MUSEUMS AND GALLERIES: FINANCE (Hansard, 10 February 1986)

§ The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead)

Consultations on the basis outlined in the statement of my noble friend Lord Gowrie on 26th July 1985 have confirmed the need, which was recognised in unanimous recommendations earlier from the Education, Science and Arts Select Committee, for a greater incentive for the national museums and galleries both to maximise their receipts and to use them more effectively. Such an incentive entails two main changes:

i. forecast receipts should no longer be specifically netted off against total Estimate requirements to provide a net grant; and
ii. there should be a resonable facility to carry over unspent moneys at the end of the financial year.

In order to effect these changes within existing conventions, it would be necessary to convert the method of financing from direct Vote provision to grant-in-aid. The Government therefore propose to consult the Public Accounts Committee on this, and also the Treasury and Civil Service Select Committee and the Education, Science and Arts Select Committee. Subject to their views, the Government would then propose to make this conversion from the financial year 1986–87 for the nine national museums and galleries for which my right honourable friend the Minister for the Arts is responsible, so that the institutions could derive the earliest possible benefit from the change. The main Supply Estimates will initially be 93WA presented to Parliament on the existing direct Vote basis. Implementation of the changes would entail presenting Revised Estimates to Parliament in the summer.

Under the new arrangements, the Government would not now propose to determine the grant-in-aid as a given percentage of each institution's assessed running costs, as foreshadowed in the statment of 26th July 1985. In the light of the representations which the museums and galleries have made, the size of the revised grants in 1986–87 would instead be settled starting from each institutions's net vote provision (excluding revotes) for running costs in 1985–86. The former proposal would have involved reducing the grants of some institutions and increasing those of others in order to produce a uniform percentage to be financed by the Exchequer with inequitable results; the method now envisaged avoids the need for that adjustment. The cash levels of grant-in-aid would be increased as appropriate in future years without any further adjustment to reflect forecast changes in receipts for those years. At the end of each financial year the institutions would be able to carry over unspent moneys equivalent to up to 2 per cent. of the annual grant and up to 10 per cent. of their annual receipts. Arrangements would be made to enable them to transfer part of their receipts to endowment funds if appropriate for the financing of long-term projects. The system of revotes of unspent surplus receipts from previous years would no longer be necessary, and would cease upon the introduction of grant-in-aid.

The purpose of these proposals is not to replace public by private funding, but to provide an opportunity for a larger growth in the total funding available to the national museums and galleries than would otherwise be possible. The institutions and their trustees will need a firm basis on which to make their plans. It is the Government's intention that there should be no further change in the method of settling their grants for running costs for at least three years, and that an adequate period of notice should be given of any intention subsequently to introduce such a change. During that period no institution, however much it earns, would have its grant-in-aid affected on that account.

94WA

Revised grants-in-aid for 1986–87 should be announced after completion of the consultations with the parliamentary committees. They would differ somewhat from the provision to be initially in the Supply Estimates, due partly to the changed treatment of receipts and revotes, and partly to the Government's intention to allocate virtually the whole of the available resources to increases in the institutions' baselines. The Government would however reserve the right in future years to allocate part of the available total selectively in response to any special needs, as appropriate. The provision which the Government propose for 1986–87 on the existing direct Vote basis is summarised below and is within the Arts and Libraries programme total given in the Public Expenditure White Paper (Cmnd. 9702). Within the sum of £57.8 million for 1986–87, about £8.2 million is being devoted to purchase grants for which the basic provision (excluding revotes) continue at the case levels established in 1985–86; and some £49.6 million for other net running costs, compared with £48.1 million in 1985–86.