Eighth Report - COVID 19: Culture Recovery Fund

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 … Read more 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. Show less

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In implementing the fund during the pandemic, the Department’s need to act quickly to provide funding to applicants while also protecting taxpayers’ money meant some applicants’ experiences could have been better. The Department announced the fund in July 2020, with … Read more In implementing the fund during the pandemic, the Department’s need to act quickly to provide funding to applicants while also protecting taxpayers’ money meant some applicants’ experiences could have been better. The Department announced the fund in July 2020, with the intention to pay successful applicants by the end of September 2020. While officials should be credited for working at speed and delivering a programme with low fraud levels, mistakes were made, particularly in relation to the fund’s accessibility. For example, the language used on the grant forms were not well geared to commercial organisations; the Department had intended that the money would be distributed more quickly, unsuccessful applicants did not receive clear feedback to understand why their bids were rejected, and recipients faced continuing requests for information such as proof of bank details for each instalment of a grant, resulting in unnecessary duplication of documents. Recommendation: In its Treasury Minute response, the Department should set out what more it is doing to communicate with those who were unsuccessful in 6 COVID 19: Culture Recovery Fund securing funding and streamline its funding processes to cut out any unnecessary demands on recipients that slow down funding, consistent with protecting taxpayers’ money from fraud. Show less

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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 … Read more 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. Show less

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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 …

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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 …

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On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Digital, Culture, Media and Sport (the Department), Arts Council England (ACE) and Sir Damon Buffini, chair of the Culture Recovery Board, about the Culture Recovery Fund (the fund).1

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The Department acknowledged that the changing pandemic scenarios around issues such as the return of international visitors, reopening and social distancing had changed the economics for organisations in receipt of grants or repayable finance.12 It told us that the fund was stretched further than it had anticipated at the time …

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The Department wrote to us to explain that ACE was now responsible for managing £252 million in loans.16 Although the take-up of loan funding was lower than the Department originally predicted, it forms part of the £92 billion total of COVID-19 loans across all of Government.17 Sir Damon Buffini explained …

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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 …

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We asked the Department about its long-term plans for the loan book, as our experience has been that Government has generally had issues at times managing loan books.24 The Accounting Officer confirmed her accountability for the fund’s loans but said it was too early to say what the plans were …

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The Department had considered that the end of September 2020 represented a cliff- edge for the sector, with many organisations in the sector likely to run out of money and close permanently if support was not available by then.27 We therefore questioned the Department about its timetable and whether it …

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We asked the Department what it had learned about setting and communicating realistic deadlines. It considered that what mattered to organisations was knowing that they were going to get funding. It acknowledged that it had given advance notice about when allocations would be announced and then had not been able …

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We asked the Department whether in retrospect it had struck the right balance between applying due diligence and how quickly funding reached organisations. The Department and ACE assured us that they were not aware of any organisation that had fallen into difficulty because of the timing of the receipt of …

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We asked about the low level of fraud in the fund and whether the Department’s focus on due diligence had led to this low level. ACE explained it had a dedicated counter-fraud resource and had so far identified no fraudulent payments at all. It said it had received and investigated …

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We received good evidence from a number of bodies about their experience of the fund and the challenges they had faced. For example some had struggled with the language of the grant form, which seemed to be geared to the not-for-profit sector or larger organisations;36 and some unsuccessful applicants were …

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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 …

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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 …

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We challenged the Department and ACE on what they had done to support parts of the sector including freelancers, commercial organisations, supply chain businesses delivering the technical aspects of the sector’s activity (for example, sound and lighting for events) and festivals.49 The Department described how ministers decided that the fund …

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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 …

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We asked the Department what the obstacles were to setting up a Government-backed insurance scheme for live events, given that many festivals, in particular outdoor ones, were struggling because they were unable to get insurance this year and would have to make decisions about whether to go ahead.55 The Department …

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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 …

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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 …

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We queried whether the Department ought to have set its value for money criteria for the evaluation earlier in the process. The Department told us that it had been assured of the value for money of its spending at all times, and never doubted that the funding had been value …

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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 …

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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’ …

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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 …

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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 …

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