Funding for the arts

Approximate read time: 13 minutes

On 4 June 2026, the House of Lords is scheduled to consider the following question for short debate in grand committee:

Lord John of Southwark (Labour) to ask His Majesty’s Government what consideration they have given to establishing a national arts bank to act as a guarantor lender for those theatres, performance venues, galleries and arts teaching colleges which require capital funding in order to operate.

As the arts are a devolved matter, this briefing primarily focuses on England although some of the figures quoted are at the UK level.^[1]

1. How are the arts funded?

1.1 Overview

In the UK, arts and cultural organisations are funded by a mix of public and private sources. Public funding is made up of funds from central and devolved government, local government, the National Lottery and the BBC licence fee.^[2] In UK central government, the Department for Culture, Media and Sport (DCMS) is the main public funder. It sponsors:

• 15 museums and galleries based in England
• Arts Council England
• Historic England
• The British Film Institute
• The British Library

1.2 Review of Arts Council England

The Arts Council England (ACE) is an executive non-departmental public body and is one of the government’s “primary vehicles” to support the arts in England”.^[3] It makes funding decisions at arm’s length from the government, using taxpayers’ and National Lottery players’ money to support projects and organisations.

In December 2024, the government announced that Baroness Hodge of Barking (Labour) had been commissioned to conduct an independent review of ACE.^[4] The government said that the review would “explore how to improve access to arts and culture in all areas of the country to drive access to opportunity”. As part of her review, Baroness Hodge examined the economic benefits associated with the arts. She also gave an overview of the current state of funding for the arts as well as the wider cultural and creative sectors.^[5] Her findings in these areas are summarised below, as are her recommendations.

1.3 Economic benefits of the arts

Focusing on the economic benefits of the arts, Baroness Hodge said that they are vital to the success of the UK economy and form a key driver of the government’s ambition for growth.^[6] She noted that in 2023, the arts, museums, galleries, archives and libraries contributed £10bn in gross value added (GVA) to the UK economy. She also argued that their influence spreads beyond the direct impact stating that across the whole of the creative industries £124bn GVA was generated in 2023 and that a “significant chunk of this money” was dependent on the skills developed and the people working in the arts and cultural sector. For example, she has said that tourism and the hospitality sector both benefit from the arts. Baroness Hodge also argued that cultural investment is one of the most successful interventions in regeneration, with the arts helping to “engender our sense of place, our identity and social cohesion”.

1.4 Funding since 2010 and associated challenges

Baroness Hodge argued that despite the arguments for investments in the arts, “the funding picture over the last decade has been bleak”.^[7] She reported that in 2022/23, public funding for culture was made up of 51% from local authorities, 32% from grant-in-aid allocated by central government (for ACE, the British Library, Historic England and DCMS sponsored museums), 11% from the National Lottery, and 7% from tax reliefs for theatres, orchestras and museums.

Looking at longer-term trends, she said that between 2009/10 and 2022/23, per person public spending on culture by ACE and local authorities fell in real terms, by 18% and 48% respectively.^[8] She also reported that:

• some local authorities had completely cut their spending on culture
• the British Council had curtailed its investment on culture
• Nesta (a “research and innovation foundation”), which had a £250mn government-funded endowment fund for the creative arts, had pulled out of funding the arts^[9]

Focusing on the funding of ACE, Baroness Hodge noted that while it does not represent the whole picture of how the arts are funded in the UK, its contribution was “vital” as in many cases its grants form the most stable source of income for the cultural sector.^[10]

The charity, Campaign for the Arts, has also focused on funding, as part of its July 2024 report ‘The state of the arts’ and its subsequent 2025 update.^[11] Similarly to Baroness Hodge, it found that “there have been dramatic falls in arts funding since 2010”.^[12] Looking at the DCMS grant-in-aid funding, the charity reported that in 2022/23, it had totalled £21.93 per person, or 0.17% of total public spending per person in the UK as a whole (£12,549). Adjusted for inflation, this figure was 18% less than in 2009/10. It also said that while tax relief for the creative industries had surged, core public funding for the UK’s arts councils and the BBC had fallen, with investment by local councils having “plummeted”. In 2025, the charity said that its analysis of the government’s spending review had found that per person spending on culture, media and sport was projected to fall further by the end of the decade.^[13]

Looking at international comparisons, Baroness Hodge said that the UK spent less on culture than most of the countries in Europe.^[14] She highlighted that in 2022, public investment in culture in the UK was 0.25% of GDP. This was the lowest across a list of European countries for which there was comparable data, including France, Germany, Italy and all of Scandinavia and was only higher than Greece. The Campaign for the Arts has also reported that the UK ranks among the lowest spenders on culture, both as a percentage of GDP and per person, in comparison to various European countries.^[15]

Baroness Hodge has also argued that the cultural sector was facing “a stark capital crisis, the scale of which is threatening the very fabric of the country’s cultural infrastructure”.^[16] She has said that the last big injection of capital took place under the previous Labour government 20 years ago and that “the boilers and lifts installed then now need to be replaced”. Noting research on this issue, Baroness Hodge has said that it highlighted a “growing and urgent need”, with over three-quarters of arts centres unable to complete planned building work and 60% not having undertaken any significant refurbishment in over a decade. She argued that this maintenance backlog was causing venues to close and that action was needed.

Baroness Hodge has said that the “significant cut in public funding coupled with huge cost pressures” had created “immense challenges for organisations and individuals working in the sector”.^[17] She argued that a failure to respond could be “deeply damaging to one of the most precious jewels in Britain’s crown: our world class artistic and cultural offer”.

1.5 Calls for change: Baroness Hodge’s recommendations

Calling for a response to these funding challenges, Baroness Hodge has argued that “access to artistic excellence should not be consigned to the privileged few”.^[18] She therefore made a number of recommendations, foremost of which was that the government “must retain the Arts Council”. She has stated that a national Arts Council, free from political interference, was the best way to ensure that the benefits of the arts “are realised across the country and by all the communities within it”.

Focusing further on the issue of political interference, Baroness Hodge has argued that there had been attempts in recent years to exert more political control over ACE decisions.^[19] She has said that this had to stop to ensure that “artistic freedom is protected, that creativity is not stifled and that public trust is maintained”. Baroness Hodge added that political interference, even by those with the best intentions, could lead to political bias or even censorship.

Further recommendations made by Baroness Hodge included several aimed at helping solve the issues around capital funding as well as calling for:^[20]

• the government to maintain and strengthen the arm’s length principle at all levels of government to ensure that arts funding is protected from politicisation
• the government to find innovative ways of responding urgently to “the underfunding that has undermined the arts over the last decade”
• the Arts Council should reform its application and reporting requirements to make them less bureaucratic and onerous but still ensure accountability for public money
• the Arts Council should review, simplify and reduce the number of its funding streams to make it easier for those applying for funding
• the Arts Council should launch a new programme to grow culture in under-served areas

2. What recent announcements has the government made in this area?

2.1 Response to Baroness Hodge’s recommendations

In its response to the independent review, the government said it would accept every recommendation Baroness Hodge made.^[21] It said it would be:^[22]

• developing a new fund for artists and creatives which will sit alongside work to ensure that every child has access to high quality arts education
• reforming ACE’s national portfolio investment programme^[23]
• maintaining a strong, politically impartial and independent ACE
• revolutionising arts investment by “exploring ideas that have the potential to boost our cultural sector” including committing to longer funding rounds of the national portfolio programme of up to five years, incentivising philanthropy, cultural tax reliefs and exploring the potential of charging international visitors for museums
• supporting ACE with up to £8mn to reform its systems and simplify its application processes

2.2 Arts everywhere fund

In February 2025, the secretary of state for culture, media and sport, Lisa Nandy, announced the creation of an ‘Arts everywhere’ fund.^[24] The government said that arts venues, museums, libraries and heritage buildings would receive a share of the fund which would support jobs and create opportunities for young people to learn creative skills “while helping to boost people’s sense of pride in where they live”.

The government later confirmed in January 2026 that £1.5bn would be allocated to the fund to be spent over a 5-year period.^[25] It said that the funding was aimed at saving more than 1,000 arts venues, museums, libraries and heritage buildings. The government has argued that the fund would “fix urgent capital needs and open up access to culture for everyone, everywhere”. It has also argued that the money would “restore national pride in community assets, bring people together and support no or low-cost options for days out as part of the government’s drive to support families with the cost of living”. In response to a written question in February 2026, the government provided further detail of how the funding would be used.^[26] It said it was made up of:

• £600mn in infrastructure funding to support national museums and DCMS sponsored cultural organisations, and £160mn for local and regional museums
• £425mn for a creative foundations fund to support approximately 300 capital projects in arts venues across the country
• £230mn for heritage, including £75mn for at risk heritage, £46mn for the heritage revival fund and a new £92mn fund called the places of worship renewal fund
• £27.5mn for the libraries improvement fund
• £80mn capital funding over four years to benefit national portfolio organisations that receive regular funding from ACE

The government has also explained that impact would be monitored via a series of independent evaluations for each part of the funding programme.^[27]

In April 2026, the government announced the first projects to receive cash from the fund.^[28] It said that 130 cultural venues, museums and libraries were set to receive a share of almost £130mn.

3. Institute for the financing of cinema and cultural industries: France

In France there is a joint initiative of public authorities and the main banks which describes itself as “a deliberately atypical and unique enterprise in the cultural financing landscape”.^[29] Created in 1983, the Institute for the Financing of Cinema and Cultural Industries (Ifcic) offers financial solutions to cultural and creative businesses that are adapted to each individual project, according to its sector and financing needs.

It operates two financial tools: a bank guarantee and loans. The Ifcic offers cultural companies its financial support and banking expertise. For banks, the Ifcic provides its expertise of the specific risks relating to cultural and creative companies. The Ifcic says it has now supported the financing of more than 2,000 cultural companies at all stages of their economic life cycle.

In terms of the Ifcic’s bank guarantee, it covers part of the risk taken by the bank when it finances a cultural company.^[30] The Ifcic’s rate varies from 50% to 70% and applies to all types of credit. This, it says, is intended to finance the majority of the needs of most cultural businesses. The Ifcic argues that this approach encourages less recourse to personal guarantees taken from a company’s managers or shareholders.

4. Read more

• Arts Council England, ‘Independent review of Arts Council England: Our response’, accessed 20 May 2026
• Local Government Association, ‘Cultural funding: Challenges and opportunities’, accessed 20 May 2026
• Rebecca Atkinson, ‘Report highlights ‘stark’ English regional funding inequalities’, Museums Association Museums Journal, 23 July 2025
• UK Government, ‘The UK’s modern industrial strategy: Creative industries sector plan’, June 2025
• Harriet Sherwood, ‘Arts Council England chair says sector at ‘tipping point’ amid funding fears’, Guardian, 16 May 2025

---

Image by papannon from Pixabay