Increased costs and culture and sport: “the crisis now facing the sector is as great as at any time in the last two years”

Published 24/01/2023   |   Reading Time minutes

On 25 January the Senedd will debate the report by the Culture, Welsh Language and International Relations Committee (Culture Committee) into the impact of the increased cost of living on culture and sport.

Culture and sport were still recovering from the pandemic when the extent of the increased cost of living became apparent. Operators are squeezed from both sides – with less money coming in from cash-strapped punters, and more going out on utilities and other costs.

The Culture Committee’s report called for additional targeted funding to help venues and organisations that face closure but have a sustainable future beyond the immediate crisis. The Welsh Government accepted this recommendation, but has provided a fraction of the funding called for by the sector.

Since the Committee published its report in November 2022, the UK Government has reduced the help it will provide with energy bills. UK Active (an organisation representing gyms and leisure centres) and Music Venues Trust (an organisation representing live music venues) have warned this could lead to permanent closures.

The long tail of the pandemic

Group participation in culture and sport was banned for much of the acute phase of the pandemic. Although the final restrictions were lifted in early 2022, participation remains below 2019 levels, as prolonged pandemic impacts merge with those of the increased cost of living. In September 2022 the Arts Council for Wales (a charity that funds and develops the arts) said that audience levels were only at 60-80% of pre-pandemic levels.

The pandemic left a legacy of unequal participation in sport, with men, older adults, those from lower socioeconomic backgrounds and those with a longstanding condition or illness most likely to feel that the pandemic negatively impacted their exercise regimes. The Welsh Sports Association (a membership body for the sport and leisure industry) reports that attendance at sports venues and events are about 70-90% of 2019 rates.

The most recent data (August 2022) from Sport Wales (the national organisation for sport and physical activity) shows that 41% of people say the cost-of-living crisis has reduced their ability to be active.

Other legacies of the pandemic include depleted reserves and staff shortages. “Even in good times”, the Arts Council for Wales explains, “many parts of the arts sector live a fragile existence”. After spending to survive the prolonged cessation of activity, organisations have little left to plug gaps caused by their current reduced incomes.

Surviving the pandemic, Sport Wales’s Owen Hathway explains, “was a bit of a Herculean effort […] If the pandemic hadn't happened, the cost-of-living increase, currently, might be more negotiable, but we are compounding two issues, which are obviously leading towards a much worse impact.”

Many workers left the cultural sector during the pandemic, in search of better paid and less precarious work, and not all have returned. The Arts Council for Wales reports that 40% of organisations they surveyed are struggling to fill vacancies.

When they’re gone, they’re gone

Reduced participation has immediate impacts on those missing out on culture and sport, and reduces organisations’ commercial incomes. But venue closures, which could be permanent, would scar participation for years to come.

During normal trading, grassroots music venues operate with tight – if any – profit margins. These are being squeezed with inflation along their supply chains and reduced incomes. 93% of grassroots music venues are tenants. “Closure”, Music Venues Trust thinks, “will most likely result in the permanent loss of these cultural spaces amongst communities”. Prospective venue operators are likely to be put off by the difficult market conditions, and landlords are likely to let these units, often in city centre locations, for other uses such as retail.

High energy consumption, as well as cost increases for vital chemicals, leaves swimming pools particularly vulnerable. Once closed, the costs of reopening leisure facilities are extensive. Welsh Sports Association notes that “restarting pumps, heaters and testing for contamination require significant investment”, and so “if increasing costs cause public and private leisure venues to close, we anticipate that it is unlikely that they will reopen”.

Call for additional targeted funding for bodies with “a sustainable future beyond the current crisis”

“The crisis now facing the sector”, the Arts Council told the Culture Committee “is as great as at any time over the last two years”. It called for additional investment from the Welsh Government to establish a £5-10 million fund, just for the arts, “that will help stabilise companies through the critical period”.

The Committee agreed, and recommended the Welsh Government provide “additional targeted funding to the sports and culture sectors to help venues and organisations that face closure but have a sustainable future beyond the immediate crisis.” Otherwise, it felt, the £140 million invested by the Welsh Government in keeping these sectors afloat during the pandemic would be wasted.

The Welsh Government accepted this recommendation. In its response it highlighted an additional £3.75 million for culture and sport during the 2022-23 financial year to help with “exceptional inflationary pressures to utility costs and costs of living pressures at the arm’s length bodies and also local sector organisations”. This extra funding has not led to targeted funding to help organisations survive the period of increased costs, as the Arts Council and Committee called for.

The 2023-24 draft budget includes increased revenue funding of 3-7% for culture and sport bodies funded by the Welsh Government (the National Botanic Garden is the only body to see its funding cut). These modest gains look set to be eroded by inflation, which is running at 10.5%.

The Deputy Minister for Arts and Sport said that extra funding “is not feasible”, and that the Welsh Government will “continue to press the UK Government to do all it can to try to ensure that these organisations are supported effectively”. She had previously rejected the Committee’s call to discuss a UK-wide culture and sport emergency funding package with the UK Government, saying “this is wholly a matter for UK Government”.

“So insufficient that is must inevitably result in the permanent closure of venues”

In September 2022 the UK Government’s Energy Bill Relief Scheme provided a lifeline for those dealing with spiralling energy costs. But a pared back scheme, announced in January 2023, and due to start in April, has led to concerns that widespread closures have been postponed, but not averted.

The UK Government had always been clear that the levels of support announced in September were temporary. From April 2023 a reduced level of support will be available, although some sectors – including museums, libraries and historic sites – will receive extra help.

Music Venues Trust said that the new scheme is “so insufficient that it must inevitably result in permanent closures of venues.” UK Active said that it will cause “further service restrictions, closures, and job losses”.

What the pandemic didn’t manage – a decimation of the culture and sport sectors – the increased cost of living may yet achieve.

Article by Robin Wilkinson, Senedd Research, Welsh Parliament