Written evidence submitted by The Old Vic
Select Committee Call for Evidence on the Impact of Covid-19 on DCMS sectors
6 June 2020
The COVID-19 pandemic likely presents the greatest threat to the future of The Old Vic since its opening in 1818 because, unlike comparable cultural organisations, we receive no ACE or government funding, instead generating 100% of our income from theatre and event tickets, donor support for artistic work and education workshops/activities, and trading (merchandise and catering): all sources of income that depend upon us being open to the public. We are currently existing by paying reduced operating expenditure through reserves. This cannot continue beyond the autumn if we wish to re-open the theatre and continue to produce work.
The Old Vic is a 202-year-old Grade II* listed theatre, a cultural civic centre with an annual turnover of circa £15.5m (2019/20), employing up to 250 staff (82 permanent) situated in the borough of Lambeth and is additionally closely linked with the borough of Southwark due to geographical proximity and user demographic. Unlike other arts organisations, comparable in scale, artistic and societal contribution, The Old Vic operates independently and is not in receipt of any regular government subsidy. It has raised £31m over the past five years in funds to keep itself thriving.
The Old Vic is known as a world leader in creativity and entertainment, and has operated in this vein much of its 202-year history. Today it is widely known as one of the UK’s leading theatres with global impact, reaching audiences in person and online of 500k+ every year, with over 60% of those engaging for the first time. The Old Vic is an iconic, national treasure, attracting 11% of bookers from overseas in 19/20 and operating as one of the UK’s cultural attractions. The Old Vic is a good bet for surprising, fun and intelligent entertainment which is accessible, vibrant and inspiring; as well as being renowned as a place that is committed deeply to its social mission as an arts educator and talent creator.
Artistic Director Matthew Warchus’ aim is to make the popular artistic, and the artistic popular, sharing each Season an eclectic mix of new writing, musicals, dance, classic revivals with a twist alongside work by auteur directors, and productions for all the family to enjoy. In the last five years, our multi-award-winning theatre has produced 30 collector’s item productions of which 18 were world premieres and 17 transferred to the West End or Broadway, toured nationally or internationally, or were broadcast in cinemas, as well as dozens more Voices Off talks and debates, One Voice monologues, late night comedy or variety nights on its iconic stage. This extensive work adds to the long-term bank of national cultural assets which predispose people to listen to the UK on the world stage, boosting our soft power as a nation and supporting the vibrancy of the nation globally.
Many engage with us online; The Old Vic has followers currently totalling 320k across all major social platforms and YouTube. Since our building closure, we have broadcast free-to-access our award-winning 2018 production A Monster Calls and a monologue series in celebration of the NHS, The Greatest Wealth, reaching a total of 7.7 million impressions on YouTube to date in over 44 countries, demonstrating our reach and brand appeal. Growth across all social channels during closed has increased by 6.7% with YouTube alone showing 40.9% growth in subscribers.
But this does not tell the full story of The Old Vic. As a theatre operating independently as a registered charity, The Old Vic’s identity is built around its wider societal contribution. Our free-to-access inspiring programme of education, employment and social mobility projects engage with 10,000 people a year giving access to free theatre tickets, bespoke learning experiences, and partnering with over 100 schools across London each year to provide all our resources for free, including lesson plans linked to the National Curriculum based on the themes of each production. 100% of our teachers rated our projects excellent or very good. A new online Education Hub (detailed below) now makes all of those resources free to access for teachers and students all over the world and underlines the power and effectiveness of the UK’s education model globally.
At the heart of our mission is making The Old Vic accessible. Each year we give away just under 10% of our tickets free or at discounted rates (this equates to a £1.23m public benefit) to groups (local and beyond) who would not otherwise be able to access theatre including Mousetrap, Gingerbread and the Black Ticket project. We do so through audience development initiatives such as the 1000-strong Access Membership offered for free to those patrons with specific requirements; our PwC £10 Previews scheme that makes 17,500 tickets available for £10 every year; and for the older generation, Matinee Idols (free tickets and workshops) opens up the theatre and invites participation as a way to combat isolation amongst older communities. And, once a year, through our annual production of A Christmas Carol, we carry out a bucket collection amongst our audiences for another charity. Over the past three years we have raised in excess of £334,000 between each of Field Lane, The Felix Project and Coram Beanstalk in the UK and $127,194 between the Broadway Cares, Equity Fights Aids Collection and Hearts of Gold charities. We do all this at no cost to the public purse.
The Old Vic that began life as a music hall, a notorious drinking den, a temperance tavern and an opera house went on to become the home of great acting, dance, musical extravaganzas, vaudeville and spectacle. Many of our great actors have appeared here, including Laurence Olivier, Sybil Thorndike, John Gielgud and Ralph Richardson. Others, like Judi Dench, Michael Gambon and Maggie Smith first made their names here and more recently we have welcomed the next generation of talent such as Sheila Atim, John Boyega, Erin Doherty and George MacKay. Olivier led the first National Theatre Company at The Old Vic and independence, integrity and a fighting spirit have permeated throughout The Old Vic’s history as it has triumphed over adversity when faced with bankruptcy, fires and even bombing during the Second World War.
The last two centuries have seen The Old Vic take on many identities but throughout this time one element has endured; an unwavering determination to remain a beacon of hope, entertainment, education, solace and inspiration with a social mission to be a force for good.
Our survival is more than just about our own preservation as an institution, but also about rebuilding the country after the crisis abates. A legacy leaving important buildings empty or closed and the communities they serve ruptured offers a poor hope for the future.
The Old Vic is governed by a Board of 12 Trustees, chaired by Nick Clarry. The collective expertise of the Trustees embraces business, finance, charitable governance, property and capital projects, theatre production and administration, theatre making, education and community, and marketing.
The Chair of OVTT is Nick Clarry, a partner at the private equity firm CVC with previous experience at Goldman Sachs and Morgan Stanley. His work with Stage Entertainment and now Head of the Exhibitions Committee at the Serpentine Gallery and Governor, Director & Trustee of the Courtauld Institute of Arts further augment his credentials. The Chair of the Finance, Audit and Risk Committee of the Board is Sir Ian Powell, ex-PwC Senior Partner. Ian Powell was elected Chairman and Senior Partner of PwC in 2008 and re-elected for a second and final four year term in 2012. He is a Chartered Accountant. Ian joined PwC as an Economics graduate and became a Partner in 1991. His specialist area prior to joining the Executive Board of PwC in 2006 was advising on international restructurings. Ian holds a number of positions including memberships of the Board of London First. He established the PwC Foundation and is involved in numerous charitable activities. Ian is a member of the National Gallery's Development Committee, a trustee of Wellbeing of Women and Chairman of the Board of Trustees of Police Now.
The management of the theatre is led by Artistic Director Matthew Warchus and Executive Director Kate Varah. Matthew is a leading UK theatre and film director and dramatist who has directed award-winning productions for many of the major British theatre companies, including The Old Vic, winning 7 Olivier awards, including Best Director and Best New Musical, and 4 Tony awards. Notable pre-Artistic Directorship productions include Art (West End, Broadway, Old Vic), God of Carnage (West End, Broadway), The Norman Conquests (OV, Broadway), and Matilda The Musical (RSC, West End, Broadway, US, Australia, New Zealand). His film Pride was selected to be screened as part of the Director’s Fortnight section of the 2014 Cannes Film Festival where it won the Queer Palm award in 2014. His artistic vision and defined sense of social mission for The Old Vic inspires everyone who works there. His tenure has recently been extended to 2023.
Kate Varah, Executive Director since 2015 and Business Director and COO for seven years prior, works with Matthew to deliver this vision. Previous roles include Business Development Director at inclusive theatre company Chickenshed and arts consultancy. Career began as employment lawyer at Linklaters, training and practising as Solicitor Advocate for six years in London, Hong Kong, on secondment to JPMorgan, and pro bono co-ordinator and Community Investment Manager for their global giving fund. Performed various Trustee and Founder roles.
Senior management of the theatre comprises an experienced and skilled team of 15 eminently qualified to execute the business plan for The Old Vic.
Our income depends entirely on the ability and inclination of both the public to pay for tickets and supporters to donate. Unknown rules and restrictions around reopening following the closure order present a huge challenge to our business. The emerging picture of Covid-19 crisis as a full-blown economic crisis leads to further concern about the viability of our business model on reopening, which requires audiences at 70% financial capacity in order for us to break even.
We have, in response thus far, variously exhausted or responsibly discounted all of our alternative means for cash-generation, i.e.:
‒ available unrestricted reserves, normally accrued for capital projects and commissioned works;
‒ loan drawdowns;
‒ emergency relief asks to donors;
‒ government schemes – including the utilisation of the Coronavirus Job Retention Scheme;
‒ and any loan facilities we have in existence.
The obvious differentiator of The Old Vic from other organisations in the sector is that we are not beneficiaries of regular Arts Council England or government funding, yet to all intents and purposes we look and feel like a subsidised entity and deliver comparable benefit: we carry significant overheads relating to the production of world class art/research alongside vital community, education and academic projects and in addition have the responsibility of the upkeep of our historic Grade II* listed building.
As an independent theatre, with no regular government subsidy, The Old Vic is particularly vulnerable in a time of crisis. Like other arts institutions across the UK, The Old Vic has been deeply affected by the Cabinet Office Assembly and Leisure closure order of 20 March 2020. It precipitated the cancellation of the last two weeks of our sold out run of Endgame (whilst some have chosen to donate their ticket purchase price, a greater proportion thus far have asked for a refund ). By necessity we have postponed our sold out run of 4000 Miles and the summer musical Local Hero. We have experienced a 90% drop in theatre income in the past month, and as yet there is no clarity as to when we may reopen our doors and resume income generation.
We are now operating during this period of closure with 10% of our usual monthly income. Our regular run rate is around £1.3m whilst in production and reduces to £650k in non-show state. We have undergone extensive furloughing, implemented a voluntary 20% salary and working hours reduction for all staff for the next six months, and removed all non-essential spend from our budget to get to this reduced figure (making departmental savings of £1m). We have released designated funds of £0.9m from our repairs and maintenance budget which were about to be spent on an urgent dimmers project for the auditorium (£700k), plus hostile vehicle mitigation security bollards (£200k).
Through taking these steps, we have significantly reduced our monthly running costs to circa £350/400k, and to meet this are drawing down heavily on hard-earned reserves we have in existence in order to meet these costs. Reserves at the start of the crisis were £3.2m (including designated funds to pay for essential and long planned capital maintenance). Of course, we can only operate in this way for a finite time. With the extension of the furloughing scheme confirmed (with gratitude), we project that reserves can take us to October after which point even if we can reopen it will be challenging to restart and then maintain operations as consumer confidence builds and income is significantly down on projections.
An important corollary of this is that while we continue to use our reserves to pay operating expenditure during closure, we will be unable to fund essential urgent repairs and maintenance for which we have been saving for many years and are in most cases vital to our ongoing operations or complete our game-changing new Annex development (see section 5 below) We also risk a vacuum of artistic development with no funds to commission or workshop new projects. In line with Charity Commission best practice, we have built up levels of reserves commensurate with our respective turnovers, but these will quickly be spent in a scenario with zero income generation and fixed costs to meet.
In order to raise funds to augment our reserves position and to continue to serve our beneficiaries in line with our charitable purposes, we have carried out a number of innovative schemes since closure.
We have devised free to access content for audiences, participants, donors through a new lockdown initiative called Your Old Vic. This includes a new Education Hub, with insightful resources including guides on how to be a playwright, interviews with designers, CV and interview techniques, digital projects and tasks, and teacher resource packs available free, globally.
Your Old Vic has placed online our youth employment and training scheme, Front Line, teaching young people looking for jobs customer service training, CV skills, cover letter writing and interview technique plus mentoring sessions and task work. It offers a new lockdown inspired project, OV Pen Pals, an intergenerational scheme connecting people aged 60+ with primary school children through letters, emails and phone calls, as part of this year’s Great Get Together in memory of Jo Cox. Your Old Vic also includes a new monologue commission to celebrate the NHS from Bernardine Evaristo, plus a chance to revisit all eight of the existing Old Vic The Greatest Wealth monologues all placed online, for free. And to broaden the work out to support emerging talent, a new podcast collaboration with the Sherman Theatre, Cardiff, called Playcrush, hosted by Artistic Director Joe Murphy as he talks to well-known names about their favourite plays and a new Creatives’ Corner hosted on The Old Vic’s Instagram Live by award-winning playwright Ella Hickson (Old Vic Associate Artist) with emerging creative talent to learn more about making of theatre.
Not only does Your Old Vic offer creative, fun and inspiring events, projects and content to keep the theatre connected with audiences, and audiences connected with each other, it also gives much needed work to freelancers in the industry. All of this was made possible through the emergency relief fund support of our Principal Partner RBC, PwC, Bloomberg Philanthropies, TS Eliot Estate and Lambeth Council.
Additionally, we have conceived artistic projects to raise funds during closure period: Old Vic: In Camera. Old Vic: In Camera is a series of socially distanced performances, beginning with Duncan MacMillan’s Lungs with Claire Foy and Matt Smith followed by a major series of rehearsed play-readings, all streamed live from the iconic Old Vic stage with the empty auditorium as a backdrop. This series is both an exciting creative experiment and also crucial in igniting the box office now all our usual channels of revenue have been entirely wiped out.
Each performance of Lungs and each subsequent play reading in the Old Vic: In Camera series will be available for at least 1,000 households per night (with some matinees, and with possible ‘audience’ number extensions depending on demand) replicating our usual audience capacity size. Tickets will be priced as they are in our auditorium from £10–£65 and whilst all ‘seats’ offer the same view, we’re asking audiences to give what they can to help support our theatre in return for access to this totally unique experience. There is also the option to add a further donation on top of this for those who are able to give a little more. The aim is that we will cover the costs of this series through sponsorship and ticket sales, plus generate an income from the series which will help bolster reserves to see us through this period of closure.
We are grateful for the Coronavirus Job Retention Scheme, but it is limited in financial cover and currently time constrained. The main source of government emergency cash available – the Coronavirus Business Interruption Loan - has now been given a wider application than previously thought; but whilst we will all continue to explore this, taking on this level of debt whilst running down reserves is not prudent financial management for registered charities who operate on an annual break-even basis. We will claim Gift Aid on donated tickets, secured a Time to Pay VAT deferral from HMRC and secured the Business Rates holiday extended to theatres.
Other leading cultural institutions of our scale are understandably able to take advantage of the Coronavirus Job Retention Scheme as well as being able to draw down an additional years’ worth of ACE funding due to their NPO status and not be required to use this funding for artistic/creative programming.
Since closure, we have received one-off philanthropic donations and ticket donations from our valued audience and supporters. As detailed elsewhere in this paper, we are planning a series of fundraising asks around our digital offering and education & community projects to regularly go back to individual supporters during this period of closure. With regard to major donors to The Old Vic, we have worked hard via regular email and calls to build the strength of our relationship with them, also using the lockdown work (Your Old Vic, Education Hub and Old Vic: In Camera) to evidence the value of the theatre and the outcome of their generosity. Philanthropists and corporates are now crowded with fundraising initiatives and asks, and we need to be able to show more thought and rigour behind our requests than ever before to stand out.
Capital: We have invested and raised from donors and local council £10.62m, without any ACE or central government support, for The Old Vic’s proposed Annex development; a £12m fundraising campaign to build a creative and social hub behind the theatre to house our education, community and talent projects for the first time in addition to creating a vibrant café space to return self-generated income to the theatre. We had been innovative in raising underwriting for the project via a £7.5m cultural loan from Southwark and Lambeth Councils, plus £3.12m from philanthropists and self-generated income, but in this new climate require certainty that we can fundraise to pay down the Council’s commitment within the term, plus fundraise for the difference, before we can continue.
The Old Vic was due for consideration for capital support from four major non-statutory grant-making trusts over the next three-months. We have been in close correspondence with these Trusts and due to the current crisis, all of these Trusts have put our (and other) applications are on hold until the sector has a clearer view on its reopening and financial imperatives. Abating this once-in-a-generation project which we had worked so hard to realise and is projected to double the output of The Old Vic’s education & community team (at a time when our local communities will need this kind of engagement more than ever) is unacceptable and we must find a way through to be able to continue.
Additionally, there is an urgent need to complete the auditorium technical upgrade and dimmers project. Funds of £800k had been raised and designated for this project, which was due to begin in April. Due to the crisis, we have had to undesignated these funds to use to pay running costs. If the dimmers are not replaced in 2020 the theatre could be without lights in two years’ time, as suppliers are phasing out the stock The Old Vic currently uses. The work would include upgrades to the sound infrastructure, aux mains and back stage working lights. Funding applications are now underway to endeavour to replace the funds undesignated to cover running costs during the crisis period. There will be a point at which the balance tips from short term survival towards the medium/long term risk of the building being inoperable.
The current uncertainty about re-opening is deeply problematic for The Old Vic, as for others in the sector. We are aware that Task Groups are currently working through the specific challenges for the theatre sector of maintaining 2m social distancing. Whilst understanding the current medical need for this requirement, it brings specific challenges for The Old Vic; operating with a 2m restriction reduces our auditorium capacity to 30%, a fundamental problem for a theatre that breaks-even at 70% capacity each year.
Additionally, navigating the public areas, entrance and exit from rows and the auditorium creates significant logistical, health and safety and access challenges. Backstage within our unmodernised 202-year-old, Grade II* listed back of house spaces, employees pass in close proximity due both to building design and the requirements of operating a production. Onstage and in rehearsal, performers are by necessity in close proximity. The work we do with 10,000 young people each year in schools, community groups and with emerging talent will bring together different operating protocols.
Once performances are able to resume, it is likely that ongoing support will be needed due to the following challenges: additional costs related to health & safety measures for audiences (temperature testing, masks, track and trace) and for companies (doubling up staffing to create teams, necessary cover arrangements) in order to ensure public confidence and union / staff agreement to a return; rebuilding public confidence regarding large public gatherings and achieving high levels of theatre occupancy necessary to cover operating costs; reduction in audience numbers due to public transport capacity; levels of domestic and international tourism and reduction in town and city office workers as a result of a continuation of remote working and staggered starts and finishes; the effect of the current recession on box office and philanthropic income; insurance risk, both cancellation insurance and employee and public liability insurance; additional costs to resume performances; potential difficulty raising investment for commercial transfers (we rely on income from commercial future life exploitation as an additional income stream).
The best method of support that the DCMS and Treasury could provide for The Old Vic is through the proposed new Cultural Investment Participation Scheme (detail submitted to the DCMS in the recent SOLT & UK Theatre letter). In the absence of any other large-scale long-term support for an independent charitable theatre like The Old Vic, there has to be an innovative solution – and we believe this works not just for independents, but for the whole sector.
In short, CIPS is an investment scheme where government gives funds to charities and commercial organisations in return for in kind social benefit and financial return, with built-in incentives for private investors and philanthropists to give.
It’s effectively a mechanism by which the Government can provide funding to some of the UK’s cultural institutions on a basis which is repayable, but does not constitute additional fixed debt which we are unable to bear. Yet whilst CIPS would provide additional support to the sector post-reopening, it offers a mechanism that allows for a return on investment for government rather than straight relief funding. The benefits:
Repayment Obligation (% surplus + social value) means that cultural institutions are repaying when they can, rather than merely asking for a grant
Quasi equity structure means that institutions are not burdened with a fixed loan which will create repayment difficulties in future
Public recognition of social benefit helps benchmark cultural institutions for part of the broader contribution to society
Ensures that charitable organisations are able to effectively leverage continued philanthropy to support education and community work
The partnership of charitable and commercial funding offers the genuine prospect of financial return for the government
This kind of investment would kickstart the theatre sector’s economy, retaining institutional workforces, generating re-employment for freelancers, maintaining the skills base, rebuilding confidence and encouraging audiences to spend money in related sectors such as hospitality.
The Old Vic has an entrepreneurial spirit; a scrappiness and drive that has been born out of years of fighting for survival operating as a bridge between the subsidised and commercial world. We are proud to have demonstrated over many years that we pioneer a model of self-sufficiency. It is therefore important to underline herein that we are making a one-off request for emergency support linked to delivery of societal benefit and is not a precursor to asking for a shift towards a future culture of state dependency.
If The Old Vic’s future can be assured, we can continue to contribute fulsomely to the country’s economy and cultural life as an independent institution and not rely on recurrent government support.
 Nick Clarry (Chair, OVTT); Sir Ian Powell CBE (Chair, FRC); Robert Bourne; Sally Greene OBE; Annie Pleshette-Murphy; Rebecca Lury; Sheila Atim MBE; Tina Alexandrou; Kevin McGrath OBE; Kate Horton; Alan Banes; Glenda Jackson OBE
 61% of Endgame revenue has been refunded (5% on an Old Vic credit voucher); 18% of Endgame revenue has been donated to The Old Vic; 21% of Endgame revenue still remains in the production until customers decide on a refund/ticket donation/credit voucher
 This is in addition to a £4m campaign completed in 2019 to open up The Old Vic’s Front of House spaces to access patrons, allowing access for wheelchair users for the first time in its 202 year history; £50k of this was ACE funded, the remainder we raised entirely from philanthropists and corporate supporters. Through the work of current management supported by its Board of Trustees, we are making great strides towards changing the way The Old Vic works physically, as well as creatively, to futureproof the charity.