Recommendations & Conclusions
14 items
2
Recommendation
Eighth Report - COVID 19: Culture Recov…
Accepted
We are concerned about the Department’s and Arts Council England’s ability to manage the significant and ongoing loan book commitments created by the Culture Recovery Fund. As a result of repayable finance awarded under the Culture Recovery Fund, Arts Council England is now responsible for managing £252 million in loans …
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We are concerned about the Department’s and Arts Council England’s ability to manage the significant and ongoing loan book commitments created by the Culture Recovery Fund. As a result of repayable finance awarded under the Culture Recovery Fund, Arts Council England is now responsible for managing £252 million in loans over the next two decades. Loan recipients will not be required to pay back money for the first four years of the typical 20-year loan term. Arts Council England has no previous experience of managing a loan book and says that the extra financial skills it needs to manage the loans are now largely in place. While the Department believes it can manage the risk of default, and Arts Council England is confident of its mechanisms to alert it to risks of non-payment, neither have sought to utilise the considerable loan management expertise that already exists elsewhere in government. Recommendation: In its Treasury Minute response, the Department should set out how it will make sure it has the resources in place to take on the new responsibilities for managing loans, and how it has drawn on learning from across government about managing the operation and future risks of its loan book commitments, including risks of organisations defaulting.
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Government response AI summary
The government accepts the recommendation, agreeing to set out how it will ensure resources are in place for managing loans and draw on cross-government learning, with a target implementation date of December 2021 and a commitment to provide further updates then.
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HM Treasury
4
Recommendation
Eighth Report - COVID 19: Culture Recov…
Accepted
The Department lacks a comprehensive understanding of the coverage and impact of its funding on parts of the sector which found themselves without funds. The Department and its arm’s-length bodies have distributed around £1.2 billion to 5,000 organisations and the Department is confident that all applicants that met criteria for …
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The Department lacks a comprehensive understanding of the coverage and impact of its funding on parts of the sector which found themselves without funds. The Department and its arm’s-length bodies have distributed around £1.2 billion to 5,000 organisations and the Department is confident that all applicants that met criteria for cultural significance and sound finances received funding. But the Department’s analysis of how the funding has been distributed is incomplete. For example, the Department has only partial knowledge about the fund’s impact on freelancers, commercial organisations, supply-chain businesses and festivals. Festivals are making difficult decisions about whether to risk their survival by going ahead this summer, but the Department has not modelled the cost of underwriting festival indemnity insurance. Recommendation: The Department should write to us within three months setting out what it intends to do to support those that were under-represented in terms of the funding they received from the Culture Recovery Fund such as freelancers and festivals.
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Government response AI summary
The government agrees to write to the Committee by mid-September 2021, outlining its intentions to support under-represented groups, but disputes the Committee's assertion that it lacks understanding of funding impact.
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HM Treasury
5
Recommendation
Eighth Report - COVID 19: Culture Recov…
Accepted
It remains to be seen whether the Department has achieved its objectives for the Culture Recovery Fund and secured longer-term value for money. The Department and its arm’s-length bodies are looking to build on the new relationships they have made with stakeholders, including many organisations they have not previously worked …
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It remains to be seen whether the Department has achieved its objectives for the Culture Recovery Fund and secured longer-term value for money. The Department and its arm’s-length bodies are looking to build on the new relationships they have made with stakeholders, including many organisations they have not previously worked with or funded. The Department claims that the fund has definitely been value for money already on the basis that it is supporting the survival of organisations and that no organisations that received funding and are “culturally significant” have failed. Yet it could not tell us how it would be measuring the value for money achieved by the fund. The Department’s evaluation of the fund is due to report after the first two rounds have been distributed and round three has been awarded. Capturing what the Department has achieved through the fund and learned about the culture sector will depend on research that has clear value for money criteria, including measures for the impact on jobs and freelancers. Recommendation: The Department should set out: • in its Treasury Minute response, the metrics it is using to evaluate the performance of the Culture Recovery Fund against its initial objectives; and • once its evaluation is complete, what it will do to apply lessons to achieve value for money from its Culture Recovery Fund spending for the whole sector including subsectors that may have been missed.
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Government response AI summary
The government accepts the recommendation and states that its externally commissioned evaluation of the Culture Recovery Fund, due by March 2022, will assess performance against objectives using various metrics including cultural output, financial health, trading status, employment, and a cost-benefit analysis for value for money.
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HM Treasury
6
Recommendation
Eighth Report - COVID 19: Culture Recov…
Accepted
The taxpayer’s investment in the sector, and the Department’s future role in overseeing it, present a huge opportunity for the Department to step up its support and advocacy for the sector. The Department has gained a lot of new information and understanding about the sector, which it could put to …
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The taxpayer’s investment in the sector, and the Department’s future role in overseeing it, present a huge opportunity for the Department to step up its support and advocacy for the sector. The Department has gained a lot of new information and understanding about the sector, which it could put to good use. We want to see the Department apply what it has learned from the Culture Recovery Fund to build the economic potential of the sector. In addition to the sector’s importance to the COVID 19: Culture Recovery Fund 7 domestic economy, we are particularly thinking about the sector’s export potential and the varying levels of cultural and heritage resources across the country. To make the most of this opportunity requires effective action, oversight and advocacy by the Department. Recommendation: The Permanent Secretary should write to us by the end of 2021 setting out: • what she sees as the key challenges facing the sector following the Department’s Culture Recovery Fund investment; • what opportunities the fund has offered for the Department to be a better advocate for the vibrancy of the creative arts and culture sector in all parts of the country; and • how the Department will realise future cultural and economic impacts, including for export, from its investment. 8 COVID 19: Culture Recovery Fund 1 Oversight and management of the Culture Recovery Fund
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Government response AI summary
The government accepts the recommendation and commits that the DCMS Permanent Secretary will write to the Committee by December 2021, outlining key challenges, advocacy opportunities, and how future cultural and economic impacts, including for export, will be realised from the Culture Recovery Fund.
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HM Treasury
9
Conclusion
Eighth Report - COVID 19: Culture Recov…
Accepted
We questioned the Department about its assessment of the profile for default on loans and what plan it and ACE had to tackle organisations defaulting on their loans. The Department told us that it had developed a profile of default. It said it would take a prudent approach to valuation …
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We questioned the Department about its assessment of the profile for default on loans and what plan it and ACE had to tackle organisations defaulting on their loans. The Department told us that it had developed a profile of default. It said it would take a prudent approach to valuation of the loan book over time and would be including loans in the Department’s accounts as part of its 2020–21 spending.20 We heard good explanations from ACE and Sir Damon of what they considered were the safeguards against the risk of organisations defaulting on their loans, for example extensive due diligence on the financial projections of each organisation and ongoing monitoring of their financial situation.21 Sir Damon was confident that successful applicants for loans had enough flexibility in their financial forecasts to repay the financing.22 ACE also believed it had mechanisms to alert it to risks materialising. ACE insisted that it expected organisations to pay back loans over the period of the funding agreement and that the loans would not be translated into grants.23
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Government response AI summary
The government accepts the recommendation to outline how it will manage loan book commitments, confirming officials are working to establish the appropriate mechanism and ensure sufficient resources by December 2021.
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HM Treasury
16
Recommendation
Eighth Report - COVID 19: Culture Recov…
Accepted
We asked the Department whether some organisations had been excluded from the support offered by the fund and whether certain regions or sectors had been under- represented in the applications.43 We also asked whether it should have a relationship manager function for parts of the sector which it knew less …
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We asked the Department whether some organisations had been excluded from the support offered by the fund and whether certain regions or sectors had been under- represented in the applications.43 We also asked whether it should have a relationship manager function for parts of the sector which it knew less about, such as more commercial organisations.44 The Department reported to us that its arm’s-length bodies had distributed £1.2 billion to 5,000 organisations.45 It told us that success rates for applications were higher outside London and the south-east. ACE pointed out that 70% of successful applications were from outside London and considered that it had made significant investment across the country. The Department was not aware of whether organisations from particular areas did not apply but might have, adding that local cultural significance was an important criterion in assessing bids.46 It said that all applicants that met its financial criteria and cultural significance criteria had received funding.47
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Government response AI summary
The government accepted the recommendation and committed to writing to the Committee by mid-September 2021 to set out its intentions for supporting under-represented groups like freelancers and festivals, though it disagreed with the premise that it lacked understanding or failed to support these sectors.
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HM Treasury
17
Conclusion
Eighth Report - COVID 19: Culture Recov…
Accepted
The Department considered that the regional breakdown of all the success rates in awards for the applications it had received suggested that there were parts of the country that had less ‘cultural and heritage fabric’ than others. It asserted that the fund aimed to support existing organisations at risk of …
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The Department considered that the regional breakdown of all the success rates in awards for the applications it had received suggested that there were parts of the country that had less ‘cultural and heritage fabric’ than others. It asserted that the fund aimed to support existing organisations at risk of failure, rather than to create new cultural infrastructure where it did not currently exist, but described this as providing “interesting food for thought for future Government policy”.48
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Government response AI summary
The government agrees with the Committee, with a target implementation date of mid-September 2021 for DCMS to write to the Committee on the matter, though it disagrees with the notion that it lacks understanding of funding coverage or impact.
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HM Treasury
19
Recommendation
Eighth Report - COVID 19: Culture Recov…
Accepted
We questioned the Department about the assessments it had made of the long-term impact on supply chain organisations.51 It told us that supply chain organisations had been eligible to apply for the fund where they were culturally significant, but we had seen evidence that applicants from such organisations, which often …
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We questioned the Department about the assessments it had made of the long-term impact on supply chain organisations.51 It told us that supply chain organisations had been eligible to apply for the fund where they were culturally significant, but we had seen evidence that applicants from such organisations, which often supported numerous freelancers, had felt their cultural significance had not been understood and they had been refused funding.52 The Department told us that its arm’s-length bodies had assessed whether the services applicants provided were predominantly for the heritage or culture sector, whether those services were scarce or particularly innovative and their relevance to the sector.53 ACE explained that the “ecosystem” of the sector had large and small and differentiated sorts of organisations. It acknowledged that, over time, it needed to make sure that the supply chain was represented.54
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Government response AI summary
The government explicitly agrees with the recommendation to ensure the supply chain is represented and commits to writing to the Committee on this matter by mid-September 2021, though it disagrees with lacking understanding or support for the identified sectors.
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HM Treasury
21
Conclusion
Eighth Report - COVID 19: Culture Recov…
Accepted
We asked the Department to tell us how it would be evaluating the success of the fund and its value for money, for example measures of the impact on jobs, freelancers and supply-chain organisations. The Department told us that it had awarded a contract to Ipsos MORI, BOP Consulting and …
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We asked the Department to tell us how it would be evaluating the success of the fund and its value for money, for example measures of the impact on jobs, freelancers and supply-chain organisations. The Department told us that it had awarded a contract to Ipsos MORI, BOP Consulting and Ecorys for the evaluation, which would be completed this financial year. The evaluation would be both a value for money assessment and a process review, to learn lessons about the fund and what it had achieved.57
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Government response AI summary
The government agrees with the recommendation to set out evaluation metrics for the Culture Recovery Fund, detailing that an external evaluation will assess impact, process, and value for money, concluding by March 2022.
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HM Treasury
22
Recommendation
Eighth Report - COVID 19: Culture Recov…
Accepted
The Department said it wanted to satisfy itself that organisations in need were supported and that it achieved its objective of supporting a significant proportion of the cultural sector through a very difficult time. It also told us it wanted to test the fund’s regional impact, how far the Department …
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The Department said it wanted to satisfy itself that organisations in need were supported and that it achieved its objective of supporting a significant proportion of the cultural sector through a very difficult time. It also told us it wanted to test the fund’s regional impact, how far the Department had reached organisations it did not normally have a relationship with, the long-term impact of the fund, and the impact of its support on what it described as “the wider ecosystem and cultural ecology”.58 It advised that it could not yet share with us the details of the questions that the evaluation would cover, but would write to us once they had been settled.59
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Government response AI summary
The government accepted the recommendation and will prepare a policy paper for publication in Spring 2022, in parallel with the Culture Recovery Fund's evaluation, to set out lessons learned and how they will be applied to achieve value for money.
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HM Treasury
24
Conclusion
Eighth Report - COVID 19: Culture Recov…
Accepted
We asked ACE what it had learned about the sector. It told us that for round one of the fund, about 40% of those organisations it funded were new to it, and for round two of the fund, 23% were new to it.62 The Department also told us that the …
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We asked ACE what it had learned about the sector. It told us that for round one of the fund, about 40% of those organisations it funded were new to it, and for round two of the fund, 23% were new to it.62 The Department also told us that the fund had been able to support a broader, larger proportion of the sector than it had anticipated at the beginning.63 In its view, one of the few silver linings of the pandemic had been the depth and breadth of the relationships that it and its arm’s-length bodies had built with stakeholders in the sector, which it wanted to build on.64 57 Qq 9, 59, 60, 65 58 Qq 60, 65 59 Q 65 60 Qq 59, 64 61 Qq 15, 16, 62 62 Q 48 63 Q 68 64 Qq 48, 74 COVID 19: Culture Recovery Fund 15
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Government response AI summary
The government commits to preparing a policy paper, to be published alongside the Culture Recovery Fund evaluation, detailing the lessons learned from the fund's process.
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HM Treasury
25
Conclusion
Eighth Report - COVID 19: Culture Recov…
Accepted
We questioned the Department about the future of the sector and what it saw as emerging risks, given the pandemic situation exceeded the worst-case assumptions when it set up the fund. The Department replied that it did not want to see its investment wasted, and it was now supporting organisations’ …
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We questioned the Department about the future of the sector and what it saw as emerging risks, given the pandemic situation exceeded the worst-case assumptions when it set up the fund. The Department replied that it did not want to see its investment wasted, and it was now supporting organisations’ reopening and restart costs. ACE told us it was seeking to understand how it could best channel its ongoing investments to make sure that arts organisations, museums and cultural organisations would thrive as they came out of the pandemic. It also said it was concerned about consumer behaviour, where it needed further work and data. It told us that cultural organisations had shown flexibility in their planning to engage with audiences in different ways over the last 14 months, and some organisations had looked at restructuring and worked towards more sustainable business models coming out of the crisis.65
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Government response AI summary
The government agrees with the committee's implied recommendation and commits the DCMS Permanent Secretary to write to the Committee by December 2021 to outline key challenges and future cultural and economic impacts from its investment.
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HM Treasury
26
Conclusion
Eighth Report - COVID 19: Culture Recov…
Accepted
We asked what plans ACE had for its funding in future years and how its future funding could build on innovation, given the effect of the pandemic on the sector. ACE told us that it was very interested in the shape of what it described as “the cultural ecosystem” of …
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We asked what plans ACE had for its funding in future years and how its future funding could build on innovation, given the effect of the pandemic on the sector. ACE told us that it was very interested in the shape of what it described as “the cultural ecosystem” of the sector across the whole of England, with large, small and different types of organisations, including supply chain organisations. It said it had a 10-year strategy which it would deliver between now and 2030. It explained that it was optimistic yet realistic given the challenges and wanted to take learning from the pandemic and organisational learning about new technology, live performance and digital performance.66
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Government response AI summary
The government agrees with the committee's implied recommendation and commits the DCMS Permanent Secretary to write to the Committee by December 2021 to outline key challenges and future cultural and economic impacts from its investment.
Read full response →
HM Treasury
27
Recommendation
Eighth Report - COVID 19: Culture Recov…
Accepted
Nationally, the sector contributed £34.6 million to the UK economy in 2019.67 We therefore challenged the Department about its role in overseeing the business aspects of the sector and what it was doing to build the sector including exploiting its export potential. The Department told us there was “food for …
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Nationally, the sector contributed £34.6 million to the UK economy in 2019.67 We therefore challenged the Department about its role in overseeing the business aspects of the sector and what it was doing to build the sector including exploiting its export potential. The Department told us there was “food for thought” in how it built on some of the new links it had developed, including with the more commercial end of the arts sector. It considered that the Department and its Ministers were “the biggest cheerleaders for the creative industries across Government”. It told us it was very proud of the sector’s successes and was committed to promoting the significance of the creative industries as an export industry and for regional economic growth.68 65 Qq 67–69 66 Qq 69, 70, 73 67 C&AG’s report, para 2 68 Qq 74, 79 16 COVID 19: Culture Recovery Fund
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Government response AI summary
The government accepts the recommendation and commits to having the DCMS Permanent Secretary write to the Committee by December 2021, outlining how the department will achieve future cultural and economic impacts, including for export.
Read full response →
HM Treasury