To ask His Majesty’s Government what consideration they have given to establishing a national arts bank to act as a guarantor lender for those theatres, performance venues, galleries and arts teaching colleges which require capital funding in order to operate.
My Lords, I declare my interests as a member of the president’s circle at the Central School of Ballet and a trustee at the Old Vic Theatre. I want to talk today about a proposition for a national arts bank, which comes from my experience as leader of Southwark Council and the financial support that we were able to give to three cultural and educational organisations, which, frankly, made the difference to them being able to progress with significant capital projects. I should say that the Table Office somewhat edited the end of my Question so that its full meaning may have been lost, because my debate is essentially about capital funding.
Let me talk about those three organisations which were helped in Southwark. The Mountview Academy of Theatre Arts had been based in Wood Green, Haringey, since its inception in 1945. A leading producer of West End stars and actors in musical theatre working around the world, it had been looking for a new home in Wood Green for many years when it began a conversation with Southwark. In short order, we identified a site for it in the heart of Peckham which was suitable for a brand-new and purpose-built theatre school. We recognised that it was going to be a significant addition to the cultural offer in that part of our borough. The problem was that Mountview had some way to go on its fundraising campaign to deliver a new building. Based on a business case put forward by the academy, Southwark agreed to lend that final part of the funding that it needed, but the secured loan facility that we offered was flexible as to the repayment of interest and capital over the lifetime of the loan and was made at or below Public Works Loan Board rates. As a result, Mountview was able to proceed with planning and entered into building contracts so that the new building was opened within three years of the initial conversation—an amazing result.
The Central School of Ballet, one of the handful of classical ballet schools in the country, had identified a new home in Blackfriars, moving from its home of many years on the edge of the City of London. Central had a fundraising target of £9 million for its fit-out, but it was short by several million pounds. Again, that meant that it could not enter into contracts to progress that fit-out and move to its new home. Once again, Southwark—under inspired leadership—stepped forward and agreed to act as the lender for that final element, again on terms that provided flexibility as to the repayment of interest and capital. Again, that commitment meant that final contracts could be entered into and works completed, and the new school opened in 2020.
Finally, the Old Vic Theatre opened its new Backstage building last October. Straddling the boundary of Southwark and Lambeth, it had already demonstrated an outstanding commitment to the community over many years through its outreach work with schools and residents of all ages. Having set an ambitious fundraising target before it could start work on the new building, it was about 25% to 30% away from that target when it approached Southwark Council and Lambeth Council and sought a loan for that final element, so that it, too, could proceed to enter into contracts and get work started. The boroughs agreed to jointly lend up to £7.5 million, again at or below Public Works Loan Board rates and with flexibility as to the repayment of interest and capital over 20 years. In the event, the Old Vic did not need to draw down all the loan facility, and it is or will shortly be in a position to repay, in full, the money lent. But the fact of that facility means that, today, we can enjoy the educational facilities provided by the Backstage building, rather than waiting two or three years with ever increasing construction cost inflation.
My Lords, I congratulate my noble friend Lord John of Southwark on securing this debate and introducing the concept of a national arts bank—capital for our culture. He has already outlined his first-hand experience of implementing similar initiatives at a local level and I believe that he is well placed to lead on this project in your Lordships’ House.
It is widely acknowledged that our cultural institutions are starving for capital. Theatres, galleries and art colleges face a crisis. Commercial banks reject them as too risky and traditional grants offer only short-term relief. We need a permanent structural solution and I think that that solution is a national arts bank.
While I welcome the funding that the Government have outlined under the Arts Everywhere project, it is limited to five years and we need longer-term solutions. We know that artistic venues are vital public infrastructure, yet they are struggling to secure commercial loans. Older theatres require urgent structural modernisation, galleries need high-tech climate control systems and colleges require cutting-edge digital media equipment. Private lenders do not understand creative revenue. They see seasonal ticket sales as unstable. Consequently, as I said, our cultural foundations are crumbling.
I recognise that, 18 months ago, the Government set up the ACE review, under the leadership of my noble friend Lady Hodge. That report highlighted:
My Lords, it is a pleasure to follow the noble Baroness, Lady Gill, and I agree with everything she said. The impact that something like this could have on NEETs, for instance, has had no attention but really deserves it. I applaud the suggestion of the noble Lord, Lord John of Southwark. It is a great idea and something we should go ahead with. It is something that this House could support and would cost us nothing, so what is not to like?
London benefits at the moment, but this Question talks about outside London as well, which is important. Let us not forget that London has quite recently had the benefit of two new theatres, which has happened because of commerce, not because of anything other than money being lent commercially. The most recent is @sohoplace, which has come about on the site of the old Astoria music hall and is there because it is part of the magnificent new development around Crossrail, the revamped Tottenham Court Road. Without a far-sighted developer in the shape of Derwent, @sohoplace would not be there.
Conversely, the Bridge Theatre over at Tower Bridge, which has produced some fantastic work, is an entirely private sector operation—but do not let anybody think that this is easy. The Bridge Theatre is currently seeking outside investors because it needs more money. Being involved in the arts does not come cheap. Although the suggestion from the noble Lord, Lord John, is an excellent one, let nobody be persuaded that every arts organisation can make a profit and pay back money. It is important that we put this in context. It would have a really useful role, but those who borrow from it would need to look, in many cases, to philanthropy to fill the gap that would enable them to pay back the money that they have been loaned.
The fact is that underfunding has undermined the arts in the UK for the last decade—actually, much more than that. Although we all know the importance of the arts, not just in creating a healthier, happier society but in building a thriving economy, this is a difficult time to argue the case for a big increase in government spending on what, in some quarters, is still regarded as unnecessary, bordering on the frivolous. We can only look at the fact that the Government are apparently currently considering cutting down the amount of money they dictate to defence spending in the defence spending review that we have been waiting a long time for. If we cannot afford the money that we should be spending on defence, public pleas for money for the arts will find it very hard to succeed, even though we know the long-term benefits.
I thank my noble friend Lord John for tabling this debate and welcome the contributions from noble Lords so far. I will particularly focus on theatre, having spent about a decade working in that industry and having trained at Guildford School of Acting. I welcome the suggestion of an arts bank, particularly to address the tricky matter of capital funding for some of these important and, in many cases, historic buildings.
Many theatres and cultural venues operate from listed buildings that are technically outdated. Trying to repair them and ensure compliance with accessibility requirements and decarbonisation becomes a very difficult and costly matter. The Government’s Purcell report from January 2026 estimated that about £7 billion in repair, maintenance and renewal was needed across publicly and third-sector owned cultural buildings, with about £3 billion of that being urgent and about £2 billion being needed in terms of the current funding deficit.
Specifically around theatre, a 2024 survey from the Society of London Theatre and UK Theatre’s members demonstrated that one in five of their venues needed at least £5 million over the next decade just to continue operating. Again, this is capital funding to do with buildings. This has nothing to do with the mounting of productions or supporting creators; it is just to continue the buildings operating. Without major capital investment, about 40% were at risk of closure and 40% could become unsafe to use.
Despite these challenges, as my noble friend Lord John alluded to earlier, the theatre sector still delivers significant social and economic benefits. It supports over 100,000 jobs and civic infrastructure. It makes towns and cities exciting and vibrant places to live, work and visit. This research estimates that every pound spent on a theatre ticket generates a further £1.40 for the local economy. The Society of London Theatre and UK Theatre have done further research that demonstrates that support for capital investment would mean that 54% of venues could provide more jobs. As my noble friend Lady Gill alluded to, that is a significant part of the argument for an arts bank and further capital funding. It would mean that 62% of these venues would increase their outreach work—again, a brilliant benefit for the community—and 100% of venues said it would improve their environmental sustainability. For those buildings built in the Victorian era, 100% would be able to ensure real accessibility for all patrons.
My Lords, I thank my noble friend Lord John for securing this debate. It is a welcome opportunity to highlight the difficulties faced by our theatres, galleries and arts venues, and there has been unified support for it across the Grand Committee.
I found it fascinating to hear of his experience at Southwark Council and of how, under his leadership, the council took steps to address some of these difficulties. The examples he shared of a local authority being able to bridge the gap between fundraising targets and money raised, future-proofing those organisations and benefiting their local communities, are instructive and inspiring. I welcome the foresight of his specific proposal, and support him in urging the Government to think about how financial agreements such as the ones he outlined could be applied more widely. In the current bleak economic climate, we must do all we can to consider new funding models for our cultural and arts organisations, so my noble friend’s suggestion is worthy of serious consideration by all those who want to see a flourishing arts sector.
I have spoken to Joshua McTaggart, CEO of Theatres Trust, which is the DCMS public body tasked with ensuring that all theatres across the country, no matter their size or location, are equipped to serve communities and artists long into the future. Theatres Trust agrees that access to loan finance from public and private sources is a key opportunity to support theatres to secure their future operations.
To add to my noble friend’s example of the Old Vic, I will mention—closer to my own home turf—the former Bradford Odeon, which now operates as Bradford Live. It received a £12 million loan from Bradford Council, which ensured that the £50 million renovation could begin. Having seen it in its previous state, I was delighted to hear that.
Another cultural centre in the north, Morecambe Winter Gardens, secured a £107,000 loan from Lancaster City Council, which enabled the venue to unlock over £2.5 million of grant funding. Last year, the Kenton Theatre in Henley-on-Thames took a £100,000 loan from the town council that enabled it to navigate operational challenges and report a budget surplus this year.
I join noble Lords in thanking the noble Lord, Lord John, for this inspired debate. I do not know quite a few of the noble Lords here. This is a different forum, so noble Lords might not appreciate that I am the Liberal Democrat spokesperson.
On our Benches, we believe there is a strong case for exploring mechanisms that improve access to affordable capital for cultural organisations, particularly those with significant civic value but limited or no ability to secure conventional lending on viable terms. Cultural organisations are very enterprising, as many noble Lords know. They exist in a mixed economy of grants. If they are lucky and live in Southwark, they are from local councils, but they are also from organisations such as the Arts Council, trusts and foundations, as the noble Baroness, Lady Hyde, said. They also seek sponsorship and philanthropic giving. There is direct income from membership schemes, commercial activities such as ticket sales, and revenue from gift and coffee shops.
Owning a building is obviously an asset for a cultural organisation but it comes with huge financial exposure. Today there are rising energy costs, the impact of wars, inflation and, previously, the pandemic. I declare an interest as a trustee of the Lowry in Salford, where I have seen this at first hand. I say to the noble Baroness, Lady Wheatcroft, that I am experiencing it outside London.
Noble Lords have mentioned the excellent report on Arts Council England by the noble Baroness, Lady Hodge. She put it starkly when she said that arts organisations are facing a
“capital crisis, the scale of which is threatening the very fabric of the country’s cultural infrastructure”.
The last big injection of capital took place 20 years ago and, as she says:
My Lords, I thank the noble Lord, Lord John of Southwark, for securing this debate and for outlining it so powerfully. I congratulate him too on the impressive record that he and his colleagues in Southwark were able to rely on. I am a Southwark resident myself—in fact, it was the strong cultural offering of the borough that attracted me to the area—so I have the benefit of seeing some of the fruits of his hard labour.
The noble Lord mentioned Mountview, the Central School of Ballet and the Old Vic in his opening speech. There are too many cultural venues in the borough to mention, but I will single out two that are celebrating significant anniversaries this year: the Southbank Centre, Europe’s, largest arts centre, which turns 75 this year, and Theatre Peckham, closer to where I live, which turns 40. I congratulate him on the pioneering work that he did and agree that other parts of the country could look to Southwark as a model.
I am glad that they will be able to think about culture much more proactively because of the concession the Government made during the passage of the then English Devolution and Community Empowerment Bill. In your Lordships’ House, we added culture as an area of strategic competence, which I hope will encourage more local authorities, particularly the metro mayoralties, to look seriously at this area.
My Lords, I join other noble Lords in congratulating my noble friend Lord John of Southwark—if anybody was in any doubt as to why he took the place designation of Southwark, I think we are clear on it today—on securing this really important debate and thank all noble Lords for their thoughtful and constructive contributions today. I share the view of the noble Baroness, Lady Bonham-Carter, that it has been quite inspiring. It is a really nice end to my week of parliamentary engagement to have something on which I can actually say, with huge enthusiasm, that I will have a lot of things to think about over coming days, and I will take some of those points back to the department.
Our theatres, galleries, performance venues and arts colleges are the bedrock of our national story. They drive local growth and expand opportunity. The Government are acutely conscious of the severe financial and physical pressures these institutions face, particularly as they navigate historical underinvestment and inflation. Like the noble Lord, Lord Parkinson, I congratulate my noble friend on his own track record of delivering in this area. As his opening contribution made clear, during his tenure leading Southwark Council, he championed many pioneering local partnerships to fund major capital developments, including the Central School of Ballet, Mountview and the Old Vic. These projects show how creative local collaboration and—in my noble friend’s own words—inspired leadership can deliver truly world-class cultural spaces.
It is particularly inspiring to hear of how that can open up arts venues to young people throughout local communities. My noble friend Lady Gill highlighted the contribution that such venues and investment can make to employment. I was pleased that my noble friend Lady Hyde highlighted the benefits to local communities, and it was also useful to hear of northern councils following suit from my noble friend Lady Warwick of Undercliffe. As she said, this shows that it can be done. It was also inspiring—in a very inspiring debate—to hear from the noble Baroness, Lady Bonham-Carter, on the work of the Lowry and its contribution in Salford. It shows how rich a vein of cultural contribution we have across the country.
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In all three of these examples, the loans were supported by robust business plans and cases, and the organisations were already on the road to reaching their fundraising targets. But they also represented the local authority recognising the massive benefit that these important cultural organisations were bringing to the borough by investing in them. In all three cases, the terms of the loan agreement included service level agreements for ongoing and increased community and schools work. For the Central School of Ballet, that means that, each evening and on Saturdays, the school is filled with local children and residents finding out about the world of dance; and the Old Vic has redoubled its work programmes with schools in Southwark and Lambeth. So successful has the Southwark model been that I am working with another important classical music venue to help it to reach a similar deal with its local authority.
As I reflected on these examples, it struck me that this model could work right across the country—in places where arts venues and cultural schools and institutions are being held back from increasing their community work and impact because they still have outdated buildings or facilities. Despite their best efforts, they are struggling to achieve that last mile or so of fundraising needed, and a commercial loan is not a viable option. We all know that there are countless examples across every part of the country of an arts venue that needs significant capital funding. This model could make that happen.
My hope is that the Minister and the Government consider taking this idea forward within the context of a national arts bank to act as that last-mile loan guarantor. Too often, the relationship between the arts and government is that of receiving a grant or handout. This is different; it represents a mature and respectful relationship. Unlike some Arts Council funding, it is more flexible and can take account of local circumstances.
This is money that will be repaid, but it is money that makes a world of difference not just to the individual organisation but to those many people in the community, young and old, who will benefit from an improved cultural offer from that organisation. It also offers the prospect of increased employment and economic benefit—I know that my noble friend Lady Hyde will talk about that more in due course.
The cultural sector is at the heart of this Government’s industrial strategy. A national arts bank fulfilling the role that I have described would be a clear statement of the Government’s support for their own priorities and strategy. I ask my noble friend the Minister to promote this idea and hope that it may appear in a Budget in the near future.
“The UK spends less on culture than most of the countries in Europe. In 2022, public investment in culture in the UK was 0.25% of GDP, the lowest across a … list of European countries for whom there is comparable data (including France, Germany, Italy, and all of Scandinavia), and only higher than Greece”.
The Campaign for the Arts has also reported that the UK ranks among the lowest spenders on culture, both as a percentage of GDP and per person, in comparison with various European countries. The sector reports that some local authorities have completely cut their spending on culture. The British Council has curtailed its investment in culture. Nesta, a research and innovation foundation, which had a £250 million government-funded endowment for the creative arts, has pulled out of funding the arts. As I said, local authorities have almost completely given up.
We need to expand our horizons and look for new solutions, and we also need to include the film sector in that. The capital gap that we are speaking about is not exclusive to live stages. Consider our booming, yet vulnerable, film sector: local production studios require massive upfront capital. I have some second-hand knowledge of this; my son is a screenwriter and director, so I hear a lot about this sector. They need virtual production walls and sound stages. Without advanced facilities, international investment tends to go elsewhere.
I believe an arts bank would secure loans for independent film infrastructure. It would allow local studios to compete on a global scale because, as we know, infrastructure is the foundation of modern storytelling. That is why countries such as France, where there is an institute for funding cinema and creative industries, operates two financial tasks: a bank guarantee and a loan, similar to what the noble Lord, Lord John of Southwark, outlined.
I wonder whether we could also link this to another topical question that we have all been tackling this week: the NEET crisis. I know that capital funding could directly impact our youth unemployment crisis. Thousands of young people are NEET—not in education, employment or training—but I have seen that the creative industries are a proven magnet for reengagement. When I was in the West Midlands as an MEP, I visited a lot of FE colleges, and I saw the level of engagement for young people who did not want to continue studying. They were happy to go into a music studio, drama or anything to do with creative arts. So I think this could be a way of reaching that goal too. I again stress that we need state-of-the-art facilities to run apprenticeships, and we could benefit across the whole sector by having a skilled creative workforce.
By investing in capital, we also drive up educational enrolment. The infrastructure itself becomes a motivation to learn. A national arts bank would make a change. It would not replace commercial financial markets; it would act as a powerful guarantor. This would be an investment, not charity. This model protects hard-earned taxpayer money. Grants disappear once a venue spends them. Guaranteed loans must be paid back fully. Venues build sustainable, long-term business models. The arts generate massive economic ripple effects. Every pound invested would boost nearby hospitality. It would create jobs for technicians, builders and creatives.
To conclude, I believe it would bridge the gap between finance and culture. It would transform state funding from charity to investment. Let us secure our venues and colleges. Let us back the creators who inspire us.
We should be very grateful not just to the noble Lord, Lord John, but to the noble Baroness, Lady Hodge—already quoted by the noble Baroness, Lady Gill—who has produced a report that is not full of whinging about the future of arts funding and has come up with some really positive ideas. They are all worth taking note of. Wonderfully, the Government have adopted every one of her recommendations. Let us not be fooled: adopting recommendations is not quite the same as doing anything, but one lives in hope and I am sure some things will result. It is a positive start, at least. The noble Baroness, Lady Hodge, came up with some very positive ideas, not least about the importance of philanthropy and what the Government might do to encourage more of that into the sector. We have already heard about France’s novel ideas on funding the arts, but it has also done some really good things in encouraging philanthropy. Tax breaks of 60% might not be acceptable in this country but, nevertheless, it has made a huge difference and the money that has flowed from corporate giving as a result, much of it into the arts, would certainly go down well here.
We need to do more. The Government have agreed to look at it, but there are innovative ideas for encouraging philanthropy that are well worth examining. At the moment, the Arts Council does not have the benefit of donations but it could, if one looked at it, have means of activating that. For instance, if it had the endowment fund that the noble Baroness, Lady Hodge, is suggesting should come its way, with the benefit of the £250 million that Nesta is not spending, there is a suggestion that the Arts Council would have to match every pound of that endowment fund with money that it raises. That could be a really positive move for the arts. We need to look at other things. We need to give the Arts Council a trading arm; that would make a huge difference. Some publicly funded bodies have made a lot of money by doing great productions that go commercial. Some of that money could go back to the Arts Council, if there were a means of getting it there. We need to find a way of doing that. The Arts Council could do much more to encourage philanthropy, particularly outside London.
The other thing that the noble Baroness, Lady Hodge, bravely said—I think it is something we all ought to take note of—is that we need to get braver about standing up to boycotts. If the arts are to flourish in this country and if money is to be available to pay back the loans to the new bank, which we all want to support, we will have to look to the commercial sector and be braver about who is tolerated—and indeed encouraged—to become a sponsor. I should declare an interest as a former deputy chairman of the British Museum, and I have to say I was disappointed when it decided that BP should no longer be allowed there. BP is looking for alternatives to just oil, and the money was very useful.
As has been stated, theatre finances rely on quite a mixed model of funding—philanthropy, sponsorship and, in some cases, public subsidy. Venue operators have to supplement that with their programming, catering, hiring and a variety of means, so financial resilience really depends on how those streams interact with each other. Earned income now accounts for 58% of the total income of subsidised organisations, with just 17% coming from contributed sources—for example, the Arts Council. Growth has really stalled, and competition for what support there is has intensified. Even large organisations are really struggling to secure multiyear commitments at scale, and smaller venues that are not in major cities face even starker barriers.
Theatre really struggles to access suitable commercial finance for capital works. Repayable finance requires predictable cash flows, but theatre income by its nature is backloaded, with ticket revenue arriving only once productions are open and production costs have been recouped. So it is brilliant that DCMS announced a £1.5 billion cultural capital package in January this year. It is the most significant intervention in cultural infrastructure in a generation. It included £425 million through the creative foundations fund, which has already been mentioned, for around 300 capital projects in arts venues. That is really welcome. It feels like the beginning, not the end, of the story about capital investments for the arts. This suggestion of a national arts bank would make that public funding go further to build a far more financially resilient arts estate, with all the benefits that we know it would have.
The financial model of many theatres can make it really difficult, and this arts bank would provide repayable grants to de-risk that investment proposition for investors who may not otherwise have the risk appetite to support arts venues. It is a really easy way for backers to get involved: it simplifies and de-risks it, and I commend the idea to your Lordships. It is also key to ensuring that our rich theatrical heritage is able to enrich lives and the economy for many years to come.
There are also significant examples of successful cultural spaces benefiting from loans via Nesta, as has been mentioned. The arts venue EartH, in Hackney, secured a £2.1 million loan in 2017 and is now a prominent cultural space in London. Birmingham Rep secured a £500,000 bridge loan, which allowed it to unlock further local enterprise partnership funding, and £400,000 for the Mercury Theatre in Colchester enabled the theatre to manage working capital while it carried out major renovation works. It can be done; let us see it more widely done.
As Theatres Trust sees it, the challenge is twofold: there need to be more sources of these loan finances, but also the arts and culture sector needs access to sound financial advice on how to maximise these opportunities and not see a loan as a negative decision or fundamentally bad business.
In these economically challenging times, the question of who pays for the arts—and, just as importantly, how—is more urgent than ever. Indeed, the question resonates through the recent independent review of Arts Council England led by my noble friend Lady Hodge. In her review she reminds us that, between 2009-10 and 2022-23, public spending on culture by ACE and local authorities fell in real terms by 18% and 48% respectively, with some local authorities completely cutting their spending on culture. She notes the “stark capital crisis” facing the cultural sector, with more than three-quarters of arts centres unable to complete planned building work and 60% not having undertaken any significant refurbishment in over a decade.
We know this. It is why the £270 million arts everywhere fund announced last year included the creative foundations fund, aimed at urgent capital works to keep venues up and running. It was a welcome boost for struggling arts venues, museums, libraries and the heritage sector, with Kate Varah, executive director of the National Theatre, saying that this much-needed capital investment
“will begin the task of enabling arts venues in towns and cities across our country to upgrade their facilities, providing more jobs and training … and offering more opportunities for young people and communities”,
as my noble friend Lady Gill so powerfully set out.
We know that investing in the arts is an investment in our communities, our creativity and our future. The arts are a huge driver of economic growth and employment—the creative industries are worth £124 billion to our economy—and help skills development in young people, training the future labour market to be creative and to challenge old ways of thinking.
But while the Hodge review notes the
“existential threat to the health and vibrancy of the arts and culture sectors”
caused by a decade of cuts in public funding, it also acknowledges that fiscal constraints limit the Government’s ability to increase grant-in-aid funding for culture and the arts. No matter that the
“modest resource needed to secure the long-term sustainability of the sector would have a disproportionately positive impact on the cultural sector, economic growth and the life of the nation”.
Instead, in the current climate we must put our efforts into finding other, innovative ways to invest in our arts, as my noble friend Lord John is initiating here.
To that end, like others I commend the Hodge review’s recommendations—all accepted by the Government, I am delighted to see—not least that we support a strong Arts Council England, free from political interference. I hope the Minister can assure us that the Government will explore the various funding ideas put forward in the review as a matter of urgency, including committing to longer funding rounds, cultural tax reliefs and incentivising philanthropy. At the same time, can the Minister provide any further detail of the £425 million creative foundations fund supporting some 300 capital projects in arts venues across the country?
Finally, like others I was interested to learn from our Library briefing of the French initiative between public authorities and the main banks to offer individually tailored financial solutions to creative and cultural industries in the form of a bank guarantee and loans. It has helped more than 2,000 cultural companies and has been going since 1983, so it is high time we caught up.
“The boilers and lifts installed then now need to be replaced”.
There are literally cracks in the walls and buckets in the corridors and backstage, as I am sure the noble Baroness, Lady Hyde, knows.
The noble Baroness, Lady Hodge, recommends that the Government urgently find innovative ways of responding, and there has been a response. Earlier this year the Government announced capital investment funding distributed through Arts Council England, which will provide financial assistance to invest in
“buildings, equipment, digital infrastructure and technology”,
but much more is required, as the noble Lord mentioned in his introduction. The scale of capital need across the cultural sector is now so substantial, as the noble Baroness, Lady Gill, said, that demand for support, even in the form of loans or guarantees, is likely to exceed the available capacity. The question therefore becomes not simply how capital is distributed but what outcomes it is intended to achieve.
The most important criterion should be not just remedial capital investment in isolation but investment that demonstrably improves long-term resilience and sustainability. In other words, support should ideally prioritise projects that help organisations adapt successfully to future operating conditions, whether through energy efficiency, modernisation, diversified income generation, audience accessibility, digital capability, workforce development or more flexible use of buildings and assets.
Then there is social capital. Many noble Lords have mentioned NEETs, and I return to the Lowry. It is more than a building, theatres and a gallery. Through vigorous learning and engagement work, it helps and inspires young people into the creative sector. Over the years, it has forged almost 30 community partnerships across Salford and Greater Manchester and has contributed a deep, diverse and long-lasting impact on local lives through educational, volunteering and community engagement programmes. It is at the heart of its community. Many other cultural organisations are the same, but they need to have a stable and safe roof over their heads to provide outreach work, inspiration and future careers for the next generation, as so many have said.
In the past, Nesta, which the noble Baroness, Lady Gill, mentioned, set up an arts impact fund by bringing together public, private and charitable funding. It provided repayable finance to arts organisations with ambitions to grow, to achieve great artistic quality and, crucially, to impact in the specific area of social value. Does the Minister agree that social capital should be considered as leverage for raising financial funds?
Most theatres, galleries, performance venues and arts training institutions are carrying significant pressures around capital maintenance, infrastructure renewal and cash flow. A national arts bank could help unlock investment where organisations are fundamentally sustainable but constrained by the risk profile perceived by commercial lenders. There will of course be key questions around scope, governance and strategic prioritisation—as the noble Baroness, Lady Wheatcroft, mentioned—but if designed well, such a mechanism could strengthen the sector’s resilience and preserve important cultural infrastructure and places. We agree with the noble Baroness, Lady Hodge, that, without that, arts organisations are facing a crisis.
The noble Baroness, Lady Warwick of Undercliffe, mentioned the work of the Theatres Trust as an arm’s-length body. The Government are looking at the planning system and the role that bodies such as the Theatres Trust have. Is the Minister able to say any more at this point on the powers they have on planning? I hope that they will be able to continue their work in encouraging local authorities to think about theatres and other cultural venues.
I am proud of the record of the previous Conservative Government. I had the pleasure of serving in the final three years as Arts Minister. In addition to securing a modest increase in the last Arts Council investment programme, I am proud that we expanded, and then made permanent, the tax reliefs available to theatres, orchestras, museums and galleries, which support them in innovative work and particularly in touring them around the country. However, the noble Lord is right that the capital needs of our cultural sector are pressing. As the noble Baroness, Lady Bonham-Carter, and others said, our cultural infrastructure is creaking. The noble Baroness, Lady Hyde of Bemerton, mentioned the figures by SOLT and UK Theatre for theatres alone.
A game-changer for our cultural life in this country was of course the creation of the National Lottery by the Conservative Government of John Major. That brought a huge influx of investment into our culture and heritage. We saw that first wave of lottery investment at the turn of the last century: everybody’s boiler, roof and building are now leaking and need fixing at the same time. There is a pressing backlog of work for our cultural sector. These are the unsexy things to fundraise for. It is much easier to get a new wing of something built than it is to replace a boiler, to improve the lavatories, and so on. Our cultural sector wants to take a lead in being more environmentally sustainable, and brilliant organisations such as the Theatre Green Book are helping them to do that. They want to be proactive in the changes that they make to their buildings.
The previous Government had a series of funds—the museum estate and development fund, the cultural development fund, the towns fund, the UK shared prosperity fund and the levelling-up fund—all of which gave grants to cultural organisations around the country to help them do some of that work. I had the pleasure of visiting some of the beneficiaries, including one in Southwark—the Old Operating Theatre, near London Bridge—where a grant of £157,000 helped it replace the Georgian skylight that looks down on the old operating table at St Thomas’ Church, part of what is now St Thomas’ Hospital.
The noble Lord and other noble Lords who have spoken today are right: we need to look at innovative ideas in the round. The noble Baroness, Lady Wheatcroft, singled out the success stories of @sohoplace and the Bridge Theatre. As I understand it, the Bridge Theatre benefited, in part, from Section 106 money. Part of the development done in that part of London allowed the creation of a brilliant new theatre, thanks to the brilliant pioneering work of people such as Nick Hytner, Nick Starr and Nica Burns in the case of @sohoplace. We should be looking at organisations such as Figurative, which are looking at new funding models for arts and culture, and cultural leaders such as Sir Vernon Ellis, who is looking in great detail at how we can encourage more place-based giving.
As noble Lords have said, we should all be reading very well-thumbed copies of the report by the noble Baroness, Lady Hodge of Barking. I am very glad the Government have accepted all her recommendations. There are many good ideas in there. We have heard some of them. On the idea that the Arts Council could be given more powers to have a trading arm to benefit from some of the investment that it gives, would that require a change in its royal charter? If so, I do not know whether the Minister can say anything on how the Government might implement these recommendations, but we hope to see these ideas bearing fruit soon.
I was struck in the noble Baroness’s report by the French example of the loi Aillagon, brought in by Jean-Jacques Aillagon, who was the Culture Minister of France in 2003, which gives generous tax deductions of up to 60% for French corporations that make donations. When I was Arts Minister here, we saw a work by Gustave Caillebotte saved for the French nation—a £43 million painting going to the Musée d’Orsay—thanks to a donation from LVMH, a corporation. It was able to claim 90% of that back in tax relief, a very generous allowance that unlocks philanthropy.
I agree with the noble Baroness, Lady Wheatcroft, that we need to be much bolder in the face of boycotts. Like many, I regret the departure of Baillie Gifford from literary festivals. At the Hay Festival, I am afraid to say, two Labour politicians from both Houses were among those who pulled out. We all need to be strong in the face of boycotts and stand up and thank those companies that are generous with their money in support of arts and culture in our country.
The noble Baroness, Lady Bonham-Carter, was right: we benefit here from a mixed model of funding. It is not quite the subsidised model of the European continent and not quite the philanthropy of the United States, but a blend of both. When I was Arts Minister, people were very clear with me that individuals and businesses will give, but only if the Government are seen to be doing their part as well. Does the Minister agree that we benefit from that mixed model? Clearly, the innovative thinking in Southwark has done so, and I am very glad that we have been able to have this debate to look at new ideas to encourage people in other parts of the country, too.
My noble friend Lord John’s proposal of a national arts bank is thought-provoking. I can see that a guarantor lender for the arts could have some strong hypothetical benefits, namely unlocking favourable loan rates where commercial lending is not viable. However, it was welcome to hear about new commercial theatres in London from the noble Baroness, Lady Wheatcroft, reminding us that, occasionally, commercial loans can be a good way forward. As my noble friend Lady Hyde said, most arts organisations—I think she cited theatres—need a mixed model of finance.
I appreciate that the debate has focused on guaranteeing capital, so I want to speak briefly on how the Government are directly investing in the arts. By focusing on direct, non-repayable capital grants rather than debt, we are taking the most direct route to tackling the critical maintenance backlogs that threaten the long-term viability of our cultural estate. As my noble friend Lady Hyde highlighted and others mentioned, this Government are delivering up to £1.5 billion in capital investment over this Parliament to secure and revitalise England’s cultural infrastructure. This historic package is designed to protect more than 1,000 cherished arts venues, museums, libraries and heritage buildings from damage and, in some cases, even closure.
We agree, however, that public funding can be only part of the solution. Our creative and cultural sectors depend upon a mixed funding model, in which private philanthropy, corporate support and individual giving play a vital role alongside earned income. I was pleased to hear the noble Baroness, Lady Wheatcroft, highlight the role of philanthropy in investment in the arts. This Government’s vision is to build an ambitious, long-term partnership with philanthropists to deliver tangible national renewal within our communities.
In relation to whether cultural institutions should accept sponsorship from companies on a case-by-case basis, I share the Secretary of State’s view that boycotting sponsors serves only to damage the cultural sector. Philanthropy and corporate sponsorship are long and valuable traditions in our country’s history of support for culture, and we undermine that at our peril. I would say, however, that decisions on commercial and philanthropic donations are rightly for the staff and trustees of those organisations, which typically have policies in place for donations and ethics.
In April, we launched Our Place to Give, our new plan for growing place-based philanthropy. This represents a fundamental shift towards a partnership model that treats philanthropy as a strategic partner in innovation. Key initiatives from the plan include investing £1 million to strengthen fundraising capacity in places, convening regional philanthropic ambassadors to broker better links between donors and communities and adopting a “think philanthropy” approach across government to ensure that public investment acts as a catalyst for wider giving. I was pleased, as Gambling Minister, that the noble Lord, Lord Parkinson, mentioned the contributions made by lotto players through the lottery. It all counts towards that mixed model.
While direct grant funding is our primary tool, the Government are actively exploring how to build a modern, resilient funding model for the arts that goes beyond traditional subsidised structures. We have already seen excellent proofs of concept in this space, such as the Arts Council’s Incentivising Touring scheme, which offers repayable grants and has demonstrated how public capital can be recycled to support more productions and wider audiences.
My noble friend Lady Gill, like most noble Lords, highlighted the work by my noble friend Lady Hodge of Barking in her review of Arts Council England. It focused particularly on exploring new ways to bring more funding into our cultural sector through a variety of innovative solutions. The Government confirmed in our response, published earlier this year, that we will consider all these recommendations. This work is being explored with the Arts Council through targeted engagement with financial experts and relevant sector stakeholders to ensure we identify viable high-quality options that fill policy gaps. I would be very happy to talk to noble Lords in greater detail about this in person, if not in a debate in your Lordship’ House—so let us have more debates on DCMS matters.
As we look into these innovative ideas, we will of course proceed responsibly. Any successful new model must satisfy a number of essential conditions. For example, it will require robust governance and sufficient sector capacity to manage repayable instruments. Fundamentally, any future approach must be affordable within our current fiscal constraints and wider budgeting decisions. We must also recognise that a robust financial ecosystem already exists. This includes deploying a portion of the £4 billion secured for priority sectors and exploring how businesses, including those in the creative industries, can secure loans using their intellectual properties, such as copyrights and designs, as collateral. This would give commercial lenders the confidence to back asset-light creative firms, providing an important pathway to finance for creative founders.
Today’s debate has illustrated the depth of expertise and passion for this in your Lordships’ Committee and the passion that I share for making sure that our arts and cultural organisations have the capital funding that they need to succeed and for finding creative solutions to do this. I hope I have demonstrated that this is a passion that the Government share. It is a debate I would be more than happy to continue. I look forward to future discussions, both with my noble friend Lord John and others, to work collaboratively for the shared goal. I have not answered all the questions; I will write to those noble Lords to whom I have not had a chance to respond.