Spending Review Statement

Thursday 21st October 2010 Written Statements

[The Secretary of State for Culture, Olympics, Media and Sport (Mr Jeremy Hunt)]

By 2014-15, the end of this spending review period, DCMS’s combined capital and resource budget will be 25% lower than in 2010-11.

The purpose of this statement is to explain in more detail what this means for those working in our sectors.

The Government recognise that these are difficult cuts. However, it has had no choice, given the pressing need to reduce the deficit.

In looking to make savings my strategy has been based on four principles:

Cutting waste and inefficiency and stopping lower priority projects. As part of this settlement I am reducing administration costs in my own Department by 50% and I am demanding similar reductions from all of the major bodies we fund. This is in addition to our previously announced decision to abolish a number of public bodies including the UK Film Council and the Museums Libraries and Archives Council.

Protecting the front line as much as possible. By taking tough action elsewhere, we are managing to protect the National Museums and the British Library, the renaissance in the regions programme, regularly funded arts organisations. Whole sport plans for national governing bodies, the public lending right and the British Film Industry (BFI). Funding for these will fall by no more than 15% in real terms over the spending review period, requiring tough but manageable efficiencies.

Delivering a safe and successful Olympic and Paralympic Games in 2012. As part of this settlement we are maintaining the planned £9.3 billion Olympic funding package. This ensures that the Olympic Delivery Authority (ODA) is fully funded through to the completion of the programme and that we retain adequate contingency to deal with key risks. However, we will continue to bear down on these costs, and have announced a number of savings, including the stadium “wrap”.

Contributing to Economic Growth. As part of this settlement we are boosting tourism by protecting Visit Britain’s £50 million marketing budget and challenging industry to match it. We are retaining support for film and the tax credit, and are also investing £230 million in broadband infrastructure, including a number of superfast broadband pilot projects.

In addition the BBC will contribute an additional £150 million per year for broadband in the four years between 2013-14 and 2016-17. This is part of a wider agreement with the BBC that will freeze the licence fee at £145.50 until April 2017. As part of this deal the BBC has agreed to take on a suite of additional spending requirements, including the BBC World Service, a significant contribution to S4C and support for local television.

Finally with great regret I have also taken the decision to withdraw funding from the Commission for Architecture and Built Environment (CABE).

The action I have taken will ensure that our sectors will get through the coming years without long-term damage. They will also benefit from our decision to restore the lottery to its original good causes, which will mean that the arts, sports and heritage sectors will each get £50 million a year extra funding from 2012.

More detail on our resource settlement is provided below and in the accompanying tables which set out DCMS’s budgets by sector and by funded bodies and programmes.

I am also providing an outline of my capital investment plan for the spending review period. This includes support for projects of major significance such as redevelopments of the British Museum and the Tate Modern, as well as continued support for sports facilities through Sport England.

In line with the Government’s commitment to transparency, I will publish all of the allocation letters I am sending to our funded bodies so that the public can see how their money is being spent and what we expect in return.

While we have had to make a number of very difficult decisions, we have acted in a decisive way that maximises the resources going to the front line. Our priority now is to get on with delivering the services the public want over the period of this Parliament and beyond.

Delivering a Safe and Successful Olympic and Paralympic Games

The top priority for my Department remains the delivery of a safe and successful Olympic and Paralympic Games. London 2012 will be a defining moment for our nation, when the eyes of the world will be upon us.

The public sector funding package available for the games will remain at £9.3 billion. Government funding for the programme, excluding security, will be held by my Department. The Greater London Authority (GLA) and Olympic Lottery Distributor will continue to contribute as per the 2007 spending review agreement. Security funding will be provided primarily by the Home Office, based on the principle that costs will lie where they fall.

This settlement ensures that the Olympic Delivery Authority (ODA) is fully funded through to the completion of the programme. We have reduced the ODA’s forecast completion cost by £20 million, in part by no longer delivering the external “Wrap” around the Olympic stadium, subject to planning conditions, and unless alternative sources of funding can be found.

In recognition of the changing focus of the programme from construction to the operational delivery of the games, the spending review settlement makes provision totalling around £0.5 billion for specific operational requirements.

As noted in the national security strategy, we must not underestimate the security challenge. The spending review settlement makes provision to ensure that all Olympic and Paralympic sporting and non-sporting venues, totalling over 100, are secure throughout the preparatory phase and six weeks of Olympic and Paralympic competition. This is over and above the funding for Olympic policing and wider security, but both are contained within the £9.3 billion funding package. As set out in the bid, venue security is a shared responsibility of the event organiser—the London Organising Committee of the Olympic and Paralympic Games (LOCOG)—and the Government. LOCOG will lead the delivery of securing venues in collaboration with the police and other security agencies.

The settlement will also provide for specific extra responsibilities, for host local authorities where the burden imposed for specific games-time operations is of such a scale that it should not be borne solely by local council tax payers, and for shared responsibilities for the safety of spectators and visitors between transport hubs and sporting venues where existing budgets cannot cover the additional requirement.

The remainder of the funding package—around £0.5 billion—will be held as an Olympic contingency for cross-programme issues including a material change in security circumstances. Contingency will be strictly controlled and will only be released to meet costs that are essential for the delivery of the games, where they cannot reasonably be met from existing budgets. The contingency will be held partly by DCMS and partly within HM Treasury’s general reserve.

The Government remain committed to the public sector funding half of the incremental cost of the Paralympic Games. This is included within the £9.3 billion funding package. Separately, and outside of the £9.3 billion funding package, all Government Departments are clear as to their operational responsibilities and will fund them as required. This is recognised in their settlements.

The capital and resource allocations for the DCMS element of the Olympic and Paralympic programme are set out in the table which accompanies this statement. Further details of the spending review outcome for the Olympic programme will be provided in the next quarterly economic report on the games, due to be published on 9 November.

Supporting Elite, Community and Youth Sport

The Government remain committed to elite, community and youth sport in the run up to hosting the London 2012 games, and is confident it can deliver a real and lasting legacy.

We have made clear to UK Sport that their first priority must continue to be world class funding for Olympic and Paralympic sport in order to deliver medal success on the world stage. As part of this settlement, they will maintain the agreed funding for Olympic and Paralympic sports up to 2012, subject to the usual performance related decisions, as well as seeking to maximise performance in Glasgow 2014 and at the next Winter Olympics and Paralympics. After 2012 there will be reductions to the direct budget for Olympic and Paralympic sports but we are confident that these can be limited to 15% in real terms and we have made clear we want UK Sport to look hard for additional private sector sponsorship to make up for this.

We have also secured a good settlement for sport’s national governing bodies as part of the overall settlement with Sport England. In our discussions with them, we have been clear that resource funding for Whole Sport Plans (WSPs) is to be protected and subject to a cut of no more than 15% in real terms over the period of this spending review. The resource budget for these plans will be in addition to continued lottery funding and capital funding.

Protecting the front line in this way will mean some tough choices and I have been clear with both UK Sport and Sport England that their spending on administration needs to be reduced by 50% by the end of the spending review period. While we are planning for the organisations to merge after the Olympics, we expect them to start finding administrative savings through closer working before then.

Alongside continued funding for these two organisations, we will continue to support UK Anti-Doping (UKAD) and the Football Licensing Authority (FLA). Given their important work both these organisations will receive below average reductions in funding. We expect them to find this from administration and efficiency rather than reduced services.

Protecting Arts, Museums And Libraries

This country has some of the finest cultural institutions in the world and we are determined to protect them so they can be enjoyed by everybody both now and in the future. Our starting point has been to look for large savings to the amount of public money spent on bureaucracy. We have previously announced that we are abolishing the Museums Libraries and Archives Council, and as part of this settlement we are asking Arts Council England to reduce their administration budget by 50% as well as cutting back sharply on discretionary, non essential, spend.

By taking these tough decisions we are able to limit any damage to the front line. We have been clear with the Arts Council that it needs to protect the grants it makes to regularly funded arts organisations,—the backbone of this country’s artistic life. Individual decisions about which organisations to fund are for the Arts Council to make, but we have been clear that the total funding for arts organisations is to be reduced by no more than 15% in real terms over the spending review period.

We are providing similar protection to the British Library and the National and non- National Museums which my Department sponsors. By limiting reductions to their resource funding to 15% in real terms over the period, we are ensuring they are able to continue with the successful policy of free entry.

I am also giving these organisations the freedom to access up to £143 million of their historic reserves over the next four years. This is an important step towards delivering on the coalition commitment to providing greater freedoms for national museums and will encourage them to work towards attracting further philanthropic donations.

Another area I am able to protect is the successful renaissance in the regions programme which has done so much to improve the quality of museums in all parts of the country. While we are abolishing the MLA, this programme will transfer to another body from 2012 with cuts to its budget limited to 15% in real terms.

We have also agreed to transfer the administration of the public lending right (PLR), the fund which compensates authors for the loans of their books in public libraries. While the total funding for the PLR will be reduced over the spending review period, this will also be limited to 15% in real terms and the fund will continue to be ring fenced. Given the need to find savings, we have decided at this stage not to extend the fund to cover audio and e-books.

Safeguarding our Heritage

We also remain wholly committed to safeguarding our heritage for future generations.

As part of this settlement, English Heritage and the other grant giving bodies will remain as separate and effective funders for the sector. We are, however, demanding significant efficiencies and as with other major bodies we are insisting that English Heritage reduces its administration budgets by 50% over the spending review period and cuts back on non-essential services.

We want English Heritage to prioritise core activities such as planning advice, grants for heritage at risk and the conservation and maintenance of sites in its care. We also want them to strengthen their fundraising capacity and increase self-generated income.

The settlement also allows us to continue with funding some of our smaller but vitally important heritage organisations. While they too will be expected to find savings on their running costs, we will continue to support the likes of the Royal Naval College in Greenwich, the Chatham Historic Dockyard Trust and the Churches Conservation Trust to carry on their important work with better than average settlements. Grants to the Royal Household for the occupied Royal Palaces will also be protected, with reductions in funding of less than 13% in real terms.

We have also awarded a fixed sum every year to continue the listed places of worship scheme, which has already helped over 9,000 local communities up and down the country. In line with previous announcements, from January 2011 we will be returning this scheme to its original scope of eligibility and these restrictions will also apply for the next spending review period.

Protecting these services has meant taking some tough decisions. One of these is to reduce funding for the royal parks. Another is our decision to withdraw our funding for the Commission for Architecture and the Built Environment (CASE). While I recognise the part that CABE has played in promoting well designed buildings and public spaces, I have judged that the most pressing need is to protect and maintain other parts of our culture and heritage.

Tourism

One of the reasons why we are protecting our cultural institutions is that they play a key role in promoting tourism, an important industry which we are committed to developing.

As part of this settlement we have agreed that VisitBritain and VisitEngland will continue to play a crucial role in this area but like all our other major bodies they will have to find administrative savings of 50% over the next four years.

We also want their remaining spending to be more focused, targeted and effective. In the case of VisitBritain, this means concentrating on international marketing and PR activity in the top and emerging international markets. Over the course of this spending review period we are asking them to create a powerful £100 million partnership marketing fund, with matching funds from the industry and Government to promote the UK as a tourist destination before, during and after the Olympic games.

At the same time we want VisitEngland to focus more on investment in and support for destination management organisations and the local businesses, local authorities and enterprise partnerships involved in tourism up and down the country.

More information on all of this will be provided as part of our tourism strategy, to be published later this year, which will set out a detailed vision for boosting UK tourism and capitalising on hosting the Olympics in 2012.

Media

Through this spending review settlement we will continue to champion our creative industries and the contribution that they make to economic growth.

One of the ways we will do this is by establishing one of the fastest broadband networks in Europe. Over the next four years we will invest £230 million in broadband. In addition, the BBC will contribute an additional £150 million per year for broadband in the four years between 2013-14 and 2016-17.

We are committed to supporting an independent BBC but are also keen to drive efficiencies and ensure better value for money for the licence fee payer. To that end, we have agreed the licence fee settlement for the remainder of the charter period. The level of the licence fee will be frozen at £145.50 until April 2017 and as part of this deal the BBC has agreed to take on a suite of additional spending requirements, including the BBC World Service, a significant contribution to S4C and support for local television.

We are committed to the future of Welsh language broadcasting and as part of the BBC licence fee deal we have secured S4C’s funding for four years. Subject to the current rules around the RPI link being changed as part of the Public Bodies Bill which will be introduced later this year, S4C’s budget will be reduced from its current levels by 24.4% over the spending review period and a partnership arrangement with the BBC will start by 2013-14. While the Government will provide the majority of funding to S4C over the SR period, the BBC will become the primary funder of S4C from 2013-14. This will happen under a new a partnership between S4C and the BBC which will retain S4Cs unique identity and editorial independence.

We are also committed to supporting our film industry. As with other areas we are determined to eradicate waste and bureaucracy and we have previously announced our decision to abolish the UK Film Council by 1 April 2012.

While we are still discussing how best to support the industry going forward we are committed to seeking to protect funding for a number of important areas over the next four years. This includes support for the film industry in the nations and in the regions, the media desk which helps secure and administer European funding, support for inward investment and work to carry out certification as part of the system of tax relief for British films.

It also includes support for the BFI which we will fund directly to maintain its important work, not least caring for one of the world’s richest and most significant collections of film archives. As with other front line services, such as museums and RFOs, we are committed to limiting reductions in their funding to no more than 15% in real terms over the course of the spending review period.

Capital and resource allocations for the DCMS element of the Olympic and Paralympic programme.