Strong concerns have been raised about the financial viability of English Heritage, the new £85m government-endowed charity which will manage historic properties in the UK.
The English Heritage Commission, the current governing board for English Heritage, has said it cannot commit to supporting the new organisation until "unacceptable financial risk" is mitigated.
The new English Heritage charity is expected to launch at the beginning of 2015 and the government intends it to be self-financing within eight years. At the end of 2013 the Department for Culture Media and Sport (DCMS) published a consultation document outlining its proposals.
In the 2013 spending review the government announced that it planned to split quango the English Heritage Commission in two and create a new charity, called English Heritage, to manage the National Heritage Collection.
The government's consultation has ended this week, and concerns have been raised about the viability of the financial model for the organisation proposed by government.
The government’s proposed model will see the DCMS invest a total of £85m over eight years on improving the condition of the National Heritage Collection and expanding visitor exhibitions.
By 2026/27 the government predicts that individual membership would grow by 86 per cent to 1.3 million and that the number of visitors per year would increase by 31 per cent to 6.8 million.
The English Heritage Commission has welcomed the proposed model, but also warned that its success is “critically dependent” upon having financial certainty.
It says the proposed English Heritage charity will need a “particular level of support” in the form of government grants in aid to deliver the business plan necessary to achieve financial self-sufficiency in eight years.
It warns that it will not be able to commit to a particular level of support for the charity over the eight years without knowing how much financial resource it has overall. “Mitigation of this unacceptable financial risk is essential to enable the Commission to endorse the new model. We want to work with government over the coming months to find a solution to this issue.”
Lack of detail
Heritage Alliance, an umbrella organisation for heritage charities, has also raised similar concerns.
It said that the government’s financial predictions for the new charity lack detail and that the case for its financial independence by 2023 and beyond is uncertain.
It says that the charity’s model is a portfolio of visitor attractions, with the business case based on growth figures of 5 per cent a year.
The Heritage Alliance warned that visitor figures are notoriously volatile as events such as the outbreak of foot and mouth disease in 2001, and 9/11 have shown. “The charity may build its reserves in time, but before that, it would only take one or two significant events to derail this model, hence our concern for contingency planning,” it said.
It recommended that the £85m being paid over to the charity from government be one lump sum to avoid a change of heart and allow the charity to benefit from financial interest and investment potential.
The National Trust has also voiced concerns in its response to government. Like the Heritage Alliance, it questioned the government’s predictions on visitor numbers:
“English Heritage visitor numbers, which have recently remained largely static, are predicted to rise by a third by 2026/27. It is unclear the degree to which this predicted visitor increase takes into account free entry afforded by increased membership. Or whether rising costs associated with significant additional visitors, like infrastructure, have been adequately accounted for.”
The National Trust also said that after eight years, when the English Heritage charity is expected to be self-financing, the model may become unsustainable. And it added that serious consideration should be given to the question of ongoing accountability for the nation’s historic assets beyond the first eight-year period of the new model.
It suggests that government might consider establishing English Heritage as a separate DCMS exempt charity under the National Heritage Act, which would result in direct accountability to the Secretary of State. But it adds that this may have implications for the ownership of properties.
