Arts Council Englands response to The contribution of the arts and culture to the national economy, a report by the

Centre for Economics and Business Research We fund arts and culture because they have the power to nurture and inspire us, to ask questions and pose challenges, whether as a society or as individuals. The contribution culture makes to our quality of life and its ability to fire our imaginations always comes first. It is also right to consider all the benefits that investment in the arts and culture can bring, particularly at a time when there is severe pressure on public finances, so that we can argue for the most effective use of that contribution. This Centre for Economic and Business Research (CEBR) report is the first comprehensive analysis to determine the value of art and culture to the modern economy at a national scale. This is an independent report, which uses methodology the Treasury will recognise and respect. The headline findings are impressive. Arts and culture makes up 0.4 per cent of Gross Domestic Product (GDP), a significant return on less than 0.1 per cent of government spending. The industry also has a relatively high Gross Value Added (GVA) multiplier effect relative to other broad UK sectors, whereby it generates more per pound invested than the health, wholesale and retail, and professional and business services sectors. The arts and culture sector is of significant scale, with resilient businesses making a turnover of 12.8 billion, providing 0.45 per cent of total UK employment and with a (GVA) of 5.9 billion in 2011. This contribution has grown since 2008 despite the UK economy as a whole remaining below its output level before the global financial crisis. This has occurred because cultural businesses have become more efficient, reducing outlays on goods and services by 16.3 per cent. The report explores the role of the arts and culture in underpinning the commercial creative industries and suggests that public funding of the arts and culture can play a vital role in encouraging creative innovation. Where the private sector is reluctant to invest in risky projects without a certain end point and pay off, public funding provides the support for creative organisations to explore the potential of new ideas that can continue in startling, unthought-of directions. The innovative work produced can then go on to great commercial success, as in the case of War Horse.

We have long understood the symbiotic relationship between culture and tourism the connections made are as old as the hills. But CEBR quantify these links for the first time, and estimates that culture plays a significant role in attracting at least 856 million of tourist spending and thats a conservative estimate. It is crucial that the UK capitalises on these links effectively, as weve begun to do through our partnership with VisitEngland. We know from the transformation of Liverpools town centre since it was Capital of Culture in 2008, and the regeneration of places like Folkestone and Margate through their cultural quarters, that the arts can transform places. The report suggests that the most successful cultural regeneration is firmly rooted in place and in solid connections to local communities. It surely makes sense now for many Local Enterprise Partnerships and Local Authorities to be thinking about how investment in culture can promote their own sense of place, and in doing so to make them stand out as attractive places to live, work and invest. While the arts and culture industry makes up 0.4 per cent of GDP it plays an important role in supporting the commercial creative industries, including the arts and culture, which make up nearly 10 per cent of GDP (based on Nestas definition of these industries) and 11 per cent of UK service exports. Fashion designers are able to draw inspiration from the V&A archives, while commercially successful shows from War Horse to the Curious Incident of the Dog at Night Time have been developed in theatres with public investment. Cultural organisations act as hubs supporting a fragmented creative sector made up of small businesses depending on ideas rather than tangible assets. They provide low cost office space, meeting spaces, networking opportunities and festivals or exhibitions that develop professional networks and improve skills. CEBR cite evidence that where creative businesses locate near cultural clusters their productivity is higher. As the Government considers the creative sector in its forthcoming Industrial Strategy it is vital that the role of the arts and culture industry as a research and development pipeline is properly considered. The place of culture in education has been publicly debated in recent months and, at a time when the Government will shortly published its Cultural Education Plan, it is timely that this evidence shows the positive benefits that cultural education can have on employability and productivity. Further work is required, but it is a reminder of how important it is for reforms to the curriculum to ensure that children have the opportunity to experience art and culture.

With this report we can confidently confirm the impressive scale of the arts and culture industry and its distinctive strengths and contribution. It is an undeniably vibrant sector with strong links to the wider economy and a key part of our economic future. The next step must be to consider how the UK can capitalise these strengths. We need to ensure Government can speak with one voice to the arts and culture industries in regards to tourism, exports, our Industrial Strategy and the education system, as well as having a clear sense of its true value, and that this value beyond its GVA is properly woven into policy. Alan Davey, Chief Executive, Arts Council England 7 May 2013