Special report: Funding cuts and weak economy send UK’s visual arts into crisis

The visual arts sector in England is struggling to survive. Public institutions are closing under the triple weights of government funding cuts, soaring energy bills and the impact of both the pandemic and the cost-of-living crisis on audience figures. Artists are chronically underpaid and systemically exploited, while university arts courses are being culled. Masked by the opaque dealings of an over-performing top tier, the commercial sector is also showing signs of strain as emerging and mid-tier businesses are being forced to grow or go. Even big businesses are suffering; in the past few months major art fairs including Masterpiece have folded because of escalating costs compounded by Brexit.

During the pandemic, the government’s £1.6bn Culture Recovery Fund prevented a collapse of the entire art sector. But since then, there has been a huge shake-up of Arts Council England (ACE) funding, with London’s institutions facing a £50m cut over the next three years. Among the worst hit are the Camden Art Centre, where subsidies have dropped from £920,000 to £600,000; the Serpentine Galleries (£1,194,000 to £708,000); and the Southbank Centre (£18.4m to £16.8m). Funding for the University of Cambridge Museums has plunged from £1,213,000 to £618,000. As part of a so-called “levelling up” of the regions, other museums have benefited, including the Arnolfini in Bristol, whose funding rose from nothing to £697,000, and the Towner in Eastbourne (£359,000 to £538,000).

ACE chair Nicholas Serota says that the cuts “affect a small number of London-based institutions”. Overall, he notes, the body is “spending more in cash terms, especially outside London, and [has] secured the continuation of exhibitions, theatre and orchestral tax relief”. However, Serota says he “recognises that costs have risen, that the pressures on public institutions are greater than ever and that many organisations are now able to do less than they would wish”.

A spokesperson for the Department for Digital, Culture, Media and Sport (DCMS) notes that a record 985 organisations are receiving ACE support this year. They add: “We are also supporting publicly funded galleries such as the National Portrait Gallery and Young V&A with multi-million-pound refurbishments to make sure they continue to provide the public with enriching experiences.”

As it stands, organisations across the regions are facing critical decisions—or, worse, closure. Levelling up is widely considered to have failed. For many, the current funding pressures “are worse than they were during Covid”, says Tony Butler, the executive director of Derby Museums Trust. Museums like Derby’s have been squeezed by “a cumulative effect of financial challenges that have existed for nearly a decade now” as government austerity has pushed England’s local councils to make “year-on-year reductions”, he adds. The emergency pandemic grants staved off “real carnage” in the sector, but Butler now thinks “there’s a real question over the long-term sustainability of civic, regional culture”.

Cuts and closures

In May the University of Brighton announced that it was closing the Brighton Centre for Contemporary Arts (CCA), saying it had faced “very significant challenges” in terms of funding, including “the near decade-long freeze in undergraduate tuition fees” as well as “generationally high levels of inflation and soaring energy costs”. More than 100 staff across the university are expected to lose their jobs as the institution seeks to save £17.9m.

Ben Roberts, the director of Brighton CCA, says the wider story is one of government funding cuts over the past 12 years. He adds: “The closure of Brighton CCA is just one result of these sustained, politically motivated attacks on the creative sector. We are witnessing the wanton destruction of our most valuable institutions and creative industries.”

University vice-chancellors warned the government in May that the higher education sector’s funding model is “broken” amid rising costs caused by inflation, urging a review of tuition fees. Arts and humanities departments are bearing the brunt of cutbacks. Most recently, it emerged that out of 36 planned academic redundancies at the University of East Anglia, 31 are expected to fall on the arts and humanities faculty.

The University of Wolverhampton has “a rolling programme of course closures and redundancies”, says Aidan Byrne, the subject leader for English Literature and former chair of the University and College Union (UCU) branch there. Citing a £20m shortfall, the university discontinued around 140 undergraduate and postgraduate courses for the 2022/23 academic year. “Performing arts and visual arts were the first to be targeted,” Byrne says, estimating that “between a third and half” of art and design courses have been eliminated. “The local population [is being] denied the opportunity to become part of the world of art, narrowing access to those who are mobile and affluent”.

The picture is similar across the regions. Clare Lilley, the director of the Yorkshire Sculpture Park (YSP), says attendance has not recovered since the pandemic. “It is a very precarious time for many organisations who depend on footfall,” she says, noting that most had a “dire time” last year, with visits typically 23% lower than before the pandemic. “Levelling up hasn’t touched us,” she says. “People in our region are necessarily limiting spending, which inevitably affects ticket sales and spend on site.”

This, together with spiralling costs, caused YSP to indefinitely close its Longside Gallery in spring 2022, operating its Bothy Gallery only during high season.

In July 2020 YSP introduced admission fees. “At that time, we didn’t know whether we would survive,” Lilley says. She adds that ticketing is now a “cornerstone” of YSP’s business model. ACE funding has been “at standstill” for 14 years, with the organisation receiving just 17% of its income from the government. Crippling energy costs are also taking their toll; energy bills have doubled this year to £300,000. Increased costs are affecting other areas of the business, including higher food prices and security costs. Spending on transport has “hugely increased”, Lilley says—a “major budget item in mounting new exhibitions”. Going forward, “footfall-driving projects” will be favoured over more risky exhibitions.

Re-evaluating business models

Other regional galleries and museums being forced to re-evaluate operations include Kettle’s Yard in Cambridge, while the Sainsbury Centre in Norwich, part of the University of East Anglia, has introduced a voluntary payment model. The Fitzwilliam Museum, part of the University of Cambridge Museums along with Kettle’s Yard and six others, is now considering whether free entry is sustainable for some staged exhibitions, according to its director Luke Syson. The Fitzwilliam no longer receives any dedicated funding from ACE and was also turned down for a Transform grant, aimed at those whose ACE funding has been reduced. Syson says the institution will now seek philanthropic and corporate support for its programmes.

Even the largest of museums are having to pivot to new funding streams. Tristram Hunt, the director of the Victoria and Albert Museum (V&A), says his institution has become “even more entrepreneurial” as the percentage of public money for national museums “declines in real terms” and visitor numbers “remain down”. The DCMS provides just under 50% of the V&A’s operating budget. Consequently, the museum has been growing its membership base and patrons’ circle; partnering with tech and media companies such as Adobe and Google for online and education initiatives; and developing commercial sponsorship with major brands like Net-a-Porter and Gucci. Also, Hunt notes, the V&A has been “reaffirming our relationship with key philanthropic partners, in families, trusts and foundations”, as well as making “strong progress in corporate hire and brand licensing”.

Concerns have been raised, however, over the blurred lines of some of these business hires—and political ties. In June the former Tory co-chair Ben Elliot, who is also a trustee of the museum, faced accusations of “undermining the political neutrality” of the V&A by helping set up a Conservative party Winter Ball there. In their public role, board members “should not occupy a paid party-political post or hold a particularly sensitive or high-profile role in a political party”, according to the code of conduct. Nor should they “use, or attempt to use, the opportunity of public service to promote your personal interests or those of any connected person, firm, business or other organisation”. A spokesperson for the V&A noted that the Conservative party events held at the V&A “were both standard corporate venue hires of V&A spaces and were contracted and managed by our corporate events team”.

Artist’s low pay

An entrepreneurial change of tack may prop up the big museum players, but for many artists their careers remain unregulated and unprofessionalised. A March report on artists’ pay commissioned by a-n, the UK’s largest artists’ membership association, and compiled by the artist-run organisation Industria, exposed “a culture of low fees, unpaid labour, and systemic exploitation”. Among the findings was that artists earned a median rate of £2.60 per hour, far below the UK minimum wage of £9.50 per hour (at the time of the research).

The Turner Prize winner Helen Cammock, whose summer commission for Brighton CCA was cancelled after the centre closed down, says she has to work “very, very hard to keep myself afloat”. Cammock’s income is wholly derived from public commissions; often, her fees barely cover costs. For one recent commission from a German museum, Cammock calculated that she was being paid £50 a day. “For most artists, it’s a really, really precarious road,” she says. With rising studio rents, many are simply being priced out of the profession.

Cammock believes there needs to be change in how private collectors are educated about contemporary art. According to the latest UBS/Art Basel Art Market report, paintings, sculptures and works on paper account for 82% of global sales. “Big institutions could put on courses for wealthy collectors about how they could support the arts rather than buying into brands,” Cammock suggests. “It feels like people don’t really understand what contemporary art is anymore.”

She also notes how young commercial galleries are struggling: “If collectors acquired work from small galleries it would ensure their survival and that of the emerging artists they nurture.”

Market slows down

In the first half of 2023 the art market began to shift into a new phase. Some areas, such as the ultra-contemporary market, distinctly cooled, while others have become more sluggish.

Until now, the perception has been that the top tier is immune to real-world vicissitudes. In a bid to maintain that bubble, large galleries and auction houses are setting up increasingly complex business structures. The Russian-owned parent company of Phillips, which is headquartered in London, was changed from one registered in the Seychelles to one registered in the tax-friendly British Virgin Islands just before Russia invaded Ukraine in February 2022. Meanwhile, this February, the fast-growing London- and Hong Kong-based gallery White Cube registered a Jersey-based company under owner Jay Jopling’s control.

Other galleries are taking on financial backers—a common practice, if rarely publicised. During Art Basel in June, the French dealer Emmanuel Perrotin made headlines, announcing that he is selling a 60% stake in his gallery to Colony Investment Management.

Ellie Pennick, who opened the London-based Guts Gallery three years ago, says smaller galleries without backers “are panicking”. Without such investment, she notes, younger businesses will not be able to grow “and artists will move to the blue-chips”.

Smaller and mid-tier galleries are often the first to be squeezed in economic downturns, but even the big guns are feeling the pinch. Christie’s 20th-/21st-century June evening sale in London made just a third of the similar event last year, and failed to reach the pre-sale estimate.

The art market researcher James Goodwin suggests that the whole industry is in for a bumpy ride. He thinks that interest rates will now slow down British, US and European economies “probably to the point of recession, possibly for a prolonged period of time”. The knock-on effect of a period of stagflation will be felt acutely in the market. As Goodwin puts it: “The outlook for future income from companies is low, meaning there will be less surplus wealth to buy art.”

This, coupled with likely higher taxation and significant shifts in taste as the “great wealth transfer” takes place, presents a troubling picture. There is perhaps no better time to rethink how the art ecosystem values all its constituent parts—and for political leaders to recognise that our museums, universities, galleries and artists are among our very greatest assets as a nation.

• With additional reporting by Gareth Harris