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Diane Banks: The arts are addicted to public money. Set them free

Wednesday 7 April 2021

The system of subsidies doled out by quangos is no longer fit for purpose. Technology, private investment and subscriptions could lead to a cultural renaissance


Last week, Glastonbury festival and the Young Vic theatre were among 2,700 arts organisations to be awarded Treasury-subsidised grants, in the second tranche of allocations from the £1.57bn Culture Recovery Fund launched last July. 

Everyone who cares even slightly about culture in this country – and that should include anyone who cares about the global reach of post-Brexit Britain – should be glad this fund was created and is helping hundreds of venues, theatrical companies, heritage sites, and cinemas to survive in extraordinarily adverse circumstances. 

Thanks to the fund, many venues that would otherwise have closed for good should now be able to reopen on 17 May (albeit with social distancing and other “non-pharmaceutical interventions” still in place).

Yet the fund is, by definition, a temporary measure and certainly not a structural solution to the problems facing the cultural sector. The last, horrendous year has shed harsh but much-needed light on the vulnerability of arts organisations and their perilous dependency upon public subsidy. The emergency action taken by Rishi Sunak, the chancellor, and Oliver Dowden, the culture secretary, should not deepen this dependency but encourage precisely the opposite response: a more imaginative, entrepreneurial approach to the funding of the arts.

It is easy to forget that the arts were squarely market-driven until the end of the 19th Century: funded by religious institutions, wealthy (and increasingly middle-class) private individuals, and the trademark Victorian culture of subscription. This could take many forms: from subscriptions for the display of public art – statues were a particularly common example – to subscriptions to a magazine or journal. The consequence was that the subscribers invested in the content that they wanted.

This approach was slowly eroded by growing elitism (concern that the masses had questionable taste) coupled with the surging statism of the last century. These twin forces culminated in the establishment in 1940 of Council for the Encouragement of Music and the Arts – a phenomenally successful endeavour, first chaired by John Maynard Keynes, which is now the Arts Council. 

In 1964, Harold Wilson appointed Jennie Lee as the UK’s first Minister for the Arts; the advent of National Lottery funding under John Major’s government was transformative; and a key tenet of New Labour was to place the arts front and centre of Brand Britain (or “Cool Britannia” as some insisted on calling it).

Even the most ardent opponent of statism should concede that this half-century of public funding made possible the growth of a world-leading creative economy – one which has had many ancillary benefits, as a key force in the encouragement of tourism, and one of the strongest foundations of Britain’s soft power.

Yet the present crisis is an opportunity to ask rigorously whether the pendulum has swung too far in the direction of taxpayer-funding; and whether the future of the arts lies in a much more diverse financing structure that does not rely so heavily upon public funding doled out by quangos. As the bill for Covid starts to bite, that subsidy will, of necessity, be limited. 

But there is, in any case, a more positive argument to be made for a different approach in the third decade of the 21st Century. Let us look first at the status quo.

Pre-pandemic, our creative industries were growing at at least two times the rate of the economy as a whole; the UK was well-established as one of only three net exporters of both music and television content in the world; and the sector was relatively Brexit-resilient, since there had never been an EU single market in intellectual property for us to leave.

All the same, private investors have generally shied away from this apparent success story. The profit motive plays too small a role in the UK creative ecosystem; research and development takes too long; the “hits” model – occasional big successes helping to subsidise everything else – is too unpredictable; and lack of assets has often disqualified new creative businesses from borrowing. (Ironic, given the billions ploughed by venture capitalists into pharma and tech companies – which, in practice, undertake a surprisingly similar quest for “big hits”, fully conscious that most of their researches will fail.)

But that landscape is changing, and is being replaced by an entirely new and much more dynamic way of doing things – one in which the creative sector can flourish.

Firstly, at the most tectonic level, the value of human capital in the automated era will be huge. We will assign a higher value to the aspects of the human condition that machines cannot replicate. And – as that happens – we will increasingly seek inspiration from those whom we associate with creativity, authenticity and thrilling individuality. That should be the philosophical baseline: that the demand for the arts will grow in the decades ahead, and that we need to find new ways of harnessing that demand.

Secondly, and crucially, technology has massively reduced the risks and costs of R&D and distribution – especially in film, gaming and book publishing. These processes used to have notoriously long lead times between development and launch. No longer.

Performing arts venues and museums, which have typically relied on donations, grants and patronage, now have opportunities to monetise vastly augmented audiences through live-streaming. They have access to tiered membership platforms such Patreon – which suggests that Kevin Kelly’s 2008 notion of 1000 True Fans (you only need a relatively small audience of passionately committed individuals to achieve success) may finally come into its own. 

My favourite case study of this during lockdown was the Tank Museum in Dorset, which drove exponential international sales to their online shop by growing their YouTube following to 320,000 subscribers and clocking up 16 million views.

To take another example: the recent trend for NFTs (non-fungible tokens) means that artists can sell their work to their fans directly without involving either physical or digital intermediaries. Yet again, this demonstrates the straight-to-market opportunities that tech has opened up to the creative sector.

And – perhaps most importantly – the tide is gradually turning in investment patterns. Look, for instance, at high-profile music funds such as Merck Mercuriadis’s Hipgnosis; Great Point Media has recently floated a streaming trust; and Li Jin, formerly of Andreesen Horowitz, has launched Atelier, a fund which invests in the “passion economy”. Capital is forming a new bond with creativity, as the possibilities of faster returns in decentralised systems, free of bureaucracy, increases dramatically.

Finally, the notion of the corporation is changing radically, in ways to which the cultural sector should respond with imagination and enterprise. Companies that want to define themselves according to their values, as well as their profitability, are looking beyond the old model of sponsorship to much deeper forms of partnership. A brilliant, technology-enabled example of this is Bank of America’s Masterpiece Moment – a fortnightly digital exploration of a great creative work – showing how businesses increasingly want to embed the arts in all that they do.

This is much more than a logo prominently visible when you enter an exhibition, or a corporate page at the front of an opera programme. It reflects the desire of ambitious businesses to be aligned with humane values.

Yes, tax incentives will always help to drive investment in the arts, especially in the regions. But the deeper force here is the meshing of artistic ideals with modern companies’ ESG agendas – increasingly seen as non-negotiable by investors.

Increased private funding for the arts and creative industries will lead to growth and increased resilience. It will also help to correct the undoubted misalignment between what the grandees of the arts quangocracy think audiences should consume; and what they actually do want to consume.

As Munira Mirza (now head of the Number 10 Policy Unit), wrote in her seminal essay collection on arts policy, ‘Culture Vultures’, for Policy Exchange in 2006, the value of public investment is always up for dispute. But value in the marketplace is always up to the consumer. 

More recently, the cultural think tank Out To Perform identified in the pandemic an opportunity to democratise the way in which the performing arts projects work, revealing quite how much culture is still kept locked behind the gates of institutions.

The paradigm shift that is needed is one in which that culture is liberated and the old power structure of centralised elites dismantled. We need fewer Whitehall committee meetings and more campaigns to fund specific works of art, subscription models and performances driven by public taste rather than the whim of quangos.

It should not be a heresy to ask if the current funding model is a constraint. Indeed, it is odd that we are not asking the more natural question which is: should we still be using a model from the 1940s in 2021? Public subsidy will remain part of the mix, for sure. But it is high time we looked at other options, too.

Will the pandemic kill the arts? Not at all. We’re on the verge of a renaissance.

Diane Banks is CEO of Northbank Talent Management and a non-executive director of Bright Blue @dianembanks