benefits, this level of cut is clearly concerning. To mitigate this decrease, the Welsh Government has called on the arts council to reduce the sector’s dependence on public subsidy and for the sector itself to up its game on fundraising.

So, for this inquiry, rather than simply look into the impact of this decline in funding and to call for it to be increased, we decided to look specifically at the Government’s approach, to assess how feasible it is, and to ask whether there are any additional practical steps the sector could take to diversify and increase the funding it receives from non-public sources.

To frame the inquiry, the committee agreed to investigate, first of all, how successful the arts sector in Wales has been in increasing non-public funding; also, how non-public arts funding is shared out across Wales; and whether there are international models of best practice that Wales could emulate.

During our inquiry, it quickly became evident that Wales’s arts sector faces varied and very difficult challenges when it comes to raising funds. Arts organisations in Wales face specific challenges to increasing their incomes, based primarily on their scale and location. In order for Wales’s arts organisations to be successful at reducing their reliance on public funding, the Welsh Government needs to ensure that they are equipped to do so. Arts companies based in Wales face many difficulties that aren’t as prevalent in other areas.

As a result, there are a number of actions we believe the Government needs to take before it can realistically expect the sector to respond effectively to its request for reduced dependence on public subsidy. Without this action, it is difficult to imagine the sector’s output and diversity not being reduced, in line with the reduction of public subsidy.

And because of the small number of large businesses headquartered in Wales, attracting business support is difficult. Nick Capaldi, chief executive of the arts council, explained that business sponsorship is more prevalent in the metropolitan centres and in support of larger, higher profile arts organisations. He added that smaller, community-based organisations in rural areas, for example, are struggling to achieve significant corporate sponsorship.

And raising funding from individuals is also problematic for the arts in Wales. We were told that the comparatively low number of high net worth individuals in Wales makes fundraising from individuals very difficult. Compounding this is the difficulty Chapter Arts Centre noted as the constant challenge of demonstrating the arts as a charitable cause. Arts fundraising consultancy Blue Canary also highlighted this issue. They told us that arts organisations are trailing behind the enterprise and initiative that is being demonstrated in income generation across the wider charitable sector.

The highly competitive market for funding from trusts and foundations was something that was brought to our attention throughout this inquiry. Private foundations in Europe have restricted their grant giving during a prolonged period of low interest rates. When combined with a number of years of public sector cuts, it is easy to understand why this market has become so fiercely competitive, as arts organisations scramble to replace lost public funding. We also heard that trusts and foundations prefer to fund distinct projects rather than replacing lost public sector revenue funding.

That being said, we were also told that, whilst competition for grants is fierce, many of the large London-based trusts still express a desire to invest more in Wales, stating that the number and quality of applications remains low. Those organisations that do succeed tend to be larger, with more capacity to dedicate to funding applications.

In this regard, Chapter Arts Centre stressed the importance of their public funding, explaining that trusts like the reassurance of seeing public support in place. For funders who are not local, this public support is often the first sign that a project has a local need and that it should be funded. I think it’s fair to say that, from the evidence we received, it is clear that as public funding declines, so too does the capacity to seek funding from private sources.

Raising revenue by selling goods and services is obviously another avenue to increase an organisation’s non-public funding. Arts & Business Cymru, who receive public funding to build relationships between arts and business organisations, explained that there has been a sharp increase in the number of companies seeking arts-based training to address staff development needs. Hijinx theatre company are such an organisation that have seized this opportunity. Hijinx now employ their learning-disabled actors to provide training for companies in communicating with vulnerable people. However, there are also companies like Theatr na nÓg, who explained that their remit as a charity is to provide a service that is not of a nature that would ever gain a return on investment by a commercial company.

In the Welsh Government’s culture strategy, 'Light Springs Through the Dark', they have recognised that the arts sector needs to adapt to cope with reduced public funding. The arts council’s resilience programme is one attempt to improve the culture sector’s financial sustainability. However, this programme is only open to the council’s revenue-funded arts organisations. As such, we have recommended that the arts council considers extending this programme to include arts bodies that aren’t already funded by the arts council, and we're pleased that they are taking forward work aimed at addressing this issue.

In our report, we have set out a number of recommendations aimed at addressing the general and, in many cases, very specific difficulties arts organisations in Wales face when attempting to increase their non-public funding. We have called on the Government to continue its financial support for the development of partnerships between businesses and the arts. We have recommended that the Government takes action to raise the profile of the arts as a charitable cause, and to increase awareness of the excellent arts organisations and projects based in Wales.

We’ve included a number of recommendations around the exploitation of international markets. Given the low number of large businesses and high net worth individuals in Wales, it is essential that these markets are recognised and exploited as far as possible. Given the small number and sometimes poor quality of funding applications being submitted, we have also called for the Government to provide a source of expertise to support small arts organisations to improve the number and quality of their applications.

So, in general, we also believe that the Government, as well as the sector, must up its game if it expects arts organisations to prosper with reduced public funding. Simply calling for them to do so is not enough. The call needs to be backed up by an appropriate and sufficient level of tailored and informed support.

In conclusion, although I am pleased to see that the Minister has accepted, at least in principle—and that’s another debate—our 10 recommendations, his response now needs to be accompanied by effective and appropriate action. In many instances, he has said he will be asking officials to work with the arts council to progress work to increase contributions. He’s committed to drawing up an action plan, and for the arts council and Arts & Business Cymru to arrange regional seminars for UK trusts and foundations, and I’m pleased to see these actions. The committee will also be expecting a report on how these efforts have translated into concrete changes for the better.

The committee will be returning to this topic next, and we ask that the Minister prepares an evaluation of the actions he has agreed to undertake in response to each of our recommendations by the spring. The Minister told us that the way the Welsh Government promotes partnership working between arts and business will be reviewed. He told us that he will be stressing to the arts council the need for it to continue to resource this activity, given that pressures on public funding are likely to continue for the foreseeable future. I would like to know what plans are in place to replace this work from April 2019 onwards if the arts council decides that Arts & Business Cymru is not providing value for money. Should their work not continue after April, what exit strategy will be in place? And is there a risk that we will lose vital learning?

Something that was made very clear to us during this inquiry is that Wales’s arts sector has an abundance of talented and passionate individuals. They deserve the support necessary to prosper, and to allow all of us to benefit from their gifts. Thank you.

Can I commend our acting Chair for the alacrity with which he's performed his temporary duties this afternoon? I think it was an excellent summary of our report, and the importance of it, and a great start to this debate.

I think the non-public funding that the arts sector receives is a key sign of its health, or otherwise. And it's important that we focus on this aspect. We all know that, throughout the ages, the great funders of the arts have been the princes of realms, and the princes of the church, and very public sources. Since the second world war, that's turned into the arts council and Government. But the amount that comes in from what we can loosely describe as the private sector, I think is really, really important as a mark of general health.

We do realise that, in Wales, we face some particular challenges. We are not London, but there again most of the United Kingdom isn't London. But an awful lot of the energy and the sponsorship that that generates through the business sector doesn't flow very far from London, and the metropolitan scene that's centred in London can be somewhat stifling sometimes. I think it is part of our work to challenge those sources of finance that are perhaps most comfortable in London to look further afield, not just to Wales—it would benefit them to look across the UK too—but we need to make our case very strongly. So, London is a key source for funding, and I think we should always remember that in our work and in the work we expect the Government to undertake.

We have great success stories as well, like the Welsh National Opera and the Artes Mundi prize. We've really got some of the best connections with the wider business community and sources of sponsorship and really creative programmes. So, I don't think we should suffer any lack of confidence in this respect.

I think one of the key areas the report highlighted in terms of the need for development is greater promotion internationally. The Government here can play a great part and the report mentioned trade missions, cultural exchanges. And can I just add that I've often thought that the projection that we give to the Mabinogion could be much greater? There are some success stories there as well, but it’s one of the great canons of world literature and in terms of the importance of the cultural development of Europe, it really is key. I've quoted John Updike several times in terms of what importance he placed on the Mabinogion, and he was a great champion in his time, in North America.

I do believe, as the acting Chair said, that fundraising expertise needs to be radically strengthened. I think the sector needs to co-operate to develop, perhaps with Welsh Government, that sort of muscle so that we can see the opportunities and we can present very coherent packages when we're making applications to funders. I think that, sometimes, we don't co-operate enough. We think that all the players out there, who might seek funding, will need their own fundraising officer. I'm not sure that’s necessarily the best way to approach it. There needs to be a more co-ordinated approach, and that can really then give you much greater strength in the capacity that you develop. Of course, the future of Arts & Business Cymru is very important in terms of the work that they've done to promote links between arts and businesses, and what will happen next year, as the Chair said, is very important.

I also think that we should remember the place of the experimental in art. Again, that’s another key sign of its success. That area is unlikely to receive very much or at least consistent non-public funding. So, we don't want to overlook that as well in our enthusiasm for other streams of finance. The approach we need is one that allows for a whole range of art to get a level of funding that it deserves so that it adds to our national life. So, public funding will still clearly be crucial.

I just would like to conclude: it was mentioned in the last debate actually that the Welsh diaspora is there. I think sometimes, because we don't see it as big as Ireland or even as Scotland—. But look at Scotland: they've done a lot of work in this area. I think that we should also tap in and perhaps define the Welsh diaspora as also including those who live in London, but also internationally. Again, there are many people there who, if asked, I'm sure would like to invest in our arts scene. Thank you, Deputy Llywydd.

I'd like to thank the Culture, Welsh Language and Communications Committee for their report and to thank the clerks for helping with the inquiry. The inquiry into the funding of the arts predates my membership of the committee, so, unfortunately, I was unable to interact with the witnesses, but I would also like to thank them for providing robust evidence.

There are those who believe that, in a time with so many competing calls on dwindling public funds, public funding for the arts is an unaffordable luxury, but I am not one of them. As our committee Chair rightly highlights, the arts illuminate and enrich our lives. They are an indispensable part of our society, and they bring wide-ranging benefits to us all.

The amount we spend on the arts equates to just 0.17 per cent of the Welsh budget, yet the arts not only play a vital role in our economy, but also help put Wales on the map. According to the Welsh Government's own figures, we have over 5,300 creative businesses in Wales, which generate over £2.1 billion in annual turnover, and give employment to over 49,000 people. The arts are a major tourist draw, representing 32 per cent of all visits to the UK and 42 per cent of all inbound tourism-related expenditure, to say nothing of the enrichment they deliver to our well-being, which is incalculable.

Over the last decade, public funding for the arts has been cut by over 10 per cent, and the Welsh Government have indicated that greater cuts are to come by asking the sector to reduce its reliance on public funds. However, as the committee discovered, doing so would be very difficult for arts organisations. Unfortunately, we don't have a great philanthropic tradition in this country, simply because The Sunday Times rich list isn't littered with Welsh sons and daughters and we can't rely on the largesse of billionaires. We have to find other means of supplementing the funds of Welsh arts organisations.

The committee considered a range of options, and its 10 recommendations are aimed at maximising the opportunities for alternative sources of funding. One thing is clear, the arts in Wales must continue to receive public funding and in order to reduce their reliance on that funding need some Government support. I am pleased that the Minister accepts, at least in principle, all the committee’s recommendations. 

In relation to recommendation 8, I am pleased that the Minister recognises how hard it is for small arts organisations to employ specialist fundraisers and therefore attract donors. The Minister says he will ask the Arts Council of Wales to look sympathetically at extending its resilience programme, and to encourage arts and businesses to promote options by which smaller organisations might share the services and expertise of a professional fundraiser. I would ask the Minister to go further. We shouldn't be asking or encouraging; these services have to be provided, so we should be directing and requiring. Access to a shared pool of professional fundraisers is essential if we are to decrease arts organisations' reliance on public funds. Diolch yn fawr. Thank you. 

Thank you. Can I now call the Minister for Culture, Tourism and Sport, Dafydd Elis-Thomas?

Thank you, Deputy Presiding Officer. May I start by thanking the committee members for their work? It's been a pleasure to co-operate with them. They have drawn attention to the financial challenges facing the arts sector in light of the undeniable pressure on the budgets of local authorities, as well as the recent reductions in the income from the National Lottery. We recognise these challenges and the Government continues to be entirely committed to funding the arts with public funds. We also acknowledge that it's unlikely that there will be a substantial increase in this funding for some years to come, and therefore it is crucial that we jointly consider all possible means of assisting the sector to increase its income.  

Of the 10 recommendations made in the report, I am pleased to have accepted or accepted in principle, the eight that are relevant to the Welsh Government. The report asks Welsh Government to continue to provide financial support in order to encourage businesses and the arts to work in partnership, and to consider whether additional funding is required in order to assist the arts sector in attracting more funding from business. At the moment, we fund this work through the arts council and through our support grant funding. The support is mainly available through the arts council itself, as Dai Lloyd mentioned in opening this debate, as well as from Arts & Business Cymru, which is supported by the council to provide specific services. 

The Llywydd took the Chair.

We do discuss with the arts council how we can combine this support. It has been noted that the council will continue to extend its resilience programme—or 'gwytnwch' in Welsh if you prefer. This programme does provide business support as well as governance support to key arts organisations to meet their individual needs. We are also eager to assist Arts & Business Cymru to continue the work to encourage corporate sponsorship and to encourage more people to become involved with the arts in all ways possible. I have asked officials to arrange partnerships where some of the core funding of Arts & Business Cymru will be based on the level of additional investment they secure for the broader arts sector. But we are still verifying that proposal at the moment. But I think that the concept of giving encouragement to Arts & Business Cymru and to reward them for their success in achieving funding is a very useful principle, and I very much hope that we will be able to retain funds in next year's budget specifically for that.

The report also asked us to raise awareness of Welsh arts institutions and the investment that trusts and foundations across the UK make in those organisations. We have tackled this in a number of different ways. We have asked the arts council to take the strategic lead. They have already held two days of meetings in London with representatives of major foundations within the UK, and these days have been so popular that they will lead to further events in Wales too.

In addition to that, Arts & Business Cymru has been organising a symposium to give face-to-face advice to arts organisations on how best to make successful applications for funding. In the most recent symposium, there were four trusts from London who had contacted Arts & Business Cymru in order to arrange similar events themselves. I will also be contacting the main trusts and foundations throughout the UK to ask for their support in taking this recommendation forward, and will invite others who are specialists in introducing successful bids and applications to the various trusts and foundations to share their experiences more broadly too.

The report also asks us to develop a strategy to assist the arts sector to develop international markets, to commission research, in order to earmark those markets that have the greatest potential for expansion, and to ensure that the cultural element is prominent in overseas trade missions. We warmly welcome this. Following a change in our relationship with the European Union, Wales must develop a new story to convey our international work, along with the European Union, of course. That follows the vision statement that we received in ‘Light Springs through the Dark’, and the emphasis on how important it is that people take an interest in culture in order to clearly demonstrate that we are a contemporary, outward-looking nation, and a nation that people should visit in terms of tourism, and where people can do business.

In July, while speaking to an international arts forum in Cardiff, I had an opportunity to challenge the key agencies, including the British Council in Wales, the arts council and the books council, as well as museums and galleries Wales, to work with us within Welsh Government in order to tackle this intention to improve cultural and economic outputs in our international activities. The response to that has been extremely positive, and there will be a further meeting soon to develop this work. 

As the committee emphasised, having specialist information on fundraising is crucial, particularly for smaller arts organisations. In this regard, it’s important to remind any arts company or any arts business that the support that we provide through Business Wales is available to them too. These services are available to smaller arts organisations to assist them with marketing, to take advantage of intellectual property and so on and so forth. But we do accept that more specialist assistance is needed in some aspects of fundraising, and the arts council once again is tackling this issue. And the council will soon announce plans to help smaller organisations to develop and to fundraise, particularly for those not in receipt of core funding within the arts council’s plans.

The Arts Council for Wales has also provided lottery funding to Arts & Business Cymru in order to develop a programme of creative interns to train new professionals in fundraising. They will also be supporting bursaries in the National Arts Fundraising School, and the council has also created a briefing pack on fundraising for the first time. This work will be developed and the materials will be available soon.

And finally, I come to my favourite, yet to be fully established body, which is Creative Wales, Cymru Greadigol, and the committee has quite rightly asked us to explain the objectives and how Creative Wales, Cymru Greadigol, will be established. It will be established as an internal agency within Welsh Government, corresponding, but not following the exact model in terms of its internal arrangements, to Cadw and Visit Wales. We are currently appointing members to an advisory board, and this new agency will be expected to work in close partnership with the arts council, and the council welcomes that, of course.

We believe that Creative Wales, Cymru Greadigol, will be an organisation that will be able to develop the economic potential more fully in the creative sector. And I do hope that that responds to the valuable recommendations made by the committee. Thank you.

I call on Dai Lloyd to reply to the debate.

Thank you very much, Llywydd. And thank you to everyone who has contributed to this important debate, and first of all to David Melding for his kind words and also for outlining the history, of course, because we are talking here about a number of challenges in this field of fundraising for the benefit of the arts. And, of course, I’m very pleased to hear about the Mabinogion—it’s not every day that we talk about the Mabinogion here in the Chamber—one of the masterpieces in Europe, certainly, in terms of literature. I’m very pleased that David also recognises that, and makes the wider point that London isn’t Wales in terms of fundraising, but also that we should have the confidence to go to London and to pursue those funds, and to have the confidence not just to go to London, but to go internationally to seek those connections with the Welsh diaspora, which was part of the debate that we heard in the previous debate. Mark is on his feet.

The great Mabinogion include the first known Arthurian romances in Welsh, critically written before Geoffrey of Monmouth wrote his false accounts for the Norman courts. Do you agree that we should be reclaiming those stories for Wales? 

Absolutely, but some of us have never lost them, so if you go far enough back—[Laughter.]

So, thank you very much, David, and, indeed, to Mark, and also to Caroline, who put forward a strong argument for the wider value of the arts and also the key contribution in terms of tourism. And also, I’m very pleased to note in the Minister’s response, to be fair, that he did answer our questions—questions that we put forward. The Minister also told us about the challenges that we face and also stated clearly that he continues to be committed to funding the arts in terms of public funding, and, of course, confirmed this resilience programme is to continue. We also welcome the news with regard to Creative Wales, Cymru Greadigol as well. I'm also grateful for the positive response to our recommendations. It has been a means, through this debate and report, of raising awareness of the importance of the arts. I'm very pleased to talk about the work that the Welsh Government is doing behind the scenes. It's not always given the publicity that it deserves, but it is supporting those people who make those successful funding bids.

To close, we have a whole host of talented and passionate individuals working in the arts here in Wales, and we have a whole host of Welsh people worldwide as well as in this country who have sufficient goodwill to want to support them in this regard. So, it’s a matter of bringing the two together. With strong leadership from the Welsh Government in this area, we do expect to see transformation in terms of funding and developing the resilience for the arts here in Wales. Thank you very much.

The proposal is to note the committee’s report. Does any Member object? No. The motion is therefore agreed in accordance with Standing Order 12.36.

Motion agreed in accordance with Standing Order 12.36.