1.  Arts Council England is the national arts development agency, responsible for developing and implementing arts policy and funding on behalf of the Department for Culture, Media and Sport, and making strategic use of both National Lottery and Treasury grant-in-aid funding. Arts Council England believes in the transforming power of the arts and aims to place the arts at the heart of our national life. Theatre is an important art form and we therefore welcome the Culture, Media and Sport Committee inquiry.

  2.  In total 248 theatre companies in England receive core funding from Arts Council England, including producing and touring companies and presenting theatres. It is worth noting that under the heading of theatre we include circus and street arts. We also fund arts centres, festivals and other organisations that are important to the theatre infrastructure.

  3.  Unless otherwise specified, when we refer to theatre we are commenting on the subsidised theatre sector. There are a number of funding streams available for theatre through Arts Council England and a glossary of these terms and grants is available at Appendix A.

THE CURRENT AND LIKELY FUTURE PATTERN OF PUBLIC SUBSIDY FOR THEATRE, INCLUDING BOTH REVENUE SUPPORT AND CAPITAL EXPENDITURE

  4.  Prior to July 2000, the future of the theatre sector looked bleak. Severe under-funding for over two decades had left the industry with limited opportunity for innovation or creativity owing to a stop-start pattern of insecure funding. Crucially, despite the importance of theatre to the country's cultural economy (an overall economic impact of £2.6 billion pa[18]) years of under-investment had left many organisations at risk of insolvency, an assessment supported by the Roles and Function of the English Regional Producing Theatres Report and the Arts Council of England's document The Next Stage. During this period of under funding, there had been a concentration on the survival of buildings and institutions. Investment in the artform and people had become secondary. The sector had become inward looking, was losing audiences and failing to engage its surrounding communities.

  5.  Two things happened in July 2000 to change that. First, the Arts Council of England (now Arts Council England) published the National Policy for Theatre in England. [19]The policy was the result of the theatre review process, which had identified a sector in crisis with poor morale, reduced productivity, lowered standards and declining audiences. This document provided a strategic framework for the sector and identified clear priorities for action for both Arts Council England and the sector itself. The Policy called for the establishment of strategic partnerships in order for it to work. It required not only Arts Council England to position itself to support and guide the sector, but for the sector itself to come fully on board and embrace the policy. Alongside this, Local Authorities and the education and commercial sectors needed to be involved so that the sector could mobilise itself for change. Without this change, the sector would be unlikely to attract new and diverse audiences, which was a crucial element for survival. This was noted in the National Policy and has become a core focus for action.

  6.  Crucially, the National Policy had identified lack of funding as a key barrier to change. As a result Arts Council England argued that, at the very least, the sector needed an additional £25 million annually to be invested in regional theatre. This assessment formed part of our bid to Government for the 2000 Spending Review. In that Review it was announced that we had secured an extra £100 million of Government funding for arts from 2003-04. It included the additional £25 million for theatre annually from 2003-04 (excluding the National Theatre and Royal Shakespeare Company). This represented a 72% increase in the budget for theatre, bringing grant in aid to £75 million. It meant that some organisations were able to receive grants that were more than doubled. Almost all of regional producing theatres received substantial increases: 83% of new funds went to producing companies, 12% to promotion and presenting, 5% strategic funding initiatives such as the Black Regional Initiative for Theatre (BRIT). One of the major achievements was a renewed focus on cultural diversity. The appendix includes details of all the work in this area for the interest of the Committee (Appendix B).

  7.  It became very clear that the theatre review process and the additional money would be the start of a journey for subsidised theatre that would bring stability and growth. Our concern now is that standstill funding could de-rail that journey and upset the fragile stability that has now been achieved. The money has brought about a real transformation in the sector, allowing innovation and excellence, new ideas and support for talent, which alongside a national policy framework has immediately invigorated a depressed sector.

  8.  The policy and the additional money set out to halt decline in theatre, and we believe it has started to do so. Theatres have valued the direction given by the National Policy for Theatre as much as the additional investment. [20]Allied to our own modernising reforms, we have been able to take, for the first time, a genuinely strategic, long-term view of the country's theatre needs.

  9.  2003-04 was the first year of the full increase in revenue funding for the new theatre portfolio and analysis of its impact is not yet complete. However, research from MORI shows that the Arts Council's review of theatre has started to revitalise and invigorate the theatre industry, giving organisations a new impetus to develop and succeed. The research found:

—  The quality of work of theatre in England has improved.

—  More and better employment opportunities are available in theatre.

—  Theatres are able to plan ahead, be more strategic and are more financially secure.

—  Morale has improved significantly and confidence within the sector has been transformed.

—  The theatre industry is taking positive steps to address issues of diversity.

  10.  There are many more signs of change. In 2001-02, for example, 63% of funded theatre organisations were actively developing the artists and creative managers of the future. In 2002-03, the first year theatre review grants were allocated, 77% had plans to do so.

  11.  However, many theatres started from a poor financial position and although money helped them to stabilise and invest, it has not been sufficient in itself to completely reverse the damage of decades of under-investment. The additional funding has helped to generate confidence and optimism but it is not the end of the story. To guarantee their survival, we believe the sector needs continued investment in order to secure these successes and ensure that they can be built upon and not lost.

  12.  As the Committee is no doubt aware, the announcement of the Spending Review 2004 did not, as the sector and we had hoped, ensure sustained investment. Cash standstill in our grant-in-aid will mean real terms drop in funding of £33.8 million over the period of the spending round 2005-06 to 2007-08. Our case to Government and the DCMS was based on the evidence that a pattern of stop start funding (as in the 1990s) undermined the arts infrastructure. Inflation would protect the stability of the sector and safeguard the funding that has already been invested into the industry.

  13.  Arts Council England's overall funding increases in arts funding secured in 2000 and 2002 have not yet redressed the erosion of arts funding seen in previous years. Between 1993-94 and 2001-02, the total core grant-in-aid received by Arts Council England was some £120 million less (at 2001-02 prices) than it would have been had it kept pace with inflation. Even now, with the uplifts of the last two spending rounds, there is still a shortfall of around £54 million, which will only be finally eroded this year (2005-06).

  14.  This is important to remember when looking at a funding freeze in Spending Review 2004. As a result of that long-term under funding, a significant proportion of the additional money for theatre of the last two rounds has gone into remedial support. This is before taking into consideration the effects on inflation, the reductions in Local Authority funding or the decline in income from other streams such as the National Lottery.

THE PERFORMANCE OF THE ARTS COUNCIL IN DEVELOPING STRATEGIES AND PRIORITIES AND DISBURSING FUNDS ACCORDINGLY

  15.  The theatre review process and the National Policy for Theatre have proven to be two defining moments in the future of the industry and have provided solid foundations for the many other initiatives and strategies we have since developed. The review and Policy have ensured that the strong partnerships we have fostered with the theatres, Local Authorities, trade unions and the education and commercial theatre sectors have provided a core focus for activity. This has ensured that progress and change are real and measurable. We believe the Policy and the review have gone a long way to address the issues of crisis in theatre and provide a useful foundation for the future. The policy is owned and acted on by the Arts Council across the country as a whole providing a coherent and consistent framework for our decisions on theatre funding and development.

  16.  Growth and confidence are important for the sector if it is to embrace its artistic potential and engage a wider audience. Economic growth should not be seen purely in terms of achievements in public subsidy, but about the box office successes of our funded theatres. Improvements in quality and standards are also important, not least regarding opportunities for creativity, but for larger casts and longer rehearsals. This change is important for those working in the sector, just as the priority for cultural growth, which looks at broadening engagement with theatre, will ensure that there is a more inclusive mix of audiences and personnel in the sector. Finally, improvements in the fabric of the buildings will ensure more attractive and accessible environments for these new audiences and workers.

  17.  The National Policy for Theatre and the funding framework enabled by the additional £25million, have been greatly valued by the sector. The intention of the policy was to enhance production and presentation of high quality work in theatre. We have provided a copy of the Executive Summary for our research Implementing the national policy for theatre in England by MORI, in the appendix (Appendix C), which is the first part of our own review of the impact of the policy. The industry has highlighted:

—  Enhanced quality of work, which they have attributed to the ability to work differently—82% of respondents stated that they felt they could work differently and they have been able to invest in rehearsal time, cast sizes and develop new work (57%[21]).

—  Crucially, theatres have been able to plan ahead, be more strategic and feel more financially secure.

—  Attendance and participation has increased alongside a diversified audience base.

  18.  One key priority for Arts Council England and the theatre sector is diversity. The theatre review process identified cultural diversity improvements in employment and audience reach as a key aim for the sector. While this was largely motivated by a desire to ensure that theatre is as inclusive as possible, it is also in part owed to recognition that for the sector to survive it needs to encourage all potential audiences to their performances. As detailed above, the appendix (Item B) includes information relating to our work in cultural diversity. The engagement of young people is also very important and we are currently developing the Theatre Education Network, which supports theatre professionals who are providing opportunities for young people, to take forward our policy priorities. More information about this work is outlined below.

  19.  As part of our endeavours to ensure as much money as possible can be allocated directly to the arts, the Committee will be aware of our efforts to modernise our organisation. Following on from the merger of the Arts Council of England and the 10 Regional Arts Boards, Arts Council England is now a single organisation. We have reduced bureaucracy through the rationalisation of 115 funding schemes to just five and we are ahead of our target to reduce our overheads by around £8 million. We have successfully delivered substantial improvements to the effectiveness and efficiency of our own organisation and we are committed to applying this rigour to a fundamental review of our portfolio of funded organisations.

  20.  The Arts Council's portfolio of Regularly Funded Organisations (RFOs) is currently around 1,200. The portfolio has changed over the years to reflect the changes in the arts themselves. We are now instigating a more formal process of review and refreshment and have therefore instigated a single framework for the assessment of all RFOs and their funding needs. The theatre review process anticipated these changes and was the beginning of a journey to stabilise theatre but our portfolio review will be the culmination of all that work. The current decision making process allows us to review the impact of the decisions made in 2001 at the time of the theatre review.

SUPPORT FOR THE MAINTENANCE AND DEVELOPMENT OF THEATRE BUILDINGS; NEW WRITING; NEW PERFORMING TALENT

Theatre buildings

  21.  While not all theatre takes place in traditional theatre buildings, the working environment is important for the majority of theatres practitioners, audiences and participants. Through the National Lottery funded capital programmes, Arts Council England has funded improvements in theatre buildings. However, we are encouraging the theatres we fund to establish reserves for the maintenance of theatre buildings as a more cost effective approach to retaining a healthy infrastructure. Local Authorities are also a key factor in the survival of theatre buildings. They own a significant number and can be their most significant arts funding partner. Arts Council England has been working in partnership with Local Authorities to ensure that investment in the fabric of our theatre heritage is drawn from many sources and not just National Lottery investment. We have provided a list of capital projects for the Committee's interest in the appendix (Item D).

  22.  Our policy recognises that the physical infrastructure of theatre underpins their potential. This reinforces the need for capital funds through the National Lottery and our encouragement of theatres to build up reserves for maintenance. Overall, the investment in theatre buildings has resulted in a vastly improved performing environment. However, given likely developments in lottery funding, we are moving to a strategy where capital and revenue are more closely linked. While the significant capital grants of the last century are unlikely to be repeated, we will use this link to ensure that as much as possible can be done to maintain the fabric of out theatre infrastructure. However, this approach will go forward in a changing environment, which may see Arts Council England no longer a National Lottery distributor. If this were the case, the impact on theatres would be considerable.

  23.  Many of our theatres are old buildings, in need of constant maintenance and repair. A significant amount of this infrastructure maintenance has been met by National Lottery capital funding but there is still much to do. What is critical for the future health of theatre in England, is that the infrastructure is not permitted to return to its previously run-down condition. New and refurbished theatre buildings need continued investment to maintain their current condition and to keep pace with the changing demands of audiences, artists and regulators. Whether this demand will be met by the National Lottery is dependent on what happens to distribution decisions in 2009.

  24.  Lottery funding for theatre over the period November 1994 to November 2004 was £441.02 million, of this capital expenditure was £356.18 million. If this investment is not maintained, even to a lesser degree, the focus of subsidy will have to be about infrastructure and not innovation and creativity. This may result in a return to the stagnant, spiral of decline characteristic of the 1990s.

  25.  In 2003-04, total Arts Council England's grant-in-aid was £335.5 million, an increase of £83.3 million from 2001-02. The vast proportion of this money is providing core funding for our 1,200 regularly funded arts organisations, of which 35% are in the theatre sector. In addition, financial investment will include stabilisation funds, and capital funding from the National Lottery. Arts Council England strategically uses all available funding streams to enable the theatre sectors' transformation. This includes stabilisation and recovery, which have been used as a method of achieving stability and growth in the theatre sector. Stabilisation investment in theatre has so far amounted to £39 million (28% overall) from April 1996 until the end of March 2004.

New Writing

  26.  New writing is a key priority area for Arts Council England. The theatre review specified that money be made available for new writing. Until recently, Arts Council England had new writing grants as a stand-alone funding stream. This has now been incorporated into Grants for the Arts. This change will allow greater flexibility for funding decisions and therefore ensure that we are able to fund a greater variety of innovative writing projects than before. While it is too early to provide statistical data on the success of this scheme, anecdotal evidence is suggesting that this system is working and we are working with the Writers Guild and producers that commission new writing to ensure that as many writers know about the new scheme as possible. Additionally, we have increased grants to RFOs that are new writing specialist companies, such as the Soho Theatre, Live Theatre and the Royal Court, and allowed many regional theatres to strengthen their literary departments eg the Crucible in Sheffield.

  27.  As part of our ongoing diversity work, Arts Council England has been working with the BBC Radio Drama to improve new writing opportunities for black and Asian writers. The project is called Stages of Sound, and it aims to commission new ideas, talent and debate around cultural diversity. Information surrounding this initiative is also supplied in the diversity section of Appendix B.

New performing talent

  28.  The United Kingdom produces outstanding performers whose work is not restricted to theatre. These performers will work in subsidised theatre, commercial theatre, television, radio and film. Often their practical training and development will take place in subsidised theatre and as such, it is vitally important for the cultural industries that the opportunities for employment are as diverse as possible.

  29.  It is important, if our international standing in theatre is to be maintained, that performers are supported. This will involve training, continuing professional development, funding for theatres and ensuring access to theatre throughout their school career. We recognised the importance of the artist in our document Ambitions for the Arts and by providing a solid foundation for the development of theatre, we can provide a sound foundation for performing talent.

  30.  To ensure that we maintain a regular dialogue with performers, we have a regular dialogue with Equity and the Musicians Union, through their association the Performers' Alliance, to which the Writers Guild of Great Britain is also a member. This allows their concerns and interests to be factored into our ongoing policy discussions. We have also worked with companies such as the Asian Theatre School and the Young Vic to provide opportunities for Asian performers. The Asian Theatre School received funds from Arts Council England as a result of our theatre review process and are now able to undertake national touring as a result.

  31.  With regard to training and development, while further and higher education and training are not within our remit, we recognise their importance and support the National Council for Drama Training (NCDT). It is important to ensure that the sector reflects society as a whole. Without diverse gender and race and performers with disabilities entering the sector through education opportunities entry routes at later life will become increasingly difficult to access. The Dance and Drama Awards (DADA) have also been important for ensuring pathways for progression. DADA provides funding for talented students attending recognised training institutions. The Scheme has recently piloted a small number of initiatives to enable performers with disabilities to undertake training. These initiatives are working with companies, such as Graeae and CandoCo Dance Company, and using the experience and expertise developed by the profession to feed back into the training sector.

  32.  We have provided targeted investment in a number of areas, including writers and directors training, and at Birkberk College, we invested in a unique directing course for three years. Arts Council England has provided funding for emerging a black and Asian theatre directors course at Contact Theatre in partnership with Nitro, Tara Arts and Live and Direct. With regard to the remaining theatre portfolio, Arts Council England has supported the training and development in the circus industry through capital and revenue investment in circus schools. We have also made significant investment into a number of circus companies. For example, Circus Space received an increase of funding of 43.5% from 2002-03 £135,077 to £231,000, while Circomedia is now a RFO with £80,000 in 2004-05 rising to £100,000 in 2005-06.

  33.  Likewise, by supporting theatres' education and youth theatre programmes we can increase the quantity and quality of opportunities for young people to develop talent and go on to make a living in the cultural sector. Youth Theatre, or Participatory Theatre, is an important area for new performers and cultural impact. "Youth theatre" is a broad term used to describe a wide variety of organisations engaging young people in theatre related activities. It takes place outside of formal education, is facilitated by adults (to greater and lesser degrees) and is based on the voluntary participation of young people. It has been shown to have wide-ranging beneficial impacts upon young people, positively contributing to transitions from childhood to adulthood. There are approximately 750 youth theatres spread across England, catering for an estimated 30,000 young people. [22]

  34.  The focus of the National Policy was on professional theatre and therefore did not identify participatory theatre as a priority area. However, this work has historically been an important part of the theatre industry in England. Since the theatre review, Arts Council England has been focusing on this area and funds the National Association of Youth Theatres; National Youth Theatre and the National Student Drama Festival, and through a variety of funding sources other youth and participation projects have been funded and continue to be funded, not least through subsidy to regional producing theatres and national touring companies, most of whom run youth projects.

  35.  In recent years significant developments have been made with the funding of the Asian Theatre School, developing new ways of an integrated approach to making work at Leicester Haymarket Theatre, and the project CONTACTING THE WORLD, led by Contact Theatre and funded through the British Council, that has seen important international collaborations. Through the work of the Black Regional Initiative in Theatre (BRIT) it is recognised that opening the doors to employment opportunities for black and minority ethnic young people in theatre is more likely to happen through participation in theatre rather than traditional training institutions.

  36.  Arts Council England undertook a specific review of Children's theatre in November 2000, which informed the theatre review process. Following a national seminar in July 2002, Arts Council England undertook a number of pilot programmes including ones looking at training for drama students and developing a consortium of eleven promoters managing venues, amongst other projects. We are also working with two producing theatres to promote the development of playwriting for children's theatre. The publication of play scripts is an important way of promoting theatre for children, and through our working this area four plays were selected for an anthology of plays for children in the 7-11 age range, published by Faber in 2004.

  37.  Currently the social welfare system does not recognise "artist" as an employment category, as a result the social and economic diversity of entrants into the arts sector is being limited. We are working to ensure that artists are recognised an employment category so that they can access more benefits to allow them to remain in the industry between jobs. By recognising and in particular by extending the Government scheme, the New Deal, to cover all artists, the Government can make an important step to broadening the range of people that can develop their careers in the arts. One of the great strengths of the New Deal is that it is flexible to the changing nature of the labour market and caters to the needs of the individual. Artists would benefit from this flexibility and specialised focus, especially though access to the New Deal from the early stages of their careers. The benefits of having a system where all performers can maintain their career even during periods of unemployment without seeking alternative income to the sector are enormous.

THE SIGNIFICANCE OF THE THEATRE AS A GENRE (A) WITHIN THE CULTURAL LIFE OF THE UK; (B) IN THE REGIONS SPECIFICALLY, AND (C) WITHIN THE UK ECONOMY, DIRECTLY AND INDIRECTLY

 (a)   within the cultural life of the UK

  38.  Theatres provide a focus for their communities. Not only are they an access point for culture, but they can be an opportunity to spark debate amongst communities, and ideally foster a better understanding of minorities for a more inclusive environment. Oldham is an example of an area working closely with communities. Oldham is the 38th most deprived local authority in England. By 2010, a fifth of its population will be Muslims with origins in Pakistan, Bangladesh and northern India. The Coliseum Theatre in Oldham has responded to this challenging environment by increasing the amount of its outreach and education activity, mainly as a result of by new partnerships with schools and colleges and agencies such a Connexions and a range of investment sources including European funding. The most exciting development in Oldham has perhaps been the rapid growth in the influence and impact of Peshkar Productions making work by, with and for younger people in Oldham mainly from the Pakistani and Bangladeshi communities. This has resulted in commissions from other theatres and a joint conference with the Coliseum in 2004 focusing on Art and Islam.

  39.  Additionally theatres can bring added value to the communities in which they are located. For example, theatre has a key role to play in delivering against the outcomes identified in Every Child Matters. It can be used to promote messages about being healthy and staying safe, and provides opportunities for children and young people to enjoy themselves and achieve recognition and status within their community. Most importantly, it can empower children with skills for creativity and for life. Theatre will also have a role to play in any proposals for youth expected in the forthcoming Government green paper and the ten-year strategy for early years and childcare.

  40.  Theatres, through their work to engage new audiences, are working differently and fostering new partnerships that can only increase their cultural value to society. It is important that theatres can react to the change in demographics around them, through new writing, new partnerships, especially for young people. Our theatre funded organisations put on 5.8 million performances for young people in 2001-02 and reached a total audience (of all ages) of 8.2 million. [23]

  41.  Schools, whether through direct relationships with theatres or Creative Partnerships, can also broaden the horizons of their pupils with theatre and educate them about society as a whole. Arts Council England whole-heartedly supports the concept of creating universal opportunity for young people to work with cultural and creative professionals, to enrich their learning across the whole curriculum and believes that theatre has a key role to play in that. The impact of youth theatre on the cultural life of communities is detailed above. There are however, many more opportunities for theatre to impact directly on this area.

  42.  Touring companies have a particular role to play in the theatre ecology. They access geographically isolated and economically deprived communities and ensure a diverse mix of theatre is available. In the financial year 2003-04, under the new Grants for Arts Lottery funded scheme, Grants for National Touring supported over £3 million worth of theatre projects to tour nationally and in some instances across UK borders. As a result, audiences were given a wide choice of high quality theatre performances across a range of genres, which complemented the regionally based theatre work from its producing theatres. Theatre accounted for 39% of all touring work in England in 2003-04, and since the theatre review, four building based producers were awarded three year fixed-term National Touring Contracts to increase the range and diversity of touring work at the large and middle scale. The investment in touring work has encouraged dynamic and mutually beneficial relationships across the country and has stimulated collaborations and touring circuits to meet the needs of artists, venues and their audiences.

  43.  The audience for street arts is also significant. A recent pilot study (2001) carried out by social survey division of the Office for National Statistics indicates that over a 12 month period, 18% of respondents had attended street art, carnival or circus compared to 22% at a play or drama, 11% at pantomime and 10% at a dance event. The survey also showed that 23% were 16-24 year-olds and 25% were 25-34 year-olds.

 (b)   in the regions specifically

  44.  The National Policy embraced regional distinctiveness. We are aware that theatres develop in different ways and react to their individual environments accordingly, reflecting their regional identity, such as the Liverpool Everyman. The Hull Truck Theatre has a different approach to programming to the Salisbury Playhouse. Additionally, theatres are very important locally and can often be a driving force for cultural policies and building blocks for cultural activity. Local Authority investment in our RFOs for 2001-02 was £17.2 million[24], with a median local authority grant of £45, 800[25] for the same year, which reflects the importance they play in communities.

  45.  Attendance numbers for theatre in the regions are consistently high, typically between 21% and 29% of those surveyed seeing a play or drama in 2003[26]. There are a number of excellent examples of theatres linking with their local communities, and we cannot outline them all here. Theatres will also provide a central focus for communities at a local level through their education sessions. For example, there were 846,000 attendances at education sessions delivered by Arts Council England theatre RFOs in 2002-03[27].

  46.  Another important method by which theatres have had a positive impact on the regions is through Creative Partnerships, which provide children across England with the opportunity to develop creativity in learning and to take part in cultural activities of the highest quality. Creative Partnerships works in schools in areas of high deprivation to foster sustainable partnerships between schools and the widest possible range of cultural and creative professionals and organisations, which includes theatre companies and many others. The projects aim to broaden learners' cultural experiences, animate all aspects of the curriculum and promote systemic change. The Partnerships can have a real direct impact in their local areas, and engage communities and their local theatre companies in an effective and strategic way.

 (c)   within the UK economy, directly and indirectly

  47.  The creative industries are the largest growth sector in economy. In May 2004 Arts Council England published the most comprehensive economic impact study of theatre, which shows that the economic impact of UK theatre is £2.6 billion annually. Overall, the economic impact of theatre beyond the West End is £1.1 billion. Tourism and leisure industries directly benefit with every audience member spending an average of £7.77 on food, transport and childcare when they visit a UK theatre outside of the West End. The West End directly contributes £1.5 billion to the economy and with audience members more often travelling to stay in London, they will spend £53.77 on food, transport and childcare (excluding accommodation) when they visit the West End.

  48.  Each theatre makes both direct and indirect contributions to the local economy. The direct impact: local spending on purchasing supplies; wages paid to staff that live locally. The indirect impact is the "knock-on" effect generated by the direct impact, where spending money leads to more money being spent. When theatres purchase supplies from a local company, that income helps the company pay wages to its staff that then use it to buy other goods. All that expenditure is constantly circulating around the local economy, helping to preserve jobs, and boost economic growth. The Everyman Theatre in Cheltenham is an excellent example of this, with goods and services bought locally totalling £478,166, with an estimated local economic impact of £4.1 million in 2002-03. [28]

  49.  The additional visitor spend (AVS) also demonstrates how audience spending can make a significant difference to the local economy. By attracting people into an area—where they might eat out, spend money on transport or buy local produce—theatres help sustain jobs, generate additional economic activity and act as forces for economic and social regeneration.

  50.  Artists and arts organisations funded by Arts Council England do much to promote Britain's image abroad. Performances by the Royal Shakespeare Company at Stratford-upon-Avon act as magnets of excellence for visitors to this country. British theatre and the RSC especially, act as a great international ambassador. A survey[29] indicates that 29% of overseas visitors (of which there were 24.7 million in 2003) are drawn to visit Britain by the chance to see performing arts. This contribution towards inward earnings is complemented by Britain's cultural exports. National Theatre productions have been acclaimed on Broadway and contribute to the national identity by taking high quality, high profile work all around the world.

THE EFFECTIVENESS OF PUBLIC SUBSIDY FOR THEATRE AND THE RELATIONSHIP BETWEEN THE SUBSIDISED SECTOR AND THE COMMERCIAL SECTOR, ESPECIALLY LONDON'S WEST END

  51.  The Economic Impact Study of UK theatre report gives a clear picture of the state of English subsidised theatre and the first indications of the impact of the Arts Council's 2001 theatre review. A great deal of this information is detailed above. Our public subsidy goes into supporting work and companies that would not be viable in a commercial market. The subsidy allows for innovation and experimentation and the development of a broader range of work that could not be sustained in a purely commercial environment. We are not suggesting that subsidised work is not entertaining or that commercial work is not valid. We believe that there is a natural relationship between experimental theatre in a found space and purely commercial work, for example. Subsidy can protect theatre from the vulnerability of the commercial market place, which is shown clearly by the current health of the regional theatres as opposed to the commercial sector, which is experiencing some difficulties. Arts Council England welcomes cooperation between different sectors within the theatre industry particularly where this results in the promotion of opportunities for greater access to work initiated with the help of public funds. Such cooperation can also result in the creation of valuable income streams for subsidised companies.

  52.  The Theatre Investment Fund, which is now called Stage One, is an important element of this relationship between subsidised and commercial theatre. Stage One is a charity that provides commitment to training and support for theatre producers. Since its creation in 1976, the fund has invested £3.4 million in over 700 productions and has run a programme of workshops and courses available to all producers. Arts Council England supports Stage One because of the invaluable experience it provides to the subsidised sector. Through a relationship with the commercial sector, producers are able to learn skills around contract negotiation, receive guidance about working methods and ensure a smooth transition of shows from subsidised to commercial markets. In addition, it ensures the development of a reciprocal relationship between the two sectors and creates mutual trust and understanding.

  53.  A healthy West End is good for theatre as a whole, just as healthy subsidised theatre sector is important to health of West End. This was noted in the Wyndham Report, which concluded that the success of commercial theatre due to its symbiotic relationship with the subsidised sector. The journey of Jerry Springer: The Opera, from the BAC in Battersea, to the Edinburgh Festival to the National Theatre and then to the Cambridge Theatre in the West End is an excellent example. Co-operation between two sectors is important as it creates valuable income streams and allows for the cross fertilisation of experience between commercial and subsidised sectors, thereby creating new partnerships.

  54.  We are aware of the Theatres Trust Report Act Now!: Modernising West End Theatre, which has identified a need of £250 million to upgrade London's commercial West End theatres. We are currently taking part in discussions with the DCMS, Heritage Lottery Fund and the Theatres Trust as to how to take this report forward, and we very much welcome this involvement. As we have noted above, it is important for the West End to thrive, as its contribution to the theatre ecology is invaluable.

  55.  While we welcome discussions and may be a small contributor to the West End's needs, we will not be able to solve what the Theatres Trust has calculated will be a £250 million renovation project. As we have already detailed above, there will be a decrease in the amount of National Lottery money available, not least if it is decided that Arts Council England should no longer be a distributor. Our capital Lottery budgets have also already been allocated until 2006. It would therefore be difficult to make any commitments, at least until we are reconfirmed as a distributor.

PROGRESS WITH SIGNIFICANT (RE)DEVELOPMENT PROJECTS

  56.  Information is provided in Appendix E.

19   A copy of the National Policy for theatre in England, is attached in hard form. Back

20   Implementing the national policy for theatre in England, Case Studies 1 by MORI for Arts Council England. Back

21   This information was the result of an internal study that took place in the North West of England. Back

22   Stages in Development, Centre for Applied Theatre Research, March 2003. Back

23   A statistical survey of regularly and fixed term funded organisations 2001-02, Arts Council England 2004. Back

24   A statistical survey of regularly and fixed term funded organisations 2001-02, Arts Council England 2004. Back

25   Implementing the national policy for theatre in England, Case Studies 1 by MORI for Arts Council England. Back

26   Arts in England 2003, Arts Council England, 2005. Back

27   Annual Survey of Regularly Funded Organisations, Arts Council England 2005. Back

28   Economic Impact study of UK Theatre, Dominic Shellard, University of Sheffield April 2004. Back

29   Overseas Leisure Visitor Survey, 1996. Back