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Arts Council organisation review

briefing note
24 February 2009

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This briefing note sets out the latest proposals for our organisation review at
Arts Council England.

The need for the review came from a simple financial imperative – to save
£6.5 million. The Arts Council was asked by Government to reduce grant-in-
aid administration costs by 15% by 2010–11. We also agreed that 15%
savings should be made on our National Lottery costs, so that a total of £6.5
million could be found to go back into the arts, year on year, and this has
already been factored into our budgets for 2010/11. Because of the level of
savings already made by the Arts Council over the last few years, finding this
amount of additional saving will involve far more than simple tinkering with the
way we are currently structured.

There are other reasons for change. The 2008 McIntosh report on our last
investment strategy and contacts with key stakeholders show that we need to
operate differently if we are to maintain the trust and authority we need to do
our job well. The review is therefore a real opportunity to consolidate our
credibility, establish ourselves firmly as one organisation which gets things
done, and to articulate and realise our national ambition, while maintaining a
strong regional presence.

The proposals detailed in this note have been endorsed by National Council
and are now under formal consultation with staff and their representatives.

The Arts Council’s unique role

In achieving the savings demanded by the review, we will maintain our ability
to play our unique role for the arts:

• using our arts expertise and knowledge to make informed decisions to


support great art of regional, national and international significance
• connecting the arts offer to people and working with local partners
• providing a long-term overview across the arts and realising ambitions
of a regional, national and international scale
• making the case to Government for funding for the arts
• using our judgement, backed by efficient processes, to give Grants for
the arts that encourage talent and produce great art

Review principles

The proposals have been developed with some key principles at their heart:

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• we will truly become one organisation
• a head office will support and guide the organisation, working to one
coherent plan and strategy
• we will maintain a strong and influential regional presence
• we will free up and better reward staff at regional level who lead our
relationships with funded organisations and other partners, and who do a
complex and difficult job

We also need a different organisational culture – where creative thinking and


collaboration is enabled and authority and performance management are
clear. This new environment will allow creative input at all levels and make the
most of a talented and motivated workforce. As well as structural change, it
will require a change of culture and a willingness to work differently.

The proposed structure

The key elements of our proposal are as follows:

• a smaller head office – focused on strategy and support to frontline staff


• nine regional offices – smaller and more focused on frontline delivery,
working with the organisations we fund, artists and other key partners
• regional offices grouped under four area executive directors – with a
strong senior management team to streamline internal processes and
encourage knowledge sharing
• a central Grants for the arts processing team – relieving regional
offices of administrative burden and making grant-giving more equitable.
The team to be based in Manchester
• a streamlined advocacy and communications team – a specialist head
office team and three area advocacy teams supporting regional offices,
line-managed in the areas but forming a clear professional family
• a smaller executive board (nine members) with a balance of regional
knowledge and a strategic overview, making quicker decisions

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Benefits of the proposal

The proposals are designed to provide a better focused service to arts


organisations.

The plans create a new, smaller executive board that is strategically focused
to provide a clear national overview, informed by a sound understanding of
what is happening across the country, providing a strong sense of direction,
and able to make quicker decisions.

The proposals aim to create a proper sense of a single and joined-up


organisation, which is confident and ambitious and shares knowledge both
internally and externally, and a culture that moves away from the perceived
tension between national and regional agendas.

There should also be greater clarity than at present for artists, arts
organisations and partners on the roles of the different parts of our
organisation, showing clear points of contact. Through greater clarity on the
role, responsibility and authority of the different areas of the organisation, the
proposal should create a culture where staff are clearer about what is
expected of them, empowered to deliver and are rewarded appropriately.
Partners and funded organisations should also benefit from this.

By creating a clearer, more focused advocacy and communications team we


should create an organisation with a stronger and more coherent voice
externally.

We are aiming for simpler, more cost effective processes, with staff in regional
offices relieved of the burden of administrative processes wherever possible,
allowing them more time to provide advice, guidance and expertise externally.
There should be an increased incentive for staff to share their particular areas
of expertise across the organisation wherever appropriate, making the most
efficient use of our valuable expertise.

Taken together we will deliver an administrative saving of £6.5 million annually


from 2010–11 to go back into the arts.

Head office

What is now known as national office will be called head office in future to
clarify its main function, which is to provide strategic national leadership for
the organisation through:

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• leadership and overview, informed by regions, and providing a
compelling narrative about the future of the arts
• long-term strategic thinking
• specialist advice and knowledge
• national advocacy
• collaboration and knowledge sharing
• good governance
• establishing simple and effective processes
• an overview of internal performance

The new head office will comprise five departments:


• Arts
• Arts Planning and Investment
• Advocacy and Communications
• Resources
• Chief Executive’s Unit

The total number of staff proposed for the new head office is 112, a reduction
from 168 in the current structure.

Areas and regions

A new concept of area ‘business units’ is fundamental to the proposals.

This means planning, investment strategy and other budget decision-making


based on four areas rather than nine regional offices. Area executive directors
will have the authority to decide how planning and funding are managed by
and delegated to regional offices.

The four area groupings are:


• North
• Midlands and South West
• East and South East
• London

The benefits of the area grouping include:


• enabling a more coherent filter than at present for information to and
from Executive Board, and assisting us in delivering coherent
strategies nationally
• enabling us to retain nine strong regional offices and creating more
flexibility to work across regional boundaries
• enabling us to have more flexibility to move funds across regional
boundaries

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• facilitating better use of the skills and experiences of the regional
teams, encouraging knowledge sharing and cross-region working and
developing area specialisms
• generating efficiency savings through a smaller number of executive
directors and through streamlining our business
• providing the potential for a more integrated approach to working with
external partners - for example, with local authorities, providing an
opportunity to incorporate ways of working with the larger metropolitan
authorities
• creating a smaller executive board but with a good mix of national
overview and local knowledge (see ‘The Arts Council’s unique role’,
above)

The four area groupings have been agreed on the following basis:
• the north of England has some geographical and economic integrity
and is already recognised in some quarters as a distinct area – so
North should be one of our areas
• London should be a discrete area because of the number and scale of
arts organisations, and the number of artists and cultural opportunities
in London
• East and South East should combine to make up one area. There are
strong economic and planning arguments for a Greater South East
model (East, London and South East), although this is not desirable for
the Arts Council because of the size of our operation in London.
However, our aim is for ongoing and frequent dialogue in future
between the London and East/South East on the many areas of
common interest
• East Midlands and West Midlands have geographical and economic
integrity, and should be joined with the South West to form one area

The proposals include retaining our regional office structure of nine frontline
regional offices to lead on:
• relationships with arts organisations and partners in their region
• relationships with artists, including helping to develop appropriate
applications for Grants for the arts in their region
• raising funding for the arts in their region, building funding partnerships
and levering in funding for the arts wherever possible

Regional offices will also deliver nationally agreed programmes of work and
provide expertise and support to colleagues across the organisation through
collaborative working. They will also offer particular expertise through a
person or team able to help and advise on particular issues in other offices.

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Staff numbers in the regional offices, area teams (and including the Grants for
the arts centre) will be 311, down from 422 in the current structures. This is
broken down by region as follows:

Proposed Existing
East 23 39
East Midlands 22 38
London 59 90
North East 22 37
North West 28 47
South East 25 45
South West 26 40
West Midlands 26 46
Yorkshire 26 40
Area staff 14 n/a
Grants for the arts
centre 40 n/a
Total 311 422

The service centre

The support centre is based in Manchester and includes teams for enquiries,
finance transactions, human resources operations, IT infrastructure and the
service desk. The structure is consistent with the principles established by the
2007 support services review. However, adjustments have been made to the
finance, human resources and IT teams to reflect the reduction in staff
numbers in the new overall proposed structure, and these will affect the
volume of work for these teams.

Grants for the arts centre

We are proposing to create one Grants for the arts centre to carry out
assessment and monitoring processes, with close links to regional offices and
head office, and decisions made at area level.

We believe this move will generate a number of benefits:


• our analysis shows that it will reduce the administration costs of running
the programme freeing up National Lottery funds for future programme
budgets
• it should provide a more consistent experience to applicants across the
country
• it will remove the processing burden from staff in regional offices,
allowing them to focus on their work with regularly funded organisations,
other arts organisations and key partners

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• it will ensure that monitoring happens in a consistent way, providing
better management information to regional and area teams
• it will provide a structure that is more future-proof – capable of
expansion or contraction to reflect the size of future Grants for the arts
budgets and volumes of applications

This team will be based in Manchester alongside our North West office and
support centre and will have 40 staff.

Savings

There are limited opportunities for non-pay related savings since over 60% of
our administration costs are pay related. In addition, we needed to find further
savings to provide the scope to improve our pay structures. This is factored
into the proposals.

Final staff numbers included in this proposal are (full time equivalents):

Current Proposed
2008/09 2010/11

Regional offices, areas and Grants


for the arts centre 422 311
Support centre 32 50
Head (formerly national) office 168 112
Total 622 473

This change equates to a 26% reduction in regional office/Grants for the arts
and a 33% reduction in head office.

In addition we are exploiting the opportunities that do exist for non-pay


savings including:
• property, co-locating London regional office with head office
• travel and subsistence budgets through better use of technology, such
as video or tele-conferencing and more discipline around the number of
internal meetings requiring travel, particularly to London
• other variable non-pay costs such as telephone and small equipment
budgets

Next steps

There will now be three months of formal consultation with staff and unions on
these proposals, which will run until the end of May. Final proposals from the

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chief executive and Executive Board, informed by comments made during the
consultation, will be presented to National Council in July. The final structure
will then be announced and implementation will begin over the summer. The
new structure will be fully operational from April 2010.

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