The chief govt of the Southbank Centre in London, which made 322 staff redundant final month within the wake of the Covid-19 disaster, tells The Artwork Newspaper that “our entrepreneurial mannequin could be very profitable”. Elaine Bedell, who has been in submit since 2017, additionally insists that the Hayward Gallery, a key a part of the complicated, “has a future. It’s extremely necessary to us that the Hayward continues its programme.”
Nonetheless, in proof submitted to an inquiry convened by the division for Digital, Tradition, Media and Sport (DCMS) in July, Southbank’s administration highlighted a debt of £21m—“taken out with full cognisance and assist from [principal funder] Arts Council England, DCMS and the stakeholders”, Bedell stresses in her interview—and requested the UK authorities to “deal with our debt ranges, both by offering the funding to repay these loans or by taking up the loans”.
Critics have questioned the establishment’s enterprise mannequin and the oversight of Arts Council England (ACE), over the previous decade or extra. “[The crisis] is a legacy of administration failure over a few years”, says Gareth Spencer, Southbank department secretary for the Public and Business Providers union (PCS). Bedell says, nevertheless: “I don’t know an inventive enterprise mannequin that’s pandemic proof.”
The centre, which contains the Queen Elizabeth Corridor, Royal Competition Corridor and Hayward Gallery in addition to the Arts Council assortment, was compelled to shut on 17 March. The huge venue, a logo of post-war optimism in-built 1951 below a Labour authorities, could have to remain closed till April subsequent 12 months and even later.
However its monetary predicament dates again to a serious renovation, starting in 2005, which created 35% extra capability within the Royal Competition Corridor. The renovation was budgeted at £111m however the ultimate value was £117m. (The revamp of the Royal Competition Corridor value £96.2m, whereas a brand new “extension” constructing value £21.7m.) Funders included the DCMS, which gave no less than £5m, and members of the Royal Competition Corridor contributed £2.5m.
Crucially, the registered charity has taken out a sequence of loans to cowl capital prices. “A time period mortgage of £15.1m was supplied by AIB Group (UK) plc in September 2004 to fund the property growth and is secured by a set cost over the Royal Competition Corridor extension constructing. The mortgage is partially repayable in quarterly instalments till April 2027 when a steadiness of £6m will stay excellent,” says the 2018 annual assessment.
The monetary state of affairs is difficult additional by an excellent mortgage of £7m supplied by Lloyds Financial institution in June 2018 to fund additional property growth, which “is secured by an task and cost over the retail lease earnings from property on the Royal Competition Corridor” (earnings from on-site eating places and retailers).
The industrial income from these streams was meant to pay down the £21m debt, however it appears that evidently working prices and the price of the creative programme have been allowed to mushroom. “It’s and it was [paid down], however, given Covid, [commercial income] has collapsed so we’re not in a position to meet it. The issue we’re all coping with, it doesn’t matter what our enterprise mannequin is, is that viewers return is tough to foretell, and we’re undecided once we’ll be capable to reopen,” Bedell says.
To mitigate a £25m complete lack of earnings this monetary 12 months, the establishment has additionally minimised upkeep prices, used the federal government’s furlough scheme and carried out 20% pay cuts. The annual prices of simply working the location (upkeep, cleansing and safety) quantity to £11m.
ACE has traditionally been beneficiant to the Southbank, each by way of capital and programme funding; in 2010 after its first large monetary wobble, ACE awarded the venue £20.7m, along with a prime up capital grant to assist elevated refurbishment prices. From 2015 to 2018, the centre obtained £19.7m yearly.
ACE’s current grant of £18.4m represents 38% of the Southbank’s complete earnings. Therein lies the dilemma, factors out Bedell. “A elementary level of our financing is that the ACE grant is given to us for the manufacturing of artwork, however we should not have any funding to take care of the location and the buildings; they don’t belong to us, they belong to the federal government,” she says.
“We have been campaigning pre-Covid that we must always have entry to some capital assist from authorities pots because the DCMS-sponsored organisations do. The museums can entry pots of cash for capital expenditure; we’ve got needed to discover various sources of earnings to fund the location as a result of we need to protect the ACE grant for the manufacturing of artwork 362 days of the 12 months,” Bedell provides.
“Time after [the renovation], the Southbank demanded more cash and 12 months after 12 months the Arts Council coughed up. Neither physique was answerable to anybody,” writes the critic Norman Lebrecht within the Spectator journal. The Southbank has gone “bleating to the federal government” despite the fact that it’s the nation’s largest “subsidy guzzler”, Lebrecht argues. ACE says: “Together with different organisations which have a low reliance on public funding and a excessive diploma of earned earnings, the Southbank Centre is especially weak to the impression of the Covid-19 disaster, with the closure of its venues in some cases and decreased footfall in others.”
The Artwork Newspaper understands that the price of the creative programme throughout the complicated rose from £7.7m previous to the refurbishment of the Royal Competition Corridor to £11.2m post-reopening. “Is the Southbank Centre decided to spend as a lot cash as it may well on its year-round creative programme? The reply is sure. Forty per cent is free, and that’s a dedication we’re very happy with,” Bedell says.
The 2018/19 annual report highlights that the centre offered a million tickets, reaching product sales of £21.5m; web site footfall additionally amounted to just about 32 million visits. Self-generated earnings elevated from 43% in 2010/11 to 62% in 2018/19. Requested if she inherited excessive staffing ranges, Bedell says: “I don’t suppose our staffing ranges have been extreme.”
PCS says that the present plan is to shut the Hayward exhibition Among the many Bushes on 31 October. The subsequent present, devoted to the US artist Matthew Barney, is scheduled for March 2021. “All customer expertise workers besides one senior supervisor are to be made redundant,” PCS says. The Southbank Centre declined to touch upon this matter.
Requested if the Hayward turns a revenue, Bedell says: “Throughout the 12 months, we attempt to have exhibitions that even out. We attempt to have what could be termed a blockbuster or a preferred present comparable to Bridget Riley (2019/20). That means that you can combine in your different exhibitions throughout the 12 months that may get much less ticket gross sales however are reputationally fascinating and thrilling.”
What occurs subsequent? Southbank instructed the DCMS inquiry that it’s going to assessment its enterprise mannequin and that the debt prevented it from accessing Treasury reduction measures; it has since utilized to the federal government’s £1.57bn Cultural Restoration Fund, which will probably be administered by ACE. The DCMS declined to say if it should step in and save the centre.
CLARIFICATION (2 October): On the difficulty of debt compensation, Elaine Bedell provides: “The £2m servicing of the debt was completely manageable pre-Covid.”
On the difficulty of staffing ranges, Elaine Bedell provides: “We have been in assured occasions and in assured occasions you handle your payroll simply.”