Culture Counts' Evidence - Finance And Public Administration Committee – Pre-Budget Scrutiny 2025-26

Culture Counts have submitted evidence to the Scottish Parliament’s Finance And Public Administration Committee’s scrutiny of the Scottish Government’s budget for 2025-26: Managing Scotland’s Public Finances: A Strategic Approach.

Our response builds upon our evidence gathered for our submission to the CEEAC Committee’s Pre-Budget Scrutiny 2025-26 and our evidence and recommendations for the 2024-25 inquiry . To further inform our response, we asked our Core Members and wider culture sector stakeholders for views and information on a number of central issues (this blog post contains further contextual information). We are extremely grateful to all of those who engaged with this process, through providing evidence and joining discussions.

Our response can be found in full below.


Culture Counts – Finance And Public Administration Committee Pre-Budget Scrutiny 2025-26: Managing Scotland’s Public Finances: A Strategic Approach

Culture Counts is a network of over 70 of Scotland’s arts, heritage and creative industries organisations which provides a collective voice for Scotland’s culture sector through advocacy and contributing to policy change. Our members are largely representative bodies, as well as some events and performing companies.

Our response focuses on the challenges, needs and opportunities for Scotland’s culture sector.

SCOTTISH GOVERNMENT PRIORITIES

In May 2024, the First Minister set out his four priorities to guide the Scottish Government’s decision-making on policy and the budget. He said his four priorities are:

  • Eradicating child poverty

  • Growing the economy

  • Tackling the climate emergency

  • Delivering better public services.

1.    Are these the right priorities for the Scottish Budget 2025-26 and, if not, where should the Scottish Government focus its attention?

We are supportive of these four priorities and want to emphasis the role that arts and culture can play in delivering these priorities. Scotland’s culture sector is world class and attracts visitors in their millions every year. It supports jobs, generates income, drives innovation and has proven societal benefits from supporting health and well-being to social inclusion.

There is no lack of understanding by the culture sector of the current financial challenges facing the Government in setting budgets. However, without an increase in core investment the culture sector will continue to decline and will not be able to deliver on Scottish Government’s four priorities. The crisis facing Scotland’s culture sector is an immediate one. Culture Counts and sector colleagues have been warning of the ‘perfect storm’ that faces Scotland’s culture sector for the past two years. We are now sadly seeing what a lack of investment with over a decade of standstill funding coupled with the impacts of Brexit, the Covid-19 pandemic, high inflation, and the cost-of-living crisis really looks like.

The funding environment is extremely precarious with unprecedented pressures on Creative Scotland’s grants programmes. Levels of demand for the new Multi Year Funding Programme far exceed the funds available with no confirmation yet on what the budget will be. This year Creative Scotland (CS) will invest around £34m into regularly funded organisations, applications still under consideration for the next three years are sitting at £87.4m per year, suggesting that the result in October will be devastating for many. Those currently not in receipt of regular funding from Creative Scotland will have to wait until Autumn for decisions on grants starting in 2025 making this interim year incredibly tough, and for some, unsurvivable. In addition, the demand for Creative Scotland’s funding only represents one strand of their funding portfolio and does not reflect the need from their other programmes, which are also experiencing high levels of demand, or from the rest of the sector who seek funding outwith Creative Scotland’s remit.

The levels of demand for funding demonstrate the ambition of Scotland’s cultural sector that whilst facing a precarious future are committed to continuing to develop world class cultural programming. We welcomed ministers’ commitment to invest at least £100 million more in arts and culture by 2028-29, and the promise of at least £25 million in financial year 2025-26 however the crisis is an immediate one. Bringing more of this funding forward now, and the Scottish Government and Creative Scotland aligning their planning for October, would enable vital investment for Creative Scotland, the sector it supports and the communities they serve across Scotland, when it is most urgently needed. Any delays caused by the timetable of the UK Autumn budget at the end of October could have catastrophic consequences.

The culture sector is a finely balanced and interconnected eco-system, so any losses have repercussions across the sector. Any organisation that disappears doesn't just leave a gap. It affects and changes everything connected to it.  As cultural organisations fight for survival, we will see a growing impact on jobs, cultural services and in communities across Scotland. Large scale contraction, which is what we are effectively looking at, will have a systemic effect that can't be predicted or easily undone. Our artists, performers and freelancers are vulnerable, and some are choosing to leave the sector seeking more stability. Our reputation and ambitions as an international cultural leader are now at serious risk.

2.    What taxation and spending decisions should the Scottish Government take to make most progress against each of the First Minister’s four priorities, within the current financial climate?

The overriding priority for culture is to invest in securing the survival of Scotland’s arts and culture sector. Culture needs the conditions to thrive which relies on having a healthy and stable sector of people, artists, creators and makers who create culture and arts. Continued standstill funding and further cuts do not provide these conditions. There is an urgent need to prioritise sustaining the sector over any new projects and initiatives, to invest in core activity, maintaining the infrastructure and capacity building and in supporting our workforce of freelancers and staff. Discussion with the culture sector is vital to ensure future investment priorities are identified and directed strategically to where they are most needed, can have the most impact and should be taken in a way which prioritises the long-term health of all parts of the culture sector.

The culture sector needs to see the Scottish Government’s ambition for it translated into immediate action with as much of the committed increase of £100 million funding, made available now when it is most urgently needed to prevent the immediate threats that many organisations, workforce, and artists stand to face this year.

Scotland’s spend on culture as a percentage of GDP is still one of the lowest in Europe. The average spend on culture in other countries across Europe is 1.5% and Scotland’s investment of just over 0.5% of overall Scottish investment, finds it sitting near the bottom of these league tables. If Scotland aspires to set an international example as a progressive nation and lead the way in its cultural investment, then the current budget levels need to significantly improve to realise this and meet the ambitions proposed within the cultural strategies. The amount of investment in culture is tiny in comparison to other portfolios and delivers huge impacts. A target of at least 1% of budget allocated to culture would demonstrate its value is understood and provide the support at a level that will enable it to flourish and play a central role in people’s lives across Scotland. Setting an adequate baseline of investment once established should have as a minimum index linked annual increases.

Ultimately, the budget comes down to choices by the Government and to date culture has not been a priority or received the investment at the pace or levels needed. The lack of available money to invest in the sector argument made by Government prevents meaningful engagement and discussion. The barriers to providing appropriate investment and a multi-year settlement are unclear given that the culture budget has represented such a low percentage of the overall Scottish Government budget, the risks to committing for at least three years are extremely low compared to the massive benefits this would deliver.  

3.    What are the potential impacts of focussing budget decisions on these four priorities on those groups of society who traditionally experience inequality? 

The current crisis for culture can be easily averted with long term, stable investment and multi-year funding settlements which have the power to reverse the inflationary impacts of 15 years of erosion of culture budgets and ensure continued programme output and employment opportunities.

A commitment to strategic investment in the youth arts sector to ensure young people in Scotland can access and participate fully in cultural and artistic life from a young age, supporting creative education, skills development, and providing essential routes into employment within the cultural industries (which is key to the ongoing success of Scotland’s thriving cultural sector). Such investment is essential for the additional benefits that participation in the arts offers, supporting wellbeing and demonstrating that culture is central to Scotland's prosperity and essential to our lives and wellbeing.

The Culture Strategy Action Plan considers cultural production and practice sitting in a broader societal context which means that specific Scottish Government ring fenced funding streams (Level 4 Budget) could be more specifically targeted to include cultural investment. However, this needs meaningful discussion at minister level to take place to agree and take forward strategic cross-portfolio investment and break down the silo nature of delivery and budget allocation. The sector has limited powers in achieving this at a strategic level without high level intervention and will.

PUBLIC SERVICE REFORM

In December 2023, the Scottish Government said in the first three years of its ten-year reform programme it must have made progress in a range of areas, including:

  • agreeing a common vision and a clear set of goals for reform,

  • developing a programme of work across the public services system to support long-term reform,

  • ensuring strategic investment to sustain capacity for reform and disinvestment in areas that don’t align with its vision and objectives,

  • removing, wherever possible, any identified barriers to reform,

  • that reform actions are making progress against more qualitative indicators of change, improvement, and success.

1.    What progress has the Scottish Government made against these specific goals in relation to public service reform?

The Cabinet Secretary for Constitution, External Affairs and Culture provided an update on progress on the Culture Strategy Action Plan to the CEEAC Committee (letter of 5 June) which referred to reform of the culture sector, however what this means has not yet been communicated. In addition, the plans, timeline and strategies for public service reform and how transformational these might be and how they will impact on national institutions and public sector cultural bodies are unclear and where future funding will be directed. There is considerable scope for cultural practice and production in its many guises to be a key part of positive and realistic transformation.  

2.    Are there any improvements that can be made to achieve faster progress with public service reform and improved outcomes?

A strategic approach to Cross Policy Working is urgently needed with identified leadership that understands the intrinsic value of culture of and in and of itself and that cultural participation has wider benefits that support our wellbeing and builds wealth in our communities.  Cross-portfolio working is implemented most successfully from the ground up. Across the culture sector there are multiple examples of collaborative models with the public and third sectors to deliver activity which supports early intervention and prevention which consequently reduce demand of higher tariff public community, social care and health services. Cross-sector investment is happening in health but needs to be captured, evaluated and promoted better. Investment, a strategic approach and commitment across Government departments is now required to work towards transferring public investment through procurement and collaborative solutions to deliver change at a transformative level. Some work has already begun to map out where arts, heritage and creative industries can deliver on outcomes across Justice; Social Security; Health; Education and Economy. Further work is required to identify ways to secure cross-portfolio investment and understanding of the benefits of culture, particularly with the increased demand for social prescribing and creative therapies to support mental health and well-being.

3. The Scottish Government recently published its Public Sector Pay Policy 2024-25 which offers pay metrics above forecast levels of inflation. What are the implications of its multiyear framework on Public Sector bodies and on the Scottish Budget for 2025-2026? And for the subsequent two years?

Public Sector Pay Policy 2024-25

Despite the current Scottish Government pledging in their 2021 Party Manifesto “agree 3-year funding settlements for Scottish Government core funded cultural organisations” to aid future planning and recovery, this has not come to fruition and Creative Scotland’s budget is currently only confirmed to March 2025. We were also disappointed not to see multi-year budgets in the 2024-25 budget as had been previously suggested by the Government as part of the Verity House agreement.

The argument to prioritise public sector pay awards over investment in culture has often been sited, however this lacks understanding that the culture sector is also largely a publicly funded sector which has similarly been on standstill funding and its workforce without inflationary pay increases for well over a decade. In addition, culture, unlike many other areas in the public sector, has a large freelance component meaning its workforce is much more precarious and vulnerable to external environmental challenges.

The culture sector is committed to fair work and its principles and implementation and it has made significant progress in this area that we suspect may be further ahead than many other sectors. We would recommend utilising the skills and expertise of the culture sector to share learning with other sectors.

However, meeting the requirements of fair work has placed a significant financial burden on the culture sector with some organisations reporting that it has directly led to an operational deficit and/or having to use reserves to meet the cost of increased wages. For some organisations adapting to provide increased wages has come at a cost of job security for employees with employers unable to provide stability for workers due to being unable to commit to longer term contracts which is in conflict with the ethos of Fair Work First.

There is no increased budget available in the 2024-25 budget to help meet the ambitions and targets for 2025, particularly in paying the Real Living Wage. As most culture organisations remain on standstill funding for this financial year meeting the obligations will either require additional funding to pay staff and artists appropriately (which may involve use of reserves and going into a deficit) or a reduction in the level of activity, service or outputs of our cultural institutions.

TAXATION

The Scottish Government plans to publish a draft tax strategy alongside its Medium-Term Financial Strategy.

1.    What elements should a new draft tax strategy include to achieve such a tax system?

Nothing to add

2.    How should a new draft tax strategy address potential impacts of behavioural change on individuals, businesses, and the overall tax take?

Nothing to add

3.    What actions should the Scottish Government take to grow the tax base and increase labour market participation, productivity, and Scotland’s economic growth?

The Creative Industries contribute more than £5 billion to the Scottish economy every year. They comprise of over 15,000 businesses employing more 70,000 people and make a vital contribution to the national wealth and international reputation. The sector is a key growth area and for example Edinburgh’s Festivals alone generate an additional £367 million a year for the Scottish economy supporting 5,000 FTE jobs mainly in tourism and hospitality with spillover benefits for local service industries and generating £33 in economic impact for every £1 invested from the public purse, every year. Despite this there has been a lack of progress in the development of existing and new forms of cultural investment and businesses and jobs are now at stake.

The culture sector has welcomed the Scottish Government support and collaboration with the UK Government to secure cultural tax breaks including Exhibition Tax Relief, Theatre Tax Relief, Orchestra Relief, energy bills relief scheme, etc. This has provided a lifeline for many organisations without which their financial situation would be much bleaker. We would urge the Scottish Government to work to maintain these commitments permanently and collaborate further with the new UK Government to open up future investment opportunities and partnerships, however, these alone, are not enough to rebalance the gap in investment that the sector has experienced or provide the sustainability the sector needs.

Clarity on where leadership in the creative economy currently lies would be hugely welcomed. We also believe there is a strong argument for a strategy for the Creative Industries in Scotland. Across the UK Creative Industries generate £108 billion a year, employ over 2.3 million people in every corner of the country and have grown at more than 1.5 times the rate of the wider economy over the past decade. (Creative industries sector vision: a joint plan to drive growth, build talent and develop skills - GOV.UK (www.gov.uk))

CLIMATE EMERGENCY

The First Minister said that growing the economy will also be achieved through tackling the climate emergency by investing in green energy and infrastructure.

1.    What steps should the Scottish Government take, in its Budget for 2025-26, to grow the economy in this way?

Scotland’s cultural sector is overwhelmingly committed to environmental sustainability and seeking innovative solutions to net zero. In addition, this is an issue that artists are particularly connected with, and their work often draws attention to climate change and its societal impacts. Whilst recognising that international work has an environmental impact, many cultural organisations have embedded sustainable initiatives at the heart of everything they do. This includes setting ambitious targets, taking action, leading and influencing others, supporting green innovation, educating, engaging and encouraging behavioural change, promoting sustainable practices and preserving cultural heritage.

CAPITAL EXPENDITURE

The Scottish Fiscal Commission has forecasted that Scotland’s capital budget is expected to fall by 20 per cent in real terms between 2023-24 and 2028-29.

1.    Given the limited capital budget available, in which areas should the Scottish Government prioritise its capital spend in the Scottish Budget 2025-26 to deliver increased productivity, innovation, and growth?

The Scottish Government should prioritise capital spend on initiatives which stimulate economic growth and development. There is an urgent need for investment in culture to prioritise sustaining the sector investing in core activity and maintaining and securing its infrastructure.

Research on the Economic Value of the Screen Sector in Scotland has shown that significant growth has been achieved in all areas of production, with inward investment in film and HETV production increasing by 110%, from £165.3 million in 2019 to £347.4 million in 2021. In the same period employment in Scotland’s screen production sector rose from 5,120 FTE to 7,150 FTE, a 39% increase.(Creative Scotland)

A joint working agreement for Culture with COSLA would be a productive way forward, recognising the key role Local Authorities play in support of culture in their communities. Scottish Government working with Local Authorities and cultural organisations to collaborate, particularly around community based cultural assets is vital to enable better use of spaces out of hours, sharing of buildings and securing affordable rentals. Improving connectivity across services through supporting partnerships between transport and cultural venues and events to encourage audiences and environmentally sustainable practices.

Joseph Peach