Third time lucky?

A new organisational structure designed to provide “a better-focused service to arts organisations” is promised to the sector by Arts Council England (ACE) in the wake of its latest £6.5m-a-year cost-saving exercise, which aims to release money that will go directly back into the sector. Described by ACE in its latest briefing document as “a real opportunity to consolidate our credibility”, the restructuring has been driven by the Government’s demand for ACE to reduce its grant-in-aid administration costs by 15% by 2010/11 (AP186). A further 15% savings will be made from its National Lottery costs.
ACE has a long track record of attempting to make savings of this nature. Its current plans for a more streamlined operation echo its 2002 restructuring exercise, which saw it absorb the activities of ten Regional Arts Boards (RABs). Staff cuts, and projections of £8–10m a year being released from administration costs and made available for arts initiatives, were forecast (AP7), but ACE’s costs and head count continued to rise (AP90), with staff numbers reaching a peak of almost 900 in 2005/06 – an increase of nearly 20% since its first merged with the former RABs. A pledge by ACE in March 2005 to place a three-year freeze on its own administration costs, including a partial freeze on recruitment (AP94), also failed to cap spending (AP130, AP159).

To achieve the cuts now being demanded of it, ACE is planning to reduce its staff numbers and base its planning, investment strategy and other budget decisions in four areas – North, Midlands and South West, East and South East, and London – with area executive directors who will decide how to delegate planning and funding activities to the nine regional offices. These will be “smaller and more focused on frontline delivery”. The London office will be relocated to the Great Peter Street building currently occupied by ACE’s national office. A support centre based in Manchester will manage a service desk, and deal with finance, human resources and IT, alongside a ‘Grants for the Arts’ centre which will take national responsibility for assessing and monitoring grant applications. This move is described by ACE as enabling them to “free up” frontline staff and create “a culture where staff are clearer about what is expected of them, empowered to deliver and are rewarded appropriately”.
Cutting the cost of its grant-making is a particular priority for ACE, which in the 2006/07 financial year spent up to 35p in the pound on the administration of some of its grants and was accused by the National Audit Office of not having a clear understanding of the costs or efficiency of its grant-making (AP171). This time, the promised cost savings are planned through cuts which will aim to see ACE “truly become one organisation” with a national office that “will support and guide the organisation, working to one coherent plan and strategy”. An estimated £1.5m a year will be saved by centralising the processing of ‘Grants for the Arts’, and a further £1.4m from the “streamlining” of the national office, which will in future be described as ACE’s Head Office. Total staff numbers are now projected to fall from 622 to 491, retaining 24 more staff than was proposed when ACE first unveiled its restructuring plans back in February (AP189). But an ACE spokesperson has told AP that this will not compromise its target of £6.5m annual savings, as property and office related costs, travel and subsistence will be further reduced to compensate. ACE has made provision for a one-off cost of up to £5m for redundancy payments.
• See John Matthews p4