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Holding the ring

Finance | Sally O’Neill | 5 May 2011

Sally O’Neill says the Royal Opera House must not compromise artistic integrity as it adapts to funding cuts.

As I write this article we have just received news of our three-year Arts Council England grant settlement for 2012-15, following the cut to the Arts Council’s budget announced in the government’s spending review last October.

We had already been informed of a 6.9 per cent cash reduction in our grant for 2011/12, and there will now be a further 4.3 per cent reduction in 2012/13, followed by a small amount of growth in 2013/14 and 2014/15 of 2.3 per cent and 2.5 per cent respectively.

Over the full four years this is a cash reduction of 6.6 per cent and has been widely portrayed in the media as a real-terms cut of 15 per cent. However, these sums are based on some woefully out-of-date and optimistic Treasury assumptions of inflation, and the real cut is nearer 20 per cent.

To be awarded an Arts Council grant from April 2012, organisations had to put a bid together in a very prescribed format of no more than 3,000 words. Rumours were rife in the arts world as to what would happen if you dared to stray to 3,001 words. And what about double-barrelled names?

But actually having only 3,000 words in which to both describe your organisation and why you are deserving of support focused minds on what was really important.

Before this settlement was announced there were 849 regularlyfunded organisations (RFOs). There were 638 unsuccessful applications, 206 RFOs lost their funding entirely, and 110 organisations were awarded funding for the first time.

The Arts Council had a very difficult job to do and it has been generally thought to have done it well. Our view at the Royal Opera House has been that, although the news is tough for us, we acknowledge that it is right we share the burden of ensuring some of the smaller, less well-funded companies survive and grow. This, we feel, is reacting responsibly in times of austerity. This is not, however, to underplay the challenge that we now face to balance our budgets for the next four years.

During the past year, and leading up to submitting our Arts Council bid in January, we have been on a fascinating journey at the Royal Opera House of redefining our strategy in a cold climate. Getting the process off the ground was quite a task as the executive leadership team is large – there are 18 of us including the chief executive.

To take the work forward with such a large executive team presented its own challenge, which we attempted to resolve by forming a small core team of three, reporting directly to the chief executive. We were very keen that we were not perceived as ‘owning’ the process, and thereby disenfranchising any of our 14 executive colleagues. It wasn’t until October 2010 that we had a document to take to the board of trustees.

By October the Arts Council had also published the details of the bidding process for arts organisations described above. All the hard work on our strategy paid off as we refined this even further and distilled it into the magic 3,000 words for our funding bid.

Artistic excellence

We worked hard in our bid to strike an appropriate and realistic balance between maintaining artistic excellence and integrity while also recognising that the business model that underpins this has to change to accommodate a future with less public subsidy. We are having to look hard at both our cost base and self-earned income potential. Robust procurement initiatives, measuring productivity and having to take some unpalatable decisions to change our repertoire is helping to cut costs.

We have reluctantly made schedule changes to reduce our repertoire, including losing three productions in 2012/13, although we remain determined to retain Wagner’s Ring in this season, as well as a long-planned new commission.

We also need to retain as much flexibility as we can for the new artistic directors coming into the ballet and opera companies over the next couple of years, and support their ambition. There are not only high costs associated with cancelling productions contracted three years ahead (for opera), but we are also very aware that we must not cross the line at which the programme’s artistic integrity is seriously compromised. 

Sally O’Neill is director of finance at the Royal Opera House. She will be talking about these issues at the CFDG annual conference on 12 May

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