MD2629 Culture at Risk Business Support Fund

The response to Covid-19 has placed unprecedented pressure on businesses of all sizes, with the cultural, creative and night time economies experiencing some of the worst, and quickest, impacts. The creative and night time economies have shut down: events have been cancelled and venues have closed; production has frozen and pipeline deals have stalled, starving supply chains. Many cultural businesses are on a cliff edge, ineligible for Government or sector support and unable to access loans. Current industry hardship funds cannot meet unprecedented demand. The Creative Industries Federation reported on 31 March 2020 that 60% of creative businesses would go out of business within 12 weeks.

Following a decade of decline, particularly at the grassroots, London’s cultural infrastructure has only stabilised in the last year following new Mayoral policies and support since 2016. GLA research shows net losses of 61% of LGBTQ+ venues and 35% of grassroots music venues since 2007 and 27% of pubs since 2001. Affordable creative workspaces lost 30% of spaces between 2014-17. Grassroots venues and affordable creative space of all kinds are central to the development of talent and cutting-edge practice in London, giving the city its global creative edge. The impact of Covid-19 could rapidly undo this investment and the stabilisation of these vital spaces for Londoners.

The decisions sought here concern the launch and delivery of a Culture at Risk Business Support Fund as a rapid response to provide funding and support to businesses and their employees who are left out of Government and sector support. A total of £2.325m will be targeted to grassroots music venues (£450k), LGBTQ+ venues (£225k), independent cinemas (£150k) and affordable creative workspaces (£1.5m).

Evidence of need

HM Government has introduced a range of support measures for the UK economy in response to the pandemic, including business rates relief, grants and loans. However, these only apply to businesses in leisure and hospitality and those who are in receipt of small business rates relief. Analysis shows that many businesses in the creative sector, such as affordable creative workspaces, are ineligible for any of the announced support. Film London report that banks are not lending. Furlough is happening, but independent cinemas have cashflow problems (they are cash businesses dependent on weekly box office and retail). The GLA has assessed the rateable value of independent cinemas in London and at least 16 out of 25 are over the £51,000 threshold meaning that they are ineligible for the Government £25,000 grant.

Three quarters of the UK’s film sector is in London, and the capital accounts for 28% (£347m) of all UK cinema-going . According to a recent survey by the Independent Cinema Office, almost a quarter of workers have no income at this time. The loss of London’s independent cinemas would effectively destroy the theatrical market for independent film.

There are gaps in current Government provision for the 47% of the wider creative workforce who are either freelance workers or self-employed. Meeting rent payments, utilities and service charges are one of the biggest immediate challenges for creative and night time businesses. Currently, only some landlords are extending rent holidays. While some Government measures, including the £25k grant, apply to parts of the sector, in London the rateable value is often too high, leaving a large part of the hospitality and leisure sector ineligible for these grants. The Times newspaper reported on 15 April 2020 that more than 130 MPs and peers have backed a call for a specific package of support for the UK’s creative industries, warning that the support announced so far has failed to reach “the very large numbers of directors of small limited companies, freelancers or agency workers that keep our creative industries booming”. Whilst the sector is lobbying for a central Government solution, there is an immediate danger in the capital that creative and night time businesses will lose the premises from which they operate. Even if the Government were to partially resolve this issue, there are likely to be numerous outstanding liabilities (rent, mortgage payments, service charges, insurance, contractual obligations e.g. waste collection) which these businesses will not be able to weather.

The cultural, creative and night time sectors will be crucial to the capital’s recovery. The creative economy is responsible for one in six jobs in London and contributes £52 billion per year to the capital. London’s economy has been growing faster at night than in the day. These sectors will play a vital part in creating jobs and helping the capital recover from the anticipated recession. The creative industries have been the fastest growing area of the economy. Following the 2008 financial crash, the film and TV industry led the way out of recession with growth at twice the rate of the rest of the economy , and that growth continued for more than a decade. London is a world leader in culture and the creative industries. Providing cultural businesses with vital support now will help shore up London‘s recovery later on.

Grassroots cultural venues are community hubs where London’s diverse population come together but most significantly provide local employment. Many independent cinemas use local suppliers for their bars and cafes and offer low price access to those who could otherwise not afford to engage. Cinemas, music and LGBTQ+ venues are critical as focal points and meeting spaces for groups outside the arts – those with dementia, learning disabilities, local entrepreneurs and creatives. Grassroots venues are often the vanguard of regeneration, leading where others follow, and helping to revitalise communities. During the Covid-19 lockdown, businesses have continued to help Londoners connect with each other through online streaming and virtual events and gigs. And when it is lifted, Londoners will need local community venues to go back to.

The effects of the response to Covid-19, have prompted the GLA’s Culture and Creative Industries Unit, the Economic Development and Communities and Social Policy teams to support the sector, including by:

• expanding the Culture at Risk Office, producing updated guidance signposting to eligible funds and resources, providing access to specialist support through sector representatives such as the Music Venue Trust across culture and the night time economy;
• intelligence gathering on how businesses have been affected, through virtual roundtable meetings with LGBTQ+ venues, music venues, licenced premises, affordable creative workspaces, London boroughs and those working in the night time economy;
• working with other GLA teams and external bodies such as Creative Industries Federation to lobby HM Treasury for more support for small businesses, freelancers and the self-employed people who fall through the gaps;
• building evidence and sharing policy from across the world on how cities are supporting culture, through the World Cities Culture Forum:

o Berlin: £26 million emergency aid package for small and medium-sized companies in the culture and media sectors that are not regularly or predominantly publicly funded;
o Hong Kong: Arts and Culture Sector Subsidy Scheme of £16 million for arts and culture;
o Paris: Emergency Fund of £9 million for the visual arts;
o Seoul: An emergency budget of £3.3 million to help artists and cultural organisations;
o San Francisco: Arts Relief Programme of £2.5 million;
o Liverpool has announced £150,000 support for their 19 grassroots music venues; and

• chairing an arts funders group to help launch Wave 2 of the London Community Response Fund, including small grant funding for the community focused arts and culture, voluntary and civic organisations.

Having identified clear gaps in current business support funding, the Culture and Creative Industries Unit recommends that the immediate priority for financial support is for grassroots businesses/venues. This is due to their vulnerability (small size, tight margins) and the risk that those that are ineligible for Government support could shut down and never reopen. Providing financial support to grassroots cultural venues is in line with the Mayor’s statutory Culture Strategy and Cultural Infrastructure Plan. As paragraph 1.2 sets out, providing financial support during the present crisis will help to ensure that Mayoral policy and support over the last four years is not undone.

We have prioritised, for this funding programme, sectors: (i) where we have clear evidence that there is urgent need; (ii) where industry has already set up robust hardship fund mechanisms (see below); (iii) to which we can thereby get funding out as quickly as possible; and (iv) where we definitely know venues and other organisations will not be able to receive Government support or other grant support quickly. We are aware, however, there are other sectors that are struggling who do not have industry hardship funds to support them. We will continue to identify and assess gaps and will explore further options to support them, including lobbying Government (see para 1.9 above).

In order to get funding to grassroots venues as quickly as possible, the Culture and Creative Industries Unit has identified Music Venue Trust, British Film Institute/Film London and the Creative Land Trust as delivery partners. These organisations have:

(i) a proven successful track record of working with grassroots venues and businesses;
(ii) a proven track record of receiving grant funding and appropriate governance and reporting mechanisms;
(iii) established delivery mechanisms in place to distribute funds to those in need; and
(iv) robust assessment frameworks in place to assess eligibility of businesses against clear criteria.

It is proposed therefore, that grant funding is awarded to these organisations as a contribution to their costs of providing financial support to businesses in the sector identified by way of transparent application process. Applicant businesses will need to demonstrate they are unable to access sufficient support to remain solvent in the next 3-6 months because of hardship caused by the response to Covid-19. They will also be required to provide robust future forecasts to show how the funding will enable them to survive in the medium to long term. Further detail is set out in section 2 below.

Responding to the need

This support will initially be targeted to fragile grassroots cultural infrastructure, which has been prioritised through Mayoral policy to date, and not covered by the Government’s current Covid-19 safety net. The Culture and Creative Industries Unit has an existing and developed knowledge of this infrastructure through the Mayor’s Cultural Infrastructure Plan, Rescue Plan for London’s Grassroots Music Venues, Creative Industries Investment Portfolio and Creative Enterprise Zones programmes.

This funding support will initially be time-limited to cover a period of three to six months. Each of the GLA funding streams will assess which organisations are not covered through other streams/measures in order to make targeted interventions so that the funding reaches those businesses at very significant risk, who can also demonstrate they are sustainable in the long-term. Viability is a key part of the selected delivery partners’ delivery mechanisms. For example, businesses will have to demonstrate their viability by producing: organisational budgets; accounts; track record in audience delivery; and plans for recovery. All independent cinemas who apply will have to demonstrate that before 18 March 2020 they had a track record of substantive audience facing activity; that they are open all year round; and that they offer an average of seven screenings per week. They will also have to provide a resilience/recovery plan to demonstrate that the GLA funding will have a material impact in helping them get back on their feet within six months.

This funding will prioritise organisations who have existing external delivery mechanisms and partners in place. The goal is to distribute funds quickly and efficiently based on evidence of where it is currently most needed amongst eligible applicants. Research by officers will continue to identify and target additional beneficiaries, should evidence show further funding is needed, which is not identified or approved in this decision. Funding may also be sought from other funders.

Immediate support

Partnering with existing industry hardship funds, this funding will help safeguard London’s grassroots music, LGBTQ+ venues, affordable creative workspaces and independent cinemas for at least three months.

To reach beneficiaries quickly, simplify administration and reduce costs, it is proposed that funding will be distributed through the delivery partners identified as follows:

*should additional third-party funding be secured it will be used to supplement GLA expenditure either in this fund or in future funds

As with all GLA grant funding, claims will be subject to financial checks, including evidence of their expenditure, income and any cash they are holding, and eligibility checks will be conducted across other available funds. Any unused grant funding will be returnable by the delivery partners to the GLA.

Grassroots music and LGBTQ+ venues – delivered in partnership with Music Venue Trust and the London LGBTQ+ Venues Forum - £675,000

Music Venue Trust calculate that, without urgent intervention, over 90% of grassroots music venues in London face permanent closure, with the potential loss of over 2,000 salaried jobs, more than 250,000 freelance jobs and 75,000 events per year.

Music Venue Trust has been identified as the most suitable organisation for delivery of the fund. They are a not-for-profit organisation with an existing Covid-19 Crisis Fund that will be rapidly expanded with GLA funding of £450,000 to support grassroots music venues and £225,000 to support LGBTQ+ venues.

Music Venue Trust is an influential strategic charity which has played a leading role in halting the decline in music venue numbers across the UK. The organisation has a track record of delivering GLA funded research, guidance and training, with excellent data collection and reporting systems and most recently was commissioned to produce the GLA’s Rescue Plan for Grassroots Music Venues.

Members of Music Venue Trust’s Music Venues Alliance will be able to access this support. There are currently 147 members.

Music Venue Trust has also agreed to extend their remit temporarily to provide support to LGBTQ+ venues. Music Venue Trust will oversee the provision of advice to LGBTQ+ venues. They will work in partnership with the LGBTQ+ Venues Forum, providing them with the expertise, resources and training to ensure that trusted voices can deliver advice and support to the members of the LGBTQ+ Forum.

In order to optimise coverage of the sector only a small amount (which will be set out in the funding agreement) of the GLA funding will be available as a contribution to Music Venue Trust’s costs of management and administration of the fund. To deliver the activity funded by the GLA, Music Venue Trust will appoint dedicated caseworkers for London for an initial 12-week period. They will also work with a representative of the LGBTQ+ Venues Forum. They will provide one-to-one business support and advice directly to venues, boosting and relieving the pressure on the GLA’s Culture at Risk office. They will ensure venues have accessed the financial support that is available and minimised all aspects of their expenditure before funding is agreed.

The aim is to shore up grassroots music and LGBTQ+ venues to a position where they will be able to re-open after the crisis.

Independent cinemas – delivered with Film London/BFI - £150,000

The funding objective is to support small/independent cinemas in Greater London that cannot access any/enough support to remain solvent during the next three to six months because of the response to Covid-19. Film London report that the businesses are unable to access bank loans. Furlough is happening, but cinemas have cashflow problems (they are cash businesses dependent on weekly box office and retail). The GLA has assessed the rateable value of independent cinemas in London and at least 16 are over the £51,000 threshold meaning that they are ineligible for the Government’s £25,000 grant.

The Independent Cinema Office estimate that 37% of employers have made or expect to make redundancies, 68% of employers can only pay workers at the current level for one to three months, 21% of workers have already had their contract terminated and 24% of workers have no income at this time. This will affect young people on lower incomes disproportionately. 62% of those working in cinema exhibition are under 35 and that average income in the Cinema Exhibition sector is the lowest across the Creative Media sector at c£19,350pa for an average 46.8 hour week[1].

GLA funding will support small/independent cinemas in London through the British Film Institute’s (BFI) new BFI FAN Covid-19 Resilience Fund. The BFI’s Film Audience Network (FAN) Offices will administer the process (Film London is the FAN Office in the capital). The structures are already in place within Film London to administer the BFI FAN Covid-19 Resilience Fund so all the GLA’s funding will go to independent cinema awardees, with none spent on administering the fund.

Film London is a key strategic partner for the Mayor with a strong track record administering BFI lottery funding to cinemas. Film London is supported through the Creative Industries portfolio and has direct relationships with the capital’s 25 small/independent cinemas.

Film London will assess all London applications under the following criteria:

0. severity of demonstrable need;
1. the difference funding would make to helping the cinema stabilise;
2. longer term cultural impact of any support given; and
3. availability of funds.

Proposed awards will be presented to the Film London Audience Development Sub-Committee (a sub-group of the Film London Board) for final decision.

Film London will share the recommendations with BFI, who will ensure consistency across FAN Local Offices UK-wide.

This will enable London’s small/independent cinema sector to achieve survival for six months and get up and running again.

Studios and affordable creative workspaces - Creative Land Trust - £1.5m

GLA research has shown that London has around 129 affordable creative workspace organisations across 239 sites (and more buildings), catering for around 11,000 tenants. Around 50% of these tenants are artists across the creative sector, including visual artists, musicians, makers and fashion designers.

Like many others across the culture and creative industries, these tenants have faced 85% cancellation of contracts and commissions or exhibitions and have been left without any income. Without being able to sustain their place of work for the future, they will be unable to begin to earn money again post shut down. Most will not qualify for government support measures or find money to cover space even up to June.

62% of the workspace operators are charities. None of the current grant programmes (e.g. Arts Council England) nor those of Government can address the specific needs of studio providers, which are suffering a double blow of insufficient rental income whilst having themselves to keep up payments on properties. This in turn impacts on their ability to allow rent relief to their tenants.

The affordable creative workspace sector does not have an industry or representative body. The Creative Land Trust has been identified as the most relevant umbrella organisation to support the sector at this time as a trusted intermediary in the sector, allowing the studio organisations themselves to apply for the fund.

Established in 2018 by the Mayor of London, Arts Council England, Outset Art Fund and Bloomberg, Creative Land Trust is a charity with robust financial and governance practices in place. To deliver these funds, Creative Land Trust has confirmed the availability of capacity at board level to bring significant experience of grant funding to the team and will appoint dedicated team members to manage the funding process. In addition to soliciting, reviewing and reporting against applications, Creative Land Trust will provide a monthly ‘temperature check’ virtual workshop to track the use and impact of the funds and inform any future needs and recovery planning. The team will also identify and support smaller scale providers to apply for fund, ensuring wider accessibility of these funds.

In order to optimise coverage of the sector only a small amount of the GLA funding amount (which will be set out in the funding agreement) will be available as a contribution to the Creative Land Trust’s costs of management and administration of these fund.

A pre-qualifying questionnaire (also used by Music Venue Trust) will be used to ensure applicants are eligible for the grant alongside the disclosure of an organisations’ expenditure, income and any reserves.

Creative Land Trust staff and board sector-wide knowledge will be further supported by a decision panel and a dedicated experienced grants officer, which will ensure appropriate case-by-case assessment of each proposal and that there is no duplication of other existing funding streams.

Decisions on proposals will involve an expert panel bringing in property and sector expertise, artists, GLA representation and other funders.

Identifying future needs

It is clear from sector intelligence that there will be further gaps for the culture sector and creative industries in the short to medium term, and we consider the case for further rounds of Culture at Risk funding going forward. Ongoing roundtables and industry data-gathering sessions are in train in order to identify further gaps and inform any subsequent waves of funding. The aim is to ensure the effective targeting of funds and to avoid duplication. For example, other sectors which are fragile and may need bolstering are London’s small museums, small theatres and specific hardship funds for creative practitioners. Any further request for funding would be subject to a separate decision.

Under Section 149 of the Equality Act 2010, as a public sector authority, the Mayor of London must have due regard to the need to eliminate unlawful discrimination, harassment and victimisation as well as to advance equality of opportunity and foster good relations between people who have a protected characteristic and those who do not.

It is not anticipated that the Fund will have a negative impact on any protected groups identified under the Equality Act 2010. It will be developed and delivered in compliance with relevant Codes of Practice and in line with the requirements of the public sector equality duty.

The grant agreements will stipulate that any organisation receiving funds through the Fund must have equality policies in place at their organisations and proactively apply the principles of the Equality Act 2010.

There is a significant risk that businesses and those working in the culture and creative industries sector will be disproportionately impacted by the current crisis. 99% of companies are SMEs and 50% of creative employees work as freelance self-employees. Support measures introduced by HM Government are not equitable and do not cater effectively for all businesses, and workers operating within this sector are therefore at a higher risk of failure or unemployment. As employment is often on a short-term contract or freelance basis, workers are less likely to receive sick pay and other benefits.

LGBTQ+ venues provide essential safe spaces for some of the capital’s most marginalised and vulnerable communities. The loss of thriving and well-loved spaces would be keenly felt among these communities. Grassroots venues have strong links to communities and many offer other services e.g. local or low-cost food provision and provision of affordable tickets. Investing in the future of grassroots venues will ensure that diverse communities all over the capital retain well-loved spaces where they feel safe and comfortable. Grassroots venues provide a vital platform for BAME musicians, particularly those starting out in their careers. Independent cinemas run diverse film festivals and seasons that showcase diverse talent and engage with different communities, from feminist festivals and Queer cinema seasons, to Turkish film festivals and free screenings for schools and young people. Most of the independent cinemas are members of the Film Hub London Network who reported that audiences across the Network at the end of Q3 2019-20 were 35% BAME, 29% under 30, 24% LGBT, 10% disabled and 57% female.

For the reasons above, it is considered that the approval of the Fund and its administration are and will be consistent with the GLA’s discharge of its Public Sector Equality Duty.

Key risks and issues:

The programmes and policies outlined in this decision link to the following Mayoral strategies and priorities:

• A City for All Londoners, wherein culture is seen as the golden thread, key to our future success, both for integrating and strengthening communities and supporting more liveable and successful places;
• Culture for all Londoners, the Mayor's landmark strategy for culture, which outlines an ambitious vision aiming to provide all Londoners with access to the capital’s rich cultural offering on their doorsteps;
• The Mayor’s vision for Healthy Streets, which are more welcoming to people and encourage them to make active and sustainable travel choices, for example by contributing to the healthy streets’ aspiration of ‘things to see and do’;
• The Mayor’s Vision for London as 24 Hour City (diversifying London’s night time offer and making it more safe, welcoming and accessible for a wider range of people); the Mayor’s Police And Crime Plan (the Women’s Night Safety Summit); the new London Plan (strategic policies for supporting London’s night time economy and its diverse range of arts, cultural, and entertainment enterprises and the cultural, social and economic benefits they offer to its residents, workers and visitors);
• Inclusive London, the Mayor’s equality, diversity and inclusion strategy, which sets out that a successful city needs to work well for all residents. Everyone should be able to share in its prosperity, culture and community life regardless of their age, social class, disability, race, religion, gender, gender identity, sexual orientation, marital status, or whether they are pregnant or on maternity leave. This is the Mayor’s vision for the city – to create a truly inclusive London; and

• The Mayor’s Social Integration Strategy aims to improve social integration in London. This means enabling people to have more opportunities to connect with each other positively and meaningfully and supporting Londoners to play an active part in their communities and the decisions that affect them. It involves reducing barriers and inequalities so Londoners can relate to each other as equals.

In terms of both social and economic development, the programmes help the GLA work with businesses and individuals to improve productivity and growth.

Impact assessment and consultations

This proposal is based on evidence that has been gathered by the Culture and Creative Industries Team over the past month, hosting a number of roundtables, and working with numerous external stakeholders to establish how Covid-19 has begun to impact heavily on businesses and Londoners.

This proposal is seeking to create a Culture at Risk Business Support Fund of up to the value of £2.325m, a direct response for emergency support to London’s culture and creative industries due to Covid-19. The initial £2.325m will be funded from the Authority’s Strategic Investment Fund.

In order to supplement the programme, external funding will also be sought to increase the financial support for the programme. This may include new EU funds, trusts and foundations, private investment and / or contributions from business support providers.

It should be noted that the process for administering the funding will follow a robust application process to be determined with project partners, including a full due diligence assessment. This will ensure that the funding is administered in a fair and transparent way with organisations most in need being the true benefactors of the fund.

The foregoing sections of this report indicate that:

- The decisions requested of the Mayor concern the exercise of the GLA’s general powers, falling within the GLA’s statutory powers to do such things considered to further or which are facilitative of, conducive or incidental to the promotion of economic development and wealth creation in Greater London; and

- In formulating the proposals in respect of which a decision is sought, officers have complied with the Authority’s related statutory duties to:

o pay due regard to the principle that there should be equality of opportunity for all people;
consider how the proposals will promote the improvement of health of persons, health inequalities between persons and to contribute towards the achievement of sustainable development in the United Kingdom; and

o consult with appropriate bodies.

In taking the decisions requested, the Mayor must have due regard to the Public Sector Equality Duty; namely the need to eliminate discrimination, harassment, victimisation and any other conduct prohibited by the Equality Act 2010, and to advance equality of opportunity and foster good relations between persons who share a relevant protected characteristic (race, disability, gender, age, sexual orientation, religion) and persons who do not share it (section 149 of the Equality Act 2010). To this end, the Mayor should have particular regard to section 3 (above) of this report.

The Mayor may delegate the exercise of the GLA’s powers to the Executive Director as proposed, pursuant to section 38 of the Greater London Authority Act 1999, should he be so minded.

In addition to seeking grant funding from Government, the EU and other public sector bodies, the GLA may seek third party funding from:

- third parties under its power to them for discretionary services under section 93 of the Local Government Act 2003, provided that the charges levied do not exceed the costs of provision; and

- third party local authorities under the Local Authorities (Goods and Services) Act 1970.

Should the Mayor be minded to make the decisions sought, officers must ensure that:

- the proposed funding is distributed fairly, transparently, in manner which affords value for money and in accordance with the requirements of the GLA’s Contracts and Funding Code;

- grant funding agreements are put in place between and executed by the GLA and delivery partners before any commitment to fund is made; and

- no reliance is placed upon third party funding before a legally binding commitment is secured from the funder(s).