DCMS Select Committee Inquiry - Written Evidence
Southbank Centre is the UK’s largest arts and cultural organisation and includes the iconic Royal Festival Hall, Hayward Gallery, Queen Elizabeth Hall and Purcell Room.
We are home to the National Poetry Library and look after the Arts Council Collection, which regularly tours the UK’s regional galleries.
We present over 3,500 events a year - over 40% of which are free - and we are the 5th most visited attraction in the UK (after the British Museum, the Tate and the NHM).
We are home to 8 orchestras and play a key role in supporting the wider arts ecology in the UK via our work with resident and associate artists, community organisations and grassroots cultural activity.
Our extensive creative learning and participation programme reaches young people and families, the socially isolated, and those affected by homelessness, dementia and addiction.
All this work is now under significant threat.
Southbank Centre’s unique circumstances.
We know that many of the problems facing the Southbank Centre are shared by other large cultural venues, all of whom provide a national and internationally renowned programme of arts and culture. However, we are uniquely different in one way and therefore particularly exposed in the current crisis.
As well as providing a wide-ranging daily cultural programme - for which ACE gives us funding and for which we are very grateful - we are also required to maintain and manage an 11-acre National Heritage estate, all of it public realm, right in the heart of London.
This outdoor space, together with the bars and restaurants on our site, attracts over 30 million visits a year and is a tourism hub. We regularly programme free cultural activity across our site so that all visitors have the opportunity to experience it, thereby ensuring that access to art is not necessarily a privilege of wealth, creating opportunity, social mobility and easing the social perils of isolation and loneliness..
Unlike other heritage cultural assets which are directly funded by the DCMS (the National Galleries, Museums and Libraries) we are a Performing Arts organisation - (despite the fact we also look after the Hayward Gallery) - and as such, funded through ACE.
This means that we do not have access to the additional DCMS funding for the capital costs of heritage buildings which is available to Museums and Galleries. Our annual ACE grant of £18.7m is prescriptively granted for the delivery of our artistic programme. It now represents 37% of our total income.
This puts us in a unique category. The annual costs of running our site (maintenance, cleaning and security) amount to £11m and have to be found from the commercial income (our bars and restaurants) that we have established in order to address the funding gap.
This commercial income has totally collapsed with the arrival of Covid-19.
Since 1 April 202 we have received almost no commercial income compared to expectations of £2.4m. Restaurant businesses are unable or unwilling to pay rent and are expecting revised arrangements which will cut back our income substantially if and when they can reopen. Bookings for events such as graduations and corporate activity has stopped in its tracks.
We are facing making difficult but necessary decisions to downsize the operation and activity to have a chance of remaining viable in the short and long term.
Delivering basic maintenance and refurbishment to ensure that the venues remain fit for purpose has required not only significant funding from the Lottery, Trusts, corporates and philanthropists but also securing significant long-term commercial debt. This debt currently stands at approximately £21m, secured against the one freehold building on our estate, as well as rental income from our retail tenants.
Prior to the COVID19 pandemic, this debt was already a significant but manageable burden with servicing costs of around £2m per annum. Now it is crippling as we have little or no income; and all forecasts indicate that it will be a number of years before we can hope to replicate the commercial income that we had built up pre Covid.19.
The debt also means we are unable to access any other relief measures offered by HM Treasury - eg CBIL - since we cannot take on more debt and have no assets left to secure against the 20% not provided by Govt in that scheme.
We are asking as a priority that DCMS addresses our debt levels, either by providing the funding to pay off these loans, or by taking over the loans and releasing Southbank Centre from this liability.
Unencumbered, we believe we might be able to access the CBIL scheme or similar and find a way through to deliver an ambitious artistic programme in a financially sustainable way, with the inevitable lower than expected income.
The reinvention of our model will undoubtedly require some tough decisions, a number of difficult trade-offs and vital choices, but we believe we can adapt and emerge successful and strong, at the heart of the cultural and social landscape of the UK and, as relevant as ever.
We believe we are the only arts venue of national significance, funded by ACE, with significant debt. By helping us address our current debt levels - incurred to refurbish the site - DCMS will give us the opportunity to get onto the front foot and the confidence to take all the other challenging decisions needed to secure our future.
For this reason, we call on government to:
● Urgently address the issue of Southbank Centre’s historic capital debts.
● Allow Southbank Centre regular access to DCMS annual capital and maintenance funding.
● Extend the furlough scheme beyond October for cultural organisations unable to re-open due to the restrictions of social distancing.
● Extend and develop the Exhibition and Theatre Tax relief.
● Develop a large scale intervention to support the arts sector as it navigates this crisis and help it survive and plan for the future.
● Support those self employed artists and musicians who do not qualify under the current financial support schemes.
Introduce the organisation and explain reason for submitting evidence
● Southbank Centre is a National Heritage site, the UK’s largest arts centre and the UKs 5th most popular visitor attraction (ALVA, 2019).
● Our site consists of 600,000 square feet across 4 buildings together with 11 acres of outdoor space (all public realm). Our buildings include the Royal Festival Hall, the Queen Elizabeth Hall, the Hayward Gallery and Liner Building.
● We present over 3,500 events each year and over 40% of our arts activities are offered free of charge.
● We are home to 8 resident and associate orchestras, the National Poetry Library and the Arts Council Collection.
● We work in partnership with a diverse network of freelance artists and we collaborate with many regional galleries across the country on an extensive Hayward Gallery and Arts Council touring programme.
● Southbank Centre also delivers a year-round free public programme for families, for the socially isolated, and for those affected by dementia, homelessness and addiction. We also support a range of community initiatives on site.
● 21% of our ticketed audience identify as being from a BAME background.
● Our educational youth programmes reach thousands of children each year.
We are submitting evidence as our future is under threat.
Given that social distancing is likely to remain in place, we do not believe we can open our concert halls to the public until April 2021 since the reduction to 30% capacity is not financially viable.
The prospect of Government furlough support ending in October means that we will need to make redundancies. This creates a financial impact that will jeopardise the level of arts, health & wellbeing and creative learning activity we can deliver in the
We face unique challenges due to the immediate loss of 60% self -generated income and the debt burden we carry.
What has been the immediate impact of Covid-19 on the sector?
Most of the sector faces one or more of the following challenges, but ALL of these are being faced now by Southbank Centre:
● Financial instability due to the loss of self-generated income.
● The prospect of prolonged closure due to social distancing rules, affecting our ability to reopen quickly and earn revenue.
● Threat to jobs if Government support for the sector is not maintained during forced closure.
● Low cash liquidity levels with a strong possibility of not being able to operate as a going concern.
● Threat to the livelihoods of the many freelance musicians and artists.
● Loss of talent leaving the sector due to uncertainty and/or redundancies
● Loss of commercial venue hire rental with ongoing softening of demand expected.
● Restaurant and shop rent income affected due to the request for rent holidays and reductions and the likely closure of vulnerable operators.
● Audiences hesitant to return.
How effectively has the support provided by DCMS, other Government departments and arms-length bodies addressed the sector’s needs?
DCMS has been quick to listen to the cultural sector and convened helpful roundtables with Ministers and officials at the start of the crisis. The Government’s initial funding support through mechanisms such as the furlough scheme has also been very welcome and gratefully received.
However we urge Government to understand:
● We need support for cultural organisations and artists to continue beyond October.
● Although we are maximising use of the Government Job Retention scheme, we will still need to make redundancies to achieve a viable business model and save costs during the protracted closure period and a weak economic environment.
● We cannot make use of the CBIL scheme because of our existing debt of £22m. We urgently ask the Govt to address these debt levels and release us from this liability.
● We need urgent clarity for those creative self-employed workers who may be most in need and fall between the Government's schemes.
● The response from Arts Council England has been positive and swift with the ability to immediately draw down 6 months of funding very welcome. We are applying to the National Portfolio Organisations (NPO) emergency funds, however we recognise that by paying forward significant funding now, ACE will need support from the government for the future funding of the arts sector.
● The ACE NPO emergency fund is designed to prevent imminent insolvency (until Sept 2020). We are grateful for it but we need a clear plan to help support our future reopening costs.
● A large scale financial intervention to support the whole arts sector will be required, but the scale of this is beyond ACE capacity. DCMS must understand the key financial dynamics that drive the performing arts sector both in terms of operating during continued social distancing and reopening challenges we face.
What will the likely long-term impacts of Covid-19 be on the sector, and what support is needed to deal with those?
It will not be financially viable for concert halls, music venues and theatres to operate with social distancing measures, with what would be only 30% seat capacity. Many venues are also heavily reliant on commercial income streams which will be much weaker in an economic recession and yet they carry high fixed costs associated with maintaining large public buildings.
In addition, we think that Government needs to consider the following:
● Further support is required for the creative workforce, particularly for the many freelancers in the creative sector who fall outside current schemes, as many talented and creative people will be unable financially to continue their work in the arts and culture sector and will instead turn to other industries to make a living.
● The impact of the crisis on audience behaviour will also be extremely significant. It is likely that there will be a significant degree of wariness amongst customers to attend indoor events and large gatherings, as well as some reluctance to travel to a central London venue. Public health reassurances from the Government once we are in a position to reopen will be vital to restoring confidence. In addition, a public campaign for cultural venues, akin to the “London is Open” campaign, would be helpful in encouraging people to return to our venues.
● Offering a digital cultural programme is not a solution for those of us maintaining venues and whose primary purpose (and business model) is live event, performance and footfall on site. There are negligible revenues for online artistic content - particularly now when so much is being offered for free. Audiences are unlikely to accept future charges for online content.
● Social distancing rules means that the logistics for the performers, including reduced numbers and the possible need to wear masks, could inhibit our ability to present work. These measures also seriously affect audiences’ enjoyment and could dissuade them from wanting to attend.
● We would appreciate government support for the sector to agree a unified response in terms of when and how we re-open. We ask for a clear mandate and timeframe from the government on relaxing social distancing measures.
What lessons can be learnt from how DCMS, arms-length bodies and the sector have dealt with Covid-19?
How might the sector evolve after Covid-19, and how can DCMS support such innovation to deal with future challenges?
At Southbank Centre, we will review our business model, make savings and adapt our model where we can in order to try to survive this crisis without undermining the wider impact we have on communities, artists and audiences across the UK. We will think and act like a start-up organisation in order to ensure we can work our way through this crisis and we will use creative and entrepreneurial thinking to do this.
However, while we are continuing to deliver on our social mission despite lockdown, and our popular (B)old creative workshops for people with dementia are continuing remotely through phone calls and postal packs, we cannot continue to deliver the scale, reach and impact of our artistic, learning, health & wellbeing programmes and our work with disadvantaged communities without a clear package of longer term support from DCMS.
Our social value is considerable: we provide a free programme that ensures access to the Arts is not a privilege of wealth; we contribute to social mobility and we provide meaningful release for those who are socially isolated and lonely. We need a plan for the wider sector which gives certainty that Government will provide the necessary support needed until we can fully reopen.
We believe passionately that a live and personal encounter with music and art, shared with others in congregation, is something that can never be replaced online. We also believe that the proliferation of free online content has now undermined any future introduction of paid-for content as a way of generating substantial new income.
Finally, it’s undeniable that arts and creativity have been a great tonic for so many people during this dark period, and we have seen people turning to books, art and music in ever-increasing numbers.
It is surely time now for the Government to recognise the critical importance of arts and creativity to our nation’s mental health and wellbeing, as well as our economy, and commit to nurturing the next generation of artistic talent, whilst doing whatever it takes to ensure the current workforce has the support it needs to survive.
It is also time for the role that arts organisations such as Southbank Centre play in delivering access to the arts for children and young people to be fully acknowledged and supported by the Government.
Just as the Festival of Britain in 1951 was created to provide a 'tonic to the Nation’ which was recovering from an existential crisis, now more than ever there is the need for the arts to play a leading role in the national recovery.
As the only remaining legacy of the Festival of Britain, the Royal Festival Hall and Southbank Centre is an iconic and symbolic institution that we believe should be leading this recovery, as it did in the past - and should not be allowed to fail.