Culture Counts' Evidence - Social Justice And Social Security Committee – Pre-Budget Scrutiny 2025-26
Culture Counts have submitted evidence to the Scottish Parliament’s Social Justice And Social Security Committee’s scrutiny of the Scottish Government’s budget for 2025-26: Third sector funding principles.
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' Evidence - Social Justice And Social Security Committee – Pre-Budget Scrutiny 2025-26: Third sector funding principles
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.
Whilst we are a charity and therefore part of the third sector, our response provides an overview focusing on the challenges, needs and opportunities for Scotland’s culture sector.
Our response is informed by evidence from our Core Members and wider culture sector stakeholders who we asked for views and information on a number of central issues.
Scotland’s culture sector is rich and diverse, with cultural assets, events, productions and activities that are distinct, globally connected, and internationally recognised. It drives innovation, generates income and millions of visitors each year are attracted by our cultural offer. And as one of Scotland’s growth sectors, the creative industries employed almost 155,000 people in Scotland in 2022, contributing £4.4billion gross value added to Scotland’s economy in 2020.
The sector’s make up is multi-faceted including public bodies, charities and commercial entities, from national organisations and institutions, local authorities and arms-length bodies, small to medium enterprises, voluntary groups, collectives and partnerships. It has a highly committed professional workforce as well as hugely talented self-employed freelancers, artists, makers and producers. It is supported by thousands of volunteers committing time to serve on boards and assisting service delivery and operations.
The sector is innovative and entrepreneurial in its financial models and how it generates income and raises funds, from public funding, grants and donations, sponsorship, commercial activity and trading. But it is in the midst of a funding crisis with over a decade of standstill funding, the legacies of the pandemic and Brexit, and the crippling cost of living crisis.
It is underpinned by cultural policies and strategies at a local, national and international level, demonstrating the importance of culture to the nation’s social and economic prosperity and well-being.
Culture Counts supports SCVOs urgent call for the Scottish Government to align with their Fair Funding approach.
1. Longer-Term Funding Impact: What are the benefits of providing longer-term funding arrangements of three years or more for third sector organisations?
The current crisis facing Scotland’s culture sector 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.
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 unprecedented levels of demand, or from the rest of the sector who seek funding outwith Creative Scotland’s remit.
Multi-year funding settlements are important for organisations to enable them to plan strategically for the future, offer longer term contracts to staff and freelancers providing much needed security for the workforce, enable staff development and organisational growth helping to retain staff within organisations, would free up resources form endless funding application and reporting cycles, enable organisations to focus on their core service and functions allowing time for innovation and to capitalise on upcoming opportunities.
It is also vital that Government supported funding bodies have multi-year settlements to enable them to plan strategically and develop their own funding programmes on multi-year basis. 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.
2. Longer-Term Funding Impact: What are the challenges in providing this and how could these be overcome?
The barriers to providing appropriate investment and a multi-year settlement to Scotland’s national institutions and public sector cultural bodies are unclear given that the culture budget has historically 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.
Creative Scotland’s Multi Year funding programme has been a long time in development and delays to its roll out, due primarily to the Covid pandemic, has left the sector on standstill funding for over a decade and now in serious financial precarity. Developing a programme for such a broad and diverse culture sector is a challenge particularly without a multi-year settlement for its own funds, the external challenges facing the sector, as discussed previously, and with the extremely difficult funding environment. Core Scottish Government funding is not enough to adequately support the sector or the programme and the ability of organisations to secure match funding from other income sources is limited and declining.
The Culture Strategy 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.
3. Flexibility and Core Funding Needs: What are the benefits of providing flexible, unrestricted core funding to third sector organisations?
There is an urgent need for investment in culture to prioritise sustaining the sector investing in core activity and maintaining and securing its infrastructure.
Additional budgets and interventions are urgently needed at a government level. There must be an understanding of the distinction between core funding which should be supported by core and sustained investment and innovative funding solutions which are not necessarily sustainable and cannot be relied on to support ongoing core activity.
Funding is often restricted to new projects or activities meaning organisations struggle to fund core costs for operations, facilities, utilities and staff roles. Project funding often is one off. Increasing core costs caused by inflationary increases, increased cost of living, the high costs of utilities and meeting the commitment to Fair Work, means that organisations are having to utilise reserves as cannot access new and rising budgets to support core activity.
Having less restricted and more flexible funding would enable organisation to plan better, be responsive to changes in their circumstances, environment and prioritise need better as well as encourage innovation and enable organisations to take up opportunities that present themselves.
4. Flexibility and Core Funding Needs: What are the challenges in providing this and how could these be overcome?
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 overriding priority for culture is to see investment 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.
Organisations welcome funders who in times of crisis allow them to divert funding to support core costs and provide flexibility to change project plans and approaches.
Dealing with financial pressures is what culture has in common with education, health and social care and leads to us being locked into having to make ‘difficult decisions’ rather than working towards imaginative solutions. We need to find ways cross-sector to look at alternative methods of resourcing and working collectively.
5. Sustainable Funding and Inflation Adjustments: How might including inflation-based uplifts and covering full operating costs influence the overall effectiveness and sustainability of the third sector?
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.
The argument to prioritise public sector pay awards over 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.
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. We also call for annual uplifts in line with inflation for all public grant funding.
6. Sustainable Funding and Inflation Adjustments: What are the challenges in providing this and how could these be overcome?
The current crisis facing Scotland’s culture sector 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. The amount of funding required is tiny in comparison to other portfolios but will deliver huge impacts. 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. 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.
7. Real Living Wage Commitments: What impact do you think the ability for third sector organisation to pay their staff the Real Living Wage has on their services?
Artists, makers, and creatives are the heart of the sector and need to be paid fairly for all that they do and produce. We need to provide the support and conditions for freelancers to survive.
The culture sector is committed to fair work and its principles and implementation, as well as the establishment of the Culture Fair Work Taskforce Group, which Culture Counts is a member of. Many organisations have been improving their practices for a number of years including becoming Living Wage employers, paying the Real Living Wage and adhering to industry standard rates, and phasing out zero-hour contracts.
Creative Scotland’s Multi Year Funding Programme which received applications from 281 cultural organisations to the Second Stage in April 2024, required commitments from all to fair work principles including confirming payment of the Real Living Wage.
Beyond Creative Scotland other funders such as Museums Galleries Scotland also have fair work conditionality for grants which has helped to drive forward the implementation of the real living wage in the sector. As it is quite early in the development and implementation of fair work across the culture sector, it is difficult to determine what progress has been made without evidence gathering and access to relevant data. We anticipate, however that cultural organisations may be further ahead than many other sectors in committing and implementing fair work.
As Festivals Edinburgh noted in their response to the consultation on the National Events Strategy: (National events strategy review: consultation analysis - gov.scot (www.gov.scot))
“In February 2023 the UK Creative Industries Policy & Evidence Centre (PEC) published the Good Work Review - the first examination of job quality across the entire UK creative industries - with Creative Scotland as the Scottish partner in this work. The study found that ‘people working in the Creative Industries tended to have higher job satisfaction than workers in other sectors, could work more flexibly, and found their work to be an outlet for their creative passion’. However, they also found that there was ‘lower than average pay in some sectors, long hours, evidence for poor workplace culture, and unequal access to the creative industries, with many people needing to work for free to get a foot in the door’. “
KEY ISSUES
What we are aware of is the financial burden that fair work and paying the Real Living Wage has placed on the 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 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.
Applying for a limited exemption in funding contracts on the basis of affordability is not an appropriate solution as it would result in staff not being appropriately compensated for a period of time and is not a permanent solution for organisations.
Freelancers are not currently included in fair work legislation.
Volunteers are also not included and as Museums Galleries Scotland reports 96% of organisations rely on volunteers and the depletion of the volunteer workforce is causing pressures.
8. Real Living Wage Commitments: What are the challenges in providing this and how could these be overcome?
Priorities for further progress
Ensure that there are adequate structures in place to capture data and evidence around fair work to comprehensively guide policy development.
To include freelancers in the Fair Work legislation, and for the Fair Work Dimensions to be embedded into contracts.
Ensure the Culture Fair Work Taskforce can influence policy and the wider sector are able to feed into this process.
Utilise the skills and expertise of the culture sector who may be further ahead than many other sectors to share learning and expertise.
9. Efficiency in Funding Processes: How could the process for third sector organisations making funding applications, reporting, and receiving payments be more efficient and consistent?
The culture sector is inherently innovative and creative across all that it does including in diversifying its income, which is why it has survived on standstill funding for over 15 years. It has, however exhausted cost cutting initiatives and innovative schemes for diversifying income at an organisational level. In addition, the pressures of organisational deficits and applying to the Multi-Year funding programme has seen innovation and the ability to take advantage of upcoming opportunities constrained. Fundraising is increasingly challenging with funders experiencing increased demand, many are moving to support different priorities and success rates are plummeting. The challenges around ethical philanthropy and corporate sponsorship mean it is not currently a viable option for developmental growth. The sector reports that it is at capacity without significantly compromising its core services and mission.
Culture Counts supports SCVOs urgent call for the Scottish Government to align with their Fair Funding approach. In particular the recommendations which would most benefit the culture sector are:
A minimum of three-year funding settlements
Flexible, unrestricted core funding, which enables organisations to provide security, plan effectively, and fulfil good governance requirements.
Sustainable funding that includes inflation-based uplifts and full costs, including core operating costs.
Funding that accommodates paying staff at least the Real Living Wage
Accessible, streamlined, proportionate, and consistent approaches to applications and reporting, timely processing and payments, and partnership between the grant-maker and grant-holder.
A comprehensive and proportionate approach to financial transparency around grant funding to support organisations and the public to understand spending decisions.
Transparent delivery goals, timelines, and accountability mechanisms – such as reporting and stakeholder groups - to ensure progress on “Fairer Funding” can be scrutinised by the voluntary sector and Parliament.
10. Efficiency in Funding Processes: What are the challenges in providing this and how could these be overcome?
Recommended improvements to the process include:
Early decisions in advance of planning before the start of the financial year.
Uniformity across funding applications and grant monitoring requirements would reduce bureaucracy and resources.
Application processes and monitoring should be proportionate for organisation scale and grant levels.
Sharing of evaluation and data would be helpful to make the case for culture.