Pity the artists. The writers, sculptors, composers, musicians and actors. We believed we were struggling in our 21st century garrets, eking out an existence, surviving on our day jobs. At least we were suffering for our art. Only it turns out that we have been bitterly deluded. The latest report from Arts Council England (ACE) demonstrates with forensically gathered evidence and logic that we’re off the scale when it comes to ROI (that’s Return On Investment as any thespian will now tell you).
Outperforming
The Centre for Economics and Business Research (CEBR)’s study for ACE shows ACE gets less than 0.1% of government spending, but produces four times that for the UK’s GDP. And as the Independent points out, the study shows that the arts sector also generates more per pound invested “than the health, wholesale and retail, and professional and business services sectors”. However, despite this truly startling and counter-intuitive set of figures, speaking as someone who’s spent their adult working life as an actor, writer and director, I’d still paraphrasingly echo Noel Coward’s advice to Mrs Worthington and suggest that as a parent, you don’t put your daughter on the stage, in front of an easel, before a lump of bronze. Certainly not if you’d like them to look after you in a disgraceful, but financially comfortable old age.
Money, money, money
But ACE’s report has implications far wider and deeper than defending the arts’ corner in a Treasury-DCMS face-off. First, it is deeply damaging for supporters of austerity (Well, I say ‘supporters’, but I suspect that after three years of bottom-feeding, there’s only one supporter left, George). It gives the lie to the idea that the solution to national debt is pulling in our horns. Austerity is the flip side of the profligacy coin, not its nemesis. Neither create what every family, every arts organisation, every business, every nation strives for: sustainable growth. Even in the terrifyingly unpredictable arts world, it is possible to invest wisely and generate the wealth that this country needs to compete internationally and pay our way. If you’re that mythical average earnings taxpayer in the UK, you can feel prudently warm and gooey that your sixty quid investment every year through ACE is helping make almost £250. Let’s skate over what we’ve poured into the banks.
HS3
Second, arts can provide not just spectacular investment returns (did I mention “0.4 per cent of GDP – a significant return on the less than 0.1 per cent of government spending invested in the sector“?), but do so speedily. ‘War Horse opened at the National Theatre on 17 October 2007. It’s currently earning £3m a year for the theatre from the West End production alone, leaving aside the international productions and revenue from aspects of the film. Compare that to the glacial progress of HS2.
Winning here
Third, it’s not just that investment pays off, but that it’s government investment. Sure, it’s operated at arm’s length through the Arts Council, but it’s still government money, spent on our behalf by a quango. It is possible for governments to pick winners. Imagine if the same model (suitably adjusted to each sector) operated in all areas of UK business and industry. Even Warren Buffet has only managed just under 20% over the last two decades.
Arts education, arts education, arts education
Fourth and last, the implications for the role of arts in our education system are not simply that they should be valued, but that it should be recognised they, in that phrase beloved of business, clearly ‘add value’. The evidence suggests that not only could arts subjects have a claim to be in the mix of the three ‘extra’ subjects that schools will be assessed on at GCSE, but that they definitely should be included.
It’s also just worth considering that, as an industry, the arts don’t kill people, pollute, cause cancer, cirrhosis of the liver, increase global warming or use pesticides. They just tend to make us happy.
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11 Comments
Delighted to see an article about the arts! There is a very powerful economic case for investing in the arts, but it is not just that, it is about the kind of society we are and our quality of life.
“Third, it’s not just that investment pays off, but that it’s government investment. Sure, it’s operated at arm’s length through the Arts Council, but it’s still government money, spent on our behalf by a quango. It is possible for governments to pick winners. Imagine if the same model (suitably adjusted to each sector) operated in all areas of UK business and industry.”
Leaving aside the facts that that the ability of subsidised theatres to pick winners really has no connection with business , have havent provided any information to enable us to judge whether the Govt is any good at picking winners. One example doesnt prove anything. How much has been spent overall and how much returned ?
Warren Buffett spends all day analysing financial reports and that is how he gains a competitive advantage over the market. Politicians picking pet industries and citing past performance is not a reliable economic strategy.
Agreed Geoff. What I felt was worth highlighting about the ACE report was the wider implications it has for government/private sector/education priorities, investment and cooperation. All that economic success AND a culturally richer and more reflective society.
Simon, the ACE report is at http://www.artscouncil.org.uk/advice-and-guidance/browse-advice-and-guidance/contribution-arts-and-culture-national-economy if you’d like more details. The report includes more art forms than just theatre. In terms of picking winners, what’s worth examining is how government can play its part as part of an industry environment to help stimulate growth.
Eddie, I agree with you. What’s interesting is how politicians, quangos, individuals, charitable trusts, companies and organisations have cooperated to generate £4 for every £1 of taxpayers’ money. The debate is richer than market forces versus state ownership.
You’ll be interested to know that Warren Buffett is not interested in significant returns, but rather the maximum return for the capital employed.
When Warren Buffett bought Berkshire Hathaway it was a textile mill company. He refused repeated requests to reinvest the profits into the textile industry and instead invested the income into businesses such as Coca Cola. If he invested based on bias we wouldn’t be talking about him today.
People need to stop proposing to spend tax payers’ money like it’s nothing. Any investment policy proposal needs to come with a proper analysis of market risk and returns.
In my opinion if we got rid of all this corporate welfare then maybe there wouldn’t be a need for benefit cuts.
Ah right Simon, I missed your last comment. Yes there is something to be said for state planning, I just want to emphasise the importance of independent analysis because at the moment it seems to be a product of lobbying!
There’s no analysis (because there’s no data) of how much the arts would bring in if left to the private sector. If a QUANGO is so good at picking things such as War Horse then why would the private sector have not done the same thing?
Yes, you can argue the private sector is currently free to do this but if the government is funding everything it distorts the market and crowds out private sector investment.
Simon – I agree wholeheartedly with your analysis though I would question your assertion that the arts don’t contribute to cirrhosis – all those bars and restaurants round The South Bank aren’t servicing the needs of commuters from Waterloo, you know!
I have no doubt that investment by the government in the arts is exactly that – an investment that generates significant GDP and enriches all our lives. Nobody simply goes to the cinema, or the theatre, or a concert. For most people, the live performance is at the centre of an experience that is inextricably linked with having a meal, a drink, buying a programme, an ice-cream etc etc.
And I am not in the least influenced by the fact that my nephew is an aspiring playwright who works at The Globe!
The report must be read in conjunction with an understanding of the commercial creative industry (e.g. the music industry): http://www.prsformusic.com/aboutus/corporateresources/reportsandpublications/addinguptheindustry2011/Documents/Economic%20Insight%2011%20Dec.pdf
Eddie is absolutely right, and this is true in the arts business where a great deal of research and care is taken before backing a winner; not all arts producers are funded.