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EXCLUSIVE: Arts finances in worst shape in five years | News
The finances of arts and cultural organizations in England are in a worse state than at any time in the last five years, an investigation carried out by Arts Professional in partnership with financial benchmarking company MyCake has found.
Analysis of a cross-section of 2,800 organizations across the country that have submitted accounts every year since 2018 shows they recorded a combined deficit of £117.8 million in 2023.
This represents a huge decline in their financial health compared to 2022, when, despite facing the ongoing impact of the Covid pandemic, they collectively made a profit of £152.4 million.
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The only other global deficit was recorded in 2020, when organisations’ collective expenditure exceeded income by £15.3m, during a period when sites across England were forced to close due to Covid restrictions.
Finances improved markedly in 2021 as venues were allowed to reopen with a collective surplus of £232.6m recorded. This was followed by a surplus of £152.4 million in 2022. But since then the situation has worsened dramatically (see chart).
The data set is dominated by nonprofit organizations and does not include organizations that closed during the period. It covers a range of cultural organisations, from small amateur dramatic societies to large national portfolio organizations that receive core funding from Arts Council England.
The £118m loss in 2023 comes despite combined income reaching the highest level in the six-year period at £4.72bn, but expenditure reaching £4.84bn.
The income level of £4.72 billion for 2023 is 4.7% above the combined income of £4.51 billion in 2018, but has failed to grow in line with inflation. According to Bank of England figures, income levels of £4.51 billion in 2018 would have to have risen to £5.62 billion in 2023 to keep pace (see chart).
Income for arts and culture comes from a variety of different sources, including core funding and grants from central and local government, donations, ticket sales and other commercial sources such as cafes and restaurants.
But many of these income streams have been hit in recent years, with local government funding being particularly affected as many municipalities have reduced spending on arts and culture.
Appearing before the Culture Select Committee on 22 May, just hours before Prime Minister Rishi Sunak called a general election, Culture Secretary Lucy Frazer was asked about the extent of the financial pressures facing the arts and culture sector , but failed to give any examples of organizations in serious difficulty.
She said that during her year as Culture Secretary, she feels that cultural organizations were empowered to “maximize their economic potential” by making tax exemptions for theaters, orchestras, museums and galleries permanent.
But the Labor Party acknowledged the financial situation, with Shadow Culture Secretary Thangam Debbonaire saying it would seek more money for the arts would be his first priority if Labor wins the general election.