 Good morning, and a very warm welcome to the 26th meeting of the Constitution, Europe, External Affairs and Culture Committee in 2023. Our first agenda item this morning is pre-bradget scrutiny of the 24-25 Scottish Government budget. Our first agenda item, we have two evidence sessions this morning for this session. The first one, we are joined by Ian Monroe, chief executive of Creative Scotland, and Isabel Davies, executive director of Screen and Creative Screen, called Creative Scotland. And a warm welcome to you both this morning. If I could begin with, we had a supplementary submission from you yesterday, and it outlined the proposed £6.6 million reduction in the grant aid for 2023-24. It had been reversed, was our understanding, but that cut has now been reinstated. I just if I'd asked Mr Monroe to outline what impact that will have on Creative Scotland. Good morning, convener and committee. Thank you again for inviting Isabel and I to come and give evidence this morning. We thought it was important to keep the committee informed of this news in our submission yesterday, so just to explain, this is indeed a reduction of £6.6 million in year for Creative Scotland's budget. It is the same £6.6 million that had been originally planned as a reduction in Creative Scotland's budget in the budget setting process for 2023, but was reversed in February of this year. It was always subject to confirmation through the autumn budget revisions, but what we've now got confirmation of is that the £6.6 million is not included in the autumn budget revisions and that the reduction is being reinstated. So a very significant development I should explain, and I'm happy to explain further about the overall way in which our budgets work, but as a proportion that is against our total combined income from the Scottish Government, that's roughly 10 per cent, but the way in which our budgets work, this hits a very specific part of our budgets, which is support for regularly funded organisations of which we now have 119. So proportionately that is around a 20 per cent cut for a full 12-month period, but given that the reduction is now coming in halfway through the year, what that would translate into is in effect a 40 per cent reduction that we would apply in a reduction to our support for regularly funded organisations for the next two payments that we would be making in this financial year. Just to be clear, we make four payments a year quarterly, and because we haven't had confirmation of the £6.6 million position until now, it would therefore have to impact the last six months of the year, which would be the two final payments and a reduction of 40 per cent. Clearly that is enormous in terms of the fragility that already exists in the sector and would in effect act as a tipping point for what we've submitted in writing before, and I've also spoken with this committee about before in terms of the risks to organisational closures, lots of employment opportunities for artists, audiences and provision, and much more beyond. The board of Creative Scotland met yesterday. The cabinet secretary was able to attend the very first part of that meeting to discuss the matter. After the cabinet secretary left, the board of Creative Scotland had detailed conversations about what the options are available to Creative Scotland. In recognition of the devastation that would result from handing on a 40 per cent cut in two weeks' time, which would be the next RFO payment, it acted swiftly on the back of this news and pragmatically agreed as a one-off to utilise £6.6 million of our national lottery reserves to offset that reduction. However, I want to stress that it is a one-off. Reserves clearly by the very nature can only be used once, but it will enable us to maintain the payment for the RFOs as planned without the cut being applied. I also want to say that because of its nature being a one-off, if the cuts were to continue, if there were budget reductions, we would have to pass them on to the sector. Our own financial resilience and that of the sector as a whole is depleted. We are at a very significant moment in the evidence around the heightening of the risks that exist within the sector. I am going to go straight to questions from the rest of the committee. If anyone would like to come in, please indicate that we are bringing in Ms Forbes and then Mr Cameron. Thank you very much and good morning. Can I ask just a quick series of questions to clarify some of the points that you have made? The first is that you mentioned that you allocate funding four times a year and the next allocation is in two weeks' time. Where are the organisations expecting that funding in full on the basis of the additional £6.6 million? Or had they still to receive confirmation? It is one annual grant award that is paid over four tranches on a quarterly basis. We have an annual contract with the regularly funded organisations that would set out the figure for the year. Based on the February reversal of the planned reduction, we have indicated the full year's commitment to the regularly funded organisations, so they would and have been expecting their third quarterly payment based on the full allocation in two weeks' time. Cash rather than a budget. In other words, the cash is allocated rather than a budget being agreed in two weeks' time. In terms of reserves, what impact will it have on reserves? Take your point that it is a one-off and by its nature reserves should not be used for on-going resource payments. What sort of percentage or proportion of reserves does that £6.6 million form? Just to be clear, as I am sure the committee will be aware, we do not have the opportunity to build reserves on our Scottish Government income, but we do through our national lottery income. It varies in terms of the extent of the reserves that we accumulate for different strategic purposes. Those reserves have been accumulated specifically to ease the transition to the new funding model from multi-year arrangements that we have been planning for some time and are now up and running as a process. We know that and we have been very clear in our messaging that we anticipate—unless there is a significant change in overall budget levels—that we are not going to be able to sustain the levels of support that we have been in the past for as many organisations or, certainly, the level that we have. In respect of that, the transition funds that would be resourced from the national lottery reserves have now been impacted, and those transition funds are to support those organisations that are unsuccessful in their multi-year application to avoid a cliff edge when their current funding commitments end and to give them a wee bit of financial support to bring in expertise for themselves to think about what their options are for the future. It is definitely not now. It is significantly reduced in terms of the amount that is available to support that transition activity, but what we will continue to do because this is a one-off regarding the £6.6 million and our use of reserves to offset that, we are protecting the balance of that reserves position to enable transition support as far as we reasonably can. Are you able to share the reserves position in terms of the quantum? As per the committee's submission, £17 million has been the allocated reserve for transition. It does fluctuate over a period up to around £20 million, but £6.6 million is now unavailable for the transition reserve that we had allocated. If I could just ask one last question. I had a quick look at the correspondence. I wasn't here at the time, but from the finance secretary, allocating the additional £6.6 million, which I believe was in March, but you may want to correct me, which is quite close to the beginning of the financial year. Did that allow you to reinstate organisations that would otherwise have received nothing, or was it a case of increasing the quantum that was available to all the organisations that you fund? It was the latter. It was February, rather than March, because we have had recurring years of regular funding support at a certain level. The objective is to be able to maintain at least a standstill position on that, but I appreciate that it is a real-terms reduction when you account for inflation and so on. However, what it enabled us to do was to maintain year on year from last year into this year, the same resource allocation for those 119 regularly funded organisations. If the £6.6 million hadn't been available to us, we would have had the same choice either use reserves at that time, or to pass that reduction on to the funding allocation for those regularly funded organisations. From an organisation's perspective, they will see no impact from that decision in the short term. It stabilises the situation, but it will be worth noting that the effects of the news of that will deepen the concern that exists within the sector. It will add to the concerns about confidence and forward planning, which is so critical to enable the cultural sector to function. To have such a significant in-year adjustment, if we hadn't been in the position of being able to allocate our national lottery reserves, the cut would have been passed on, as I say, at 40 per cent. It would have inevitably seen the tipping point in our estimate probably up to half of the current regularly funded organisations, but because we have been able to use the £6.6 million, it has stabilised the position until the end of this financial year. However, what is not clear is what the position will be for 24-25 onwards. As I say, if reductions were to continue, we will have no option then, but to pass it on. It is a very short-term intervention by Creative Scotland to stabilise and give confidence for as best we can for the rest of this year, but it is not certain at all beyond that. I am going to bring Mr Cameron in there and bring Mr Beby. Thank you, convener. I am just so clear that you are using £6.6 million of approximately £17.1 million of reserves. Is that right? It is about a third of your reserves that you are using. Since the update, we have given you £17 million. The reinstatement of the cut now essentially means that you have had a reprieve of just over seven months, is that right? A reprieve in terms of funding? It has lasted seven months, and now you know that the cut is being reinstated. The resource that was available to us for the first six months of the year has enabled us to make the first two quarterly payments to the regularly funded organisations. I would not interpret that as a reprieve in a sense. What it enabled us to do was have confidence to be able to make those payments, but we are now in a position that we needed confidence for the last six months of the year. We heard evidence last week from Liam Sinclair of the Federation of Scottish Theatre. He said that, in relation to the initial 10 per cent cut and in the reversal of the cut in February, it would be difficult to overstate the erosion of faith and trust among our members that resulted from that journey. What do you think will be the reaction of people such as Liam Sinclair to the news that the cut is being reinstated in your words? There is some early reaction, and you will clearly be taking evidence from sector colleagues later this morning, and you will be able to hear directly. However, some of the early reaction is far from positive. I think that there is despair, there is despondency, I think that there is disillusionment. There is a fear. People are exhausted in trying to keep the show on the road, literally. As I have already mentioned, what is vital is forward planning confidence. To have uncertainties, even with some months' notice, but with short-term uncertainties, it is only adding to the pressures and risks that people are having to manage directly in the sector and that it is not sustainable. In our evidence, we have given you illustrations based on the regularly funded organisations that those that are so financially fragile are at risk. I think that in these situations, as the perfect storm continues—I have to say that it is growing stronger—the risks are increasing all the time in relation to the potential for parts of the sector to be unsustainable. We see the decline of the sector in the months and indeed years ahead, unless there is a change in the resourcing equation. In practical terms, what does that mean? Does that mean closures? It means closures, job losses, loss of provision, less available for communities across the country, less opportunities for artists, as well as those employed directly within the organisations. It means less ability to reach into other policy areas where we know that culture has such an important role to play—health and education, for example. It means less in terms of the spillover effects that the role that culture plays across cultural, social and economic impacts in tourism, for example, hospitality, as well as Scotland's international reputation, which is so strong in relation to our cultural identity. I think that there is more at stake on the ground in terms of local provision and the loss for audiences and employment in organisations, but more beyond that, in terms of the consequences as a result of a strong cultural offer. I think that it is potentially very damaging if there is decline in the sector on all fronts. We have had a U-turn in February and we have had a U-turn on the U-turn, so there is no wonder that there is an erosion of trust within the sector. You mentioned, Mr Murrow, that the cabinet secretary was at the meeting yesterday. Did the cabinet secretary give an explanation as to that? Yes. I would want to say to the committee very clearly that we do not underestimate the pressures on public finances. Hard choices are, of course, having to be made. There are pressures on all fronts. I think that in that context it is very much understood that there are hard choices being made. There are inflationary pressures and pay settlements that are all adding to the pressures on public finances. That is the contextual backdrop that is the explanation from the Scottish Government in relation to the inability now for the Scottish Government to provide the £6.6 million. Obviously, a commitment was given in February and you have talked about the pressures that the cabinet secretary discussed with you yesterday and you mentioned pay there, so this budget is potentially getting used for pay settlements elsewhere in the public sector. Is that your understanding? There is not a direct line of sight. We need to be very clear that £6.6 million is a meaningful significant sum of funding and the cultural sector makes every pound work doubly hard in terms of the value that it delivers, but it is overstretched. 6.6 million in an overall Scottish Government budget of £60 billion is proportionately very small. I should be clear that Creative Scotland's budget as a proportion of the overall Scottish Government budget has now tipped below 0.1 per cent of the overall total expenditure of the Scottish Government. The creative economy as a whole is also worth talking about. We have a role to play among others in helping to support the creative economy to thrive, not just the cultural economy but the creative economy. That creative economy for Scotland is very significant. At the UK level, it is a growth sector. There are over 13,000 creative businesses in Scotland employing around 80,000 people—that is 80,000 people—and generating nearly £4.5 billion net for the Scottish economy. The return on investment that comes through funding to Creative Scotland as part of that overall equation is enormous. The small sums of money is to unlock a lot of potential, but because the budgets that are available to us have not been able to keep up even with inflation, our budgets have been at relative standstill, the unrestricted budgets for over 10 years. There is an inbuilt deficit already within the equation. When the cuts of small numbers emerge, they have a disproportionately negative impact on the effects for not just culture but social benefits and for the economy. It is in a context of a much bigger equation that we need to understand. The promise that was made in February was confirmation in writing on the 27th about the cut not being reinstated. Have you any indication of when a decision was made in Government about that or for how long they have been looking at not reinstating the cut? Clearly, the Cabinet Secretary did not wake up yesterday morning and say that he would cut £6.6 million from the Creative Scotland budget. We got the confirmation letter on the 20th, a week ago, essentially. The technical reality was that the Deputy First Minister at the time, as finance secretary, confirmed the £6.6 million, but it was subject to the autumn budget revision. The Scottish Government has had, through the course of 2023-24 since April, to explore how the £6.6 million was going to be provided. Clearly, the autumn budget revision has not secured the £6.6 million, and hence the letter to us confirming it is not available after all. £6.6 million is considerable, and you have identified that within the process this morning. The shock waves that you and the sector must have experienced when that decision was reversed and you were losing that. I commend you for at least filling the gap, which you have managed to do, but the death nail to some of the sector without you filling that gap would have been considerable. You have identified that this morning. Does it feel that the sector is under attack? It is expendable? It is not seen as a priority by the Government, because that would appear to be the message that is being transmitted to you as a sector. You have talked about how you are successful and you have done as a sector, and that is to be commended as well. However, how do you measure that success when you get something like this thrown at you? Economic growth involvement, the development of the sector, how can the sector progress when it is put in a life-death situation? You are the survivor, you do not. If you had not put that money into the sector, then some of those organisations would no longer exist at the end of this financial year. Yes, that is correct. That is why the board has moved as swiftly as it can to stabilise the situation. However, as I said earlier, it is for a short time, and you are right. I have talked about the planning confidence that is required. Those interventions of change are a bit like trying to change the engines on an airplane whilst you are flying it. If I can stick with an airline analogy, I think that the planning confidence that I am talking about is that we do not know what the funding landing strip is that we are aiming for. Is it of a scale of a Glasgow international airport or a regional airport like Aberdeen or Inverness or is it indeed Barra beach? We have got to understand what the future looks like to be able to navigate with more confidence. Whatever the final settlement picture looks like, multi-year commitments are really important for us as well as for others. A few points in addition. I have talked about the despair and despondency and so on, but there is confusion out there in relation to the very clear and bold statements of value and support for the cultural sector compared with the realities of the resource that is available to support its sustenance and development and growth and the contribution that it can confidently make to culture, society and the economy. Clearly, there is concern that we are all talking about here in terms of what is at risk, the potential for decline and the damage that indicates the loss of opportunity as well as the reputational damage around the world. Because there is inherent ambition in the sector and for those who are getting support, they are doing their very best to not just keep going but deliver the very best work and they need to be thanked and commended for that. However, that too is now at risk, and I think that people are starting to feel very compromised in their ability to continue delivering, whilst that uncertainty on the funding commitment continues to exist. At last week's meeting, you probably heard that there was talk about how Scotland gets it when it comes to culture. My stark review of this today is that Scotland does not get it if that is the way that you are treated by the Government of the day. As I said, you as a sector have been over backwards to accommodate and be supportive and take on board many of the areas. You have been innovative and you continue to do that. You punch above your weight—we discussed that last week—but you cannot maintain, sustain and retain if you do not know where you are going. At the moment, it is quite obvious that that route plan is not available to you as an organisation or to the sector. How can you plan and progress if you do not have that? With extreme difficulty, I can genuinely say that I believe that the Scottish Government gets it to use your phrase from previous evidence. There are challenges that I have acknowledged on all fronts, but it is very clear the value that is returned. I have talked about some of it and other evidence gives you more. However, it is not translating into the resource equation. The overall cultural budget is about 0.6 per cent, so ours is just below 0.1 per cent of overall Scottish Government expenditure. Culture budget as a whole, if I have done my arithmetic correctly, is about 0.6 per cent. If we look at comparators, it is very interesting. The European average of 34 countries that I have been analysing is one and a half per cent. That is the European average. We are way off that. I know that Culture Counts has put forward its own view on resourcing levels that would be helpful. I come at it from a different perspective and I would certainly support what Culture Counts has put forward. I think that, based on that international comparator, and what we know would be an exponential return on investment if the sector is backed, then an aim to get the culture budget up to 1 per cent of total Scottish Government expenditure should be an objective. If we are all able to see that commitment, then we can no-one understand what it is that the funding-landing strip looks like. A few quick questions on the last point that you made. You have given the comparator between Scotland and the European average. Do you know what the relevant figures are for the rest of the UK in terms of the percentage of the UK budget that is spent on culture and within that Wales? Yes. I should be clear that direct, like for like, international comparisons are very difficult, but when you look at the detail under our colleagues that are experts in this, I have tried to get the average across the piece. Across the UK, it is similarish, but what we have seen is most recently a 2 per cent uplift for our equivalent in England and nearly a 3 per cent uplift in our equivalent in Wales. You specifically mentioned Wales. I think that there is another bit of context that is worth sharing. I have mentioned it in past evidence to this committee. In Wales, there is a policy framework in legislation now called the Wellbeing of Future Generations Act 2015. What it requires is policy areas beyond culture to have an I2 culture when it is planning for its service, provision and delivery. It is the same with the environment, for example. It acts as an inbuilt trigger for culture to have a reference point within policy areas beyond culture, automatically in health or education. It is, by its title, a generational approach, but it absolutely means that we know the value that exists in these other policy areas, which are part of the value in the impact. The resource equation can be unlocked in that kind of framework, so I would draw that to the committee's attention. The question that I was asking was about the comparator with England and Wales. Were you saying that England and Wales or the UK and Wales are equivalent to the European average or to what is spent in Scotland? To the Scotland figure. In relation to your reserves, you said that the entirety of the reserves—I think that you said that, correct me if I'm wrong—comes down to the national lottery, no part of the reserves has been contributed by the Scottish Government funding, is that right? You mentioned the UK context and the sector across the UK. You said that it was important to have context. You have had 13 years of austerity budgets where budgets have declined. Do you think that the culture sector, because there is some pretty challenging stuff in here and in what you have been saying about the Scottish Government, do you think that there are, I think in the words of Alexander Stewart, attacked by the Scottish Government or seen as expendable a bit? Do you think that you've been treated differently from other parts of the budget? As I say, I think that everybody knows and understands the context, and people make a confident contribution as best they can based on their resourcing levels, and they of course understand the tough choices that are having to be made. Do they feel under attack? I would let the sector express that for themselves, but I think that what they do feel is under challenge to make sense of the very clear statements of public support and a resource equation that has been in net effect in decline for 10 years plus, knowing the value and return on investment that exist. Actually, in relative terms, those are small but meaningful sums of money that have an exponential return on that investment, so I think that they feel under challenge as a result of these kinds of decisions, but I think that the potential and ambitions still exist within the sector, but even that will now start to dissipate because of a lack of confidence and exhaustion about how people can move forward confidently into the future. There are long lead-in times for a lot of work in the cultural sector, and I do think that people are growing impatient to see the gap closed between the potential that exists and the ambition that exists and the reality of what is delivered and what could be achieved with just a little bit more in terms of the resource equation. I do think that the way in which structures are in place of managing the business of government, and this includes local government, are an important player in this equation as well in terms of resource, and they too are in decline in their support. The way in which structures drive siloed-based approaches to decision-making is missing the opportunity to think differently and behave differently in relation to culture, which can sit in a silo and does currently, but is clearly speaking to the wider policy agenda on, I keep mentioning health and education, for example. I think that there is still a lot more work to be done to ensure that there is a strong culture budget in place, but we are also working to unlock the opportunities across governmental portfolios for the added benefits and value that flow there as well. My last question, referred last week, there has been a 40% reduction in funding to local government at UK level, which obviously has a consequential effect, a very similar effect in Scotland, because if UK government cuts, it is also interesting to note that at no point in my memory in the last 13 years has there been an amendment proposed to the Scottish Government's budget by any other party asking for more funding for the sector. I just wonder how would you describe your relationship with the Scottish Government just now? I would say that it is positive, but testing is the reality of what we are dealing with. We have been able to develop a very honest relationship, a very direct relationship, in which we can speak truth to each other, but it is clearly being tested. We are an arms-length body of government but very much aligned to delivery of Scottish Government policy, and we take that job and responsibility very clearly and very seriously. I think that relationships are being tested. I am sure that the nature of the relationships that we have got will enable us to navigate that, because it is vitally important that Creative Scotland has a positive, productive relationship as far as it reasonably can with the Scottish Government to make sure that we can navigate what I know are public sector-wide challenges and that culture is not immune from that. It is not a special pleading, as it were. It is absolutely about recognising the positive contribution and value that culture and creativity make to the country in all dimensions and ensuring that we have the conditions in place to unlock that opportunity to maximum effect. I will ask one last quick question to say it. I will try to view it from a member of the public's point of view. If you have a situation where for 13 years you have had cuts of the global budget, and as you said, you cannot take this in isolation, you have got to get the context. If you have had cuts because of austerity for 13 years, and like you said, that is a cumulative effect, it wears people down over a period of time, do you think that the public would be surprised to find that it would take until, say, year 13—I am not sure that this is the case, and you can tell if it is not—to think about starting to use reserves to address some of those issues. I realise that reserves can be held for different purposes in a rainy day. Do you not think that after 13 years of austerity a rainy day might have arrived by now just how the public might perceive that? Our reserves position varies year on year. Sometimes we have no reserves, and the way in which national lottery income works is that we can actually over commit to enable us to have negative reserves. It is not a policy position that we adopt, but it is a technical point. What I would say is that the national lottery income is intended and framed under the national lottery act to be additional to Government funding, not a substitute for. We need to be very clear that the reserves position is built for a specific purpose, not intended to substitute for what should otherwise be Scottish Government funding. When you came to committee this time last year, you were obviously looking at that £6.6 million cut. The impression that I got from you at the time was that that was not going to make a massive difference to RFOs in this year, but the concern was really about the next year, the 24-25, about whether those cuts were going to continue. Is that essentially still the case, despite the chaotic situation that you are now in with reinstatement and then you are having to dip into those reserves again? The issue here is really still about the 24-25 budget and what the impact might be. I will answer that in two parts. We are stabilising the situation to enable us to move through the next six months. There is uncertainty over 24-25, which we will come to in a second. Even understanding still funding, which is what this reinstatement from reserves of the £6.6 million enables us to achieve as per our submission, means that we still see sufficient fragility in the sector that, in our estimate, at least a third of the current regularly funded organisations are so financially fragile as to be at risk in this next six month period. In our submission, we have referred to that and we have a consequential effect of around 900 jobs, 12,000 artists, employment opportunities and the loss of audiences of £1.4 million. That is even on a standstill basis. The problem has not gone away. It will be amplified if the reductions continue into next year, where if the £6.6 million was not available and was applied, the numbers go up enormously. The estimate is based on current information and financial information and the fragility that we understand. Around half of the current regularly funded organisations would be at risk. That would lead to 2,000 job losses. It would lead to 26,000 lost opportunities for artist employment. It would see nearly £3.5 million of lost audiences as a result. In-year is not solved. We have stabilised it, but the fragility continues, because, in material terms, standstill still represents a cut. That standstill budget is actually the number that was set five years ago. The inflationary effects over that period were accumulating anyway, but they have been exacerbated in the current economic and fiscal environment. I also had a couple of questions for Isabelle. I am wondering from the screen-scotland point of view how any kind of in-year budget revisions have impacted your work, and then separate to that, perhaps linked into it in many in some ways, you have a memorand of understanding with a range of partner organisations, including Scottish Enterprise. I am wondering how that process works. Is that effective for opportunities to see perhaps more direct funding of screen-scotland within that? On the first point, the position for this year's budget with Screen-Scotland on the Scottish Government side is that we have £2 million of our in-year budget that is unresolved at this point, so we do not yet know whether or not that cut will be coming. Obviously, that comes off the back of the £2 million cut last year. If I can draw your mind back to August when we were able to announce stunning figures of growth from 2019 to 2021, which represented the period when we were able to grow Scotland's infrastructure and studio terms and therefore draw in large-scale productions, be that high-end TV, be that film, and at the same time grow our own skills base and our infrastructure base. We have proven, happily, quite what can be done when you have a proactive agency that has funding that can go into the right way. I would say that that was funding that was drawn directly from the Scottish Government into Screen-Scotland as part of Crater Scotland and certainly Crater Scotland's role in building the infrastructure is absolutely critical. In terms of this year's budgets, the unresolution is unhelpful for all the reasons that would be true of the cultural sector. In the main, confidence and planning are two absolute fundamentals for the film and TV production business. There is a long trajectory in terms of planning and it is incumbent upon any agency, any country with its services when it is trying to attract production that it can show that it is steadfast as a partner in a world where all sorts of other contingencies will come into that production process. It is an absolute fundamental. In terms of how we go forward, we are obviously awaiting further news, but there is no way around the fact that it will mitigate our growth trajectory if we are unable to put that money into where it was intended to go, which is production, skills, talent development, all of those good things. On the second point with regard to the MOU, when I first started at Screen-Scotland when I was born five years ago, the arrangements with the enterprise agencies were formalised into MOUs. We still retain a strong relationship but we do not work under an MOU basis with Scottish Enterprise anymore. It is fair to say that Screen-Scotland has established itself as the agency in its own right and we have worked out over time that we are better off working with our partners such as Skills Development Scotland, Scottish Funding Council and Scottish Enterprise on a more bilateral basis. In some aspects, that has been pretty productive, so we continue to co-fund business development support and we work together on studio projects as well. In terms of where other budgets might be found, that is a good question. It is not the case at the moment. The case is that there are agencies that maintain and hold those budgets that you then have to apply to, or do those budgets come straight to Screen-Scotland? There is no money that transfers from Scottish Enterprise or the other agencies. I would single out Highlands and Islands Enterprise as being a really strong partner for us, where we co-fund projects that are obviously of mutual benefit. South of Scotland Enterprise is actually coming forward quite strongly with good local partnerships, but there is now a transfer of cash. Another question is on Mark Ruskell's question to Isabel Davis. For as long as we have a stagnating economy, high inflation and a budget that is based on consequentials driven by austerity, things are going to be tight, yet the Screen sector has been such a significant contributor to economic growth in Scotland. Looking at some of those figures, in terms of total spend up 55 per cent since 2019, staffing up 39 per cent, in terms of economic drivers, Screen is at the forefront. In that vein, you could just outline a few of the opportunities that you see in the coming year, and of course the link there to budget is, if you grow, the budget will indirectly grow as well. Thank you for that question. Absolutely. I think that that leverage effect is true through production. The opportunity that is coming back on us, and I wouldn't have felt confident to have said this even two days ago, but the resolution of the Writers Guild of America strike situation has immediately brought back a number of projects into our orbit. Clearly, the Screen Act of Guilds dispute is still on-going, but we are more confident than we have been for a while that, come January, production will be flowing again. If we are not ready with the tools to attract that production to Scotland, then there is no possibility of it coming. It will come if we are able to attract it in with a range of production incentive, readiness in our crew base, and, of course, the way in which we grow Scotland's opportunities further, the way in which we are able to see that huge leap in terms of jobs growth and production growth is to do with the skills programmes that are appended to productions. There is no better way to learn your skillset if you are working in production than on an actual production. The earlier that we can get in with those productions, to work with them, and I must say that the film and TV production sector is extremely ready to work on skills programmes if they have the time and the bandwidth to do so. That is again where Screen Scotland plays a very proactive role. Does that answer your question around the opportunities there? The fact that we have such a strong leverage effect is that we work on a budget across grants in aid and lottery of less than £20 million. If you see that we were worth over £600 million, nearly £650 million in 2021 alone, and we are on that growth curve upwards, we have seen more studios coming to play. Obviously, the reverse is true as well. If we are not able to draw that investment in, then those numbers will not even stay where they are. Yes, thank you. I just wanted to add something, because the screen sector is an undoubted success and on a success trajectory. There is a question mark over an aspect of the budget, which could risk inhibiting that success trajectory, but nonetheless it is undoubtedly there. What I wanted to add was my reflections on the screen as an example of what is possible when you get the right factors in place. Those factors would be the right people with the skills, talent and expertise to unlock the opportunity. It is illustrated with Isabel and her colleagues on screen, but right across the staff body of Creative Scotland we have such people. It is a combination of people with a very clear policy priority that has political backing, that then translates in combination with the unlocking of modest financial investment. For the Scottish Government, that is less than £10 million in addition to the £10 million from the national lottery funds that we channel. If you get the set of factors in place working together, as we have seen on screen, you will be able to replicate that right across the cultural spectrum. The return on investment would be equally as powerful, not just economically but culturally and socially. It is my point about modest investment that can unlock the greatest potential on return on that investment. I echo Ms Forbes' comments about the success of the screen industry, which we are all very proud of. I am also conscious that a lot of the work that we are getting back from cultural organisations, from Edinburgh festivals, from the fringe and everything is that they have been successful. Post-Covid recovery is kicking in. We are seeing numbers returning and the sector is flourishing. It is good to see performance across all areas in that respect. I wonder if I could return to the immediate challenges. Obviously, you have been able to mitigate directly funded organisations for this year. Next year we do not—do you know? I have yet any indication from the Government that that is going to be a recurring cut that we can see going forward, as there have been any discussions along those areas. If that cut continues, will it fall mainly on the regular funded organisations or will you have to re-evaluate your whole programme and ambition for multi-year funding? On what our understanding is for next year, I think that there is an indication from the Scottish Government that they would not wish to see this repeated next year. However, of course, there is due process to be undertaken in relation to the budget planning and budget setting process through the Parliament. It is undetermined, but I think that there would be a desire for it not to continue, but it is not guaranteed. Forgive me for the second part. Going forward, what are your ambitions for multi-year funding and the changes in business model that you would look at? If it is the same £6.6 million in the way that it is applied to our budgets, it would be directly a consequence of a reduction to the RFOs. On the subject of multi-year funding, I read with great interest your submission about how you are setting up this system of multi-year funding. We hear it so often in this committee, but in terms of your funding, do you still prefer a multi-year funding settlement from the Scottish Government? Is that something that you have an ambition for, to allow you to likewise carry out your own system of multi-year funding? Yes, that is the short and direct answer. I think that I will go back to planning confidence again. The way that the budget cycles have been working is three months' notice before the year-end to understand the draft budget. We know why that is a chain of events from UK Westminster Parliament settlement to Scotland and so on, but it makes planning very last minute and precarious, because we need to translate that very quickly into confidence for the sector in the subsequent year. The more the level of budget settlement, the more we have, on the long-term view, the better. I would also add that we have Audit Scotland, our external auditors, and for all public bodies this is the same. They have an expectation of us for long-term financial planning. We have this conversation every year about our ability to meaningfully do that in the context of annual budget settings, cycles and the way that they currently are undertaken. What do Audit Scotland say about your reserves? Do they offer you any guidance or analysis about the level of reserves that you have? In general terms, it is understood that this is a position that we can adopt and hold. They know that we are prudent in how we use our income and think about reserves and the purposes for which we have got them. It is all appropriate and in line with the Audit Scotland requirements and the finance manual. To add to that, I apologise. What would be a concern is if there was an expectation that, when reserves are depleted, there was any move to see national lottery income stream, which is a third of our overall budget, then stepping in on an annual basis to offset a reduction in Scottish Government income. There would be a concern then. Using the reserves issue will make it more difficult to move to multi-year funding without having that cushion that you otherwise would have had. Yes, it will limit our ability to smooth the transition through multi-year funding because, as I have mentioned, the demand equation that was referred to also is an intention to apply from over 500 organisations requesting for that one programme alone over £113 million a year. If those sort of numbers to be possible then it is less of a challenge, but on the basis of the current resourcing levels, we would see us nowhere near being able to support that level. We will see fewer organisations supported even under current arrangements. Those that we do support, we want to support at an appropriate level to enable them to deliver the best outcomes, but I think that unless something significantly changes for the better, we will be funding fewer. That means that we need to give them time and space to think about what their future looks like and what the transition support from reserves is intended to enable. However, the less reserves that we have, the less possible it is to give people the time and space to understand whether it is reconfiguring the business into a different business model or, indeed, for some, it might be the closure. It is a difficult situation. People are looking for certainty over multi-years, but they do not even get certainty over seven months at the moment. I do not feel the situation here. Any final thoughts, Mr Burnhill? Just one further point on the demand around multi-year, and I will also talk about demand on national lottery open funds. On multi-year, I think that we are all challenged by the scale of that potential ask and our deadline for the first stage of the multi-year application processes at the end of October, so we will know absolutely then and be clear about what the scale of that looks like. It will be an undoubted challenge, as we expect, based on the intentions to apply. However, what we should look at is at the other side of that coin. I think that the ambition that will be inherent in all those applications is going to be untapped if the resource levels are not higher. There will be a big missed opportunity in terms of what could be achieved through support on that multi-year fund. It is only one avenue of support. It is the most significant one for many and most organisations in the cultural sector. However, what we are also seeing is an upturn in the volume of demand on our national lottery open funds. Those are entirely national lottery supported programmes for individual artists and creative people and cultural organisations. The demand equation has gone up. It was already challenging, but the demand has gone up already by more than 50 per cent in terms of the number of applications that are coming in. The financial ask, because of the inflationary environment and the contraction of financial support elsewhere, has more than doubled through those applications. The budget position is not any better and could get worse. The volume of unsuccessful applications that we are having to deal with is increasing. On all our budget fronts, national lottery, Scottish Government and all our funding programmes, the demand equation has gone up to such an order now. We are thinking very carefully about how we can continue to make a meaningful offer, although we are trying to manage the expectations of our ability to support that demand. We are very happy to talk about the success of the production sector and other parts of the screen sector. I have other challenges, but I wanted to make one more positive comment about the way in which the Edinburgh festivals have been emblematic of the need to think differently and work together and be collegiate. I would like to thank Fran Heggy, who I know is on next, for her. I am beryllwring of the film festival in its time of need in August. The wonderful attitude that the Edinburgh festivals have had towards that festival and the Fringe Society have really lent into what we see as the opportunity to build an audience for fringe work from the film and TV sector. I would like to say that there are some really great examples of people thinking differently and thinking collegially across the board. That was helpful. With exhausted questions this morning, I will suspend briefly while we change over to our next panel, which will be cultural organisations to look at the budget scrutiny again. Thank you. A warm welcome back to our second evidence session this morning. Today we are drawn by Laurie Anderson, director of Culture Counts, Julia Amor, director of Edinburgh festivals, David Watt, chief executive of Culture and Business Scotland, Chris Prouard, director of the National Museums of Scotland, Brenna Hobson, executive director of the National Theatre of Scotland and Francesca Heggy, chief executive of Edinburgh international festival. A warm welcome to you all. Last year, our budget scrutiny coined the term, Perfect Storm, facing the cultural sector. I was just wondering if I could ask each of the witnesses to reflect on where they are now. I think that most of you saw the evidence session previously with Creator Scotland, but I will go round the room, left or right, so if I could start with you. No, I don't need to touch it. Sorry, I don't touch the great equipment, my apologies. Hello, hi. Thank you so much for inviting us this morning and for everybody's kind words about Edinburgh's festivals in 2023. I think that we were very buoyed up by the fact that it was a strong recovery in terms of audience experience and critical reception, but I would have to immediately say that, from watching last week's session, I heard you refer to the term doughnut funding, convener. I think that the real danger with that kind of outward success is that people do not realise that, under the waterline, the ship is hauled. All of the issues that you heard about last week and the issues that you heard this morning from the National Arts Development Agency are causing that precipice to loom ever closer for the festivals, despite doing a magnificent job. It is all the people that make the festivals happen, the other people around this table and not around this table, who are independent artists, for example, who are gaining income through the festivals, using it as part of their juggling their livelihoods and then working in their own communities across the whole of Scotland around the rest of the year. Obviously, we are cultural organisations and we may spend quite a lot of time speaking about the organisational challenges, but it is always with that motivation of how we can actually sustain a viable cultural system in Scotland, which is 70 per cent freelance. You have heard that the system is going to fall. Is the Scottish Government just going to let the sea the cards fall where they will, or are they going to build for the future? Even if you see us coming at the bottom of the European League tables in future years, that is something that I think there is a responsibility to manage and to support the restructuring of, with a multi-year targeted investment. I think that the Scottish Government is making choices despite the difficult situation. Recently, we have seen some of the major events that have been supported overrunning in terms of their budget and that having to be supported. We have seen a commitment in the programme for government to future major events. This is not a sports versus culture thing. This is not an Edinburgh versus Glasgow thing. This is about evidence-based policy. The economic impact assessment that festivals Edinburgh published in July showed that the perennial value of homegrown events is bringing back 10 times the amount of value that the Commonwealth Games was able to bring back in economic assessment terms. That is far from all the value of culture. When are the very supportive words going to be backed up by the deeds that this evidence would suggest or needed? First, thank you very much for inviting us along to give evidence this morning. You are inviting us to respond to the perfect storm that was reported on last year. I think that, at best, the sector would suggest that things have remained the same, but the reality for most is that things have got much, much worse. You took a lot of evidence last week about those particular individual factors that are contributing to that. The economic picture, as you know, is extremely challenging. The sector suffered from the effects of high inflation, rising interest rates, fuel costs, cost of living, and the impacts of Brexit are still having a significant impact on the sector. We are still in recovery despite hearing some good news around festivals and recovering certain areas. Audience numbers in many areas are still not yet at pre-pandemic levels, but it is the impact of the cost of living crisis and the standstill investment, which is having the biggest impact on the sector. In terms of the culture portfolio, that is a real-terms cup for the sector, and we cannot get away from the impact of that. What we are seeing is the reduction in cultural services. We are seeing staff losses, we are seeing challenges around retaining staff and about attracting new staff into the sector. There is a significant toll on morale and on the sector in terms of mental health. There are real threats of closures coming up now and loss of services, and the sector is really quite exhausted in terms of its ability to continue to make cuts and to diversify its income generation. As we have heard earlier, financial reserves across the sector are being depleted, and really the sector does remain in crisis. The looking ahead to 2024-25 cannot begin to imagine what that is going to look like, particularly given the news that we received yesterday by the Cult of Greater Scotland. It is worth noting that, at a local authority level, things are particularly challenging over the past year. I know that 50 per cent of culture and leisure trusts, which were members of community leisure UK, have received flat management fees in terms of the operation of cultural services. We know that there is a trajectory now in terms of zero funding at least five. Members are reporting that they are on the brink of that at the moment. The picture in terms of the perfect storm is not great. It is worse, much worse. Will you like comments just now on what we have heard earlier from Cult of Scotland, or will we come back to that? Perhaps we will come back to that. I would let introductory questions, but we will come back to you, Laurie. David. Thank you for a very good speech. I suppose that building on what colleagues have said, I would agree. The key issue is that the sector is definitely a talent drain, which has obviously been caused by the kind of aforementioned societal challenges, and many organisations are struggling to recruit short-term, free land staff and core staff, for example, major skills, shortage in technical staff, and I am sure that Julia could probably speak more about that in terms of the festivals. That is obviously a key contributor to that. It is Brexit, with the restrictions limiting access to the EU marketplace and the introduction of the bilateral work visas, which is costly and time consuming, particularly for small-scale organisations. In addition, organisations are struggling to replace expertise in development roles, such as fundraising and business development, which has significantly impacted their ability to secure additional income and look at new business models and so on. That is compounded by the fact that the reserves are being eroded, partly because of the impact of the lockdown and the continuing cost of living crisis and the high energy bills that are crippling many organisations. South of Scotland Enterprise confirmed that some of the cultural organisations in their constituency have seen energy bills increased by 400 per cent, which is simply not sustainable if we are looking at budget cuts again. In summary, real-term reduction in public funding in that context of external society economic challenges means that organisations can only continue to far fight to meet short-term challenges, and there is absolutely no opportunity to look at growth and development for future sustainability and planning. If the budget pattern continues, there is going to be significant shrinkage in the culture sector. I am sorry not to be able to paint a brighter picture. I would say that audiences are starting to come back. They are not the whole way back, but what we are seeing is that the demand is really there. Costs are very high. Costs are rising. We all know that. You heard about Perfect Stone last year, and we have seen some of the effects of that this year. We have seen dance bass having to cut back on services, cut back on staffing. We have seen the loss of film house. The other point that I would make is that, as a sector, we are incredibly interconnected. Technicians who work in theatre also work on film. Performers who work in theatre also work on film. If we erode the sector, whether that is national performing organisations, whether that is Creative Scotland funded companies, that impacts our ability to deliver in those real growth areas that can be incredibly financially beneficial to Scotland. We are at the point where there is real danger there. We have significant issues around skills, and we risk losing people, generally speaking, to London. Can I clarify, Brianna? You said that the people who support the production are talking about technicians. Is it that they have been lost to the screen sector, or have they just been lost to the... Not at all. One of the great joys of our industry is that people work between screen, between theatre, between music. That is a really healthy thing. To have a healthy sector, we need to have screen performing arts, all of those areas being well funded so that those freelance workers can work between the sectors and to have a viable career. Chris, thanks. Thank you very much for inviting me. I want to start on a positive as well, because above the surface, the museum and gallery sector are doing wonderful, wonderful things. I was at the opening of the National Gallery's new galleries last night, Kilmarten, where a third of the collection there. We work with Kilmarten in terms of the national collection, opened recently, and last year, the Borough Collection, extraordinary, extraordinary museum and galleries are really part of the beating heart of this country. To go back to the perfect storm scenario and Julia's scenario of the hole below the hull, sorry for continuing an aquatic metaphor, I often feel like a swan gliding through waters, kicking desperately while the weeds grab around my legs. Beneath that surface picture, where visitors are returning as Brenna says, there are real systemic problems that mid-year now present to the sector a huge challenge. Of course, all of those projects I've been talking about are the result of capital investment that goes back 10 years. I don't see that sort of glory of opening new spaces for another 10 years at least at the moment. It's a struggle for survival. Museum and gallery is at the core of what we do and embedded in our act as National Museum Scotland. We preserve, we interpret and we provide public access to extraordinary collections for Scotland's visitors and for the world, I have to say. That's a legal obligation and I'm very, very worried about that legacy for future generations because it's becoming frayed around the edges. Mid-year at the moment, just to give you a sense of how we're experiencing that. Well, that systemic problem, our grant in aid has decreased really in real terms by 16% over the past 10 years. I think that echoes previous comments. We did get an uplift last year to reflect utilities and inflation costs for which we were very grateful. Our visitors are returning. We feel like a thriving organisation but mid-year this year we face a deficit of £1.2 million if we're to match those costs that are not within our gift really, particularly around pay in the future. That will mean making some invidious decisions about what we do. I think that's shared by the sector at large, the museum and gallery sector. With success comes a responsibility and comes future costs. Our visitors over the past 10 years have increased by 16% since 2011. The re-invigoration, the huge capital project for chamber streets that took place, has brought them back in crowds much better than national museums in London. The international visitors have returned because we offer a fantastic programme but our floorboards are getting worn down already. The displays are looking tired in those corners of the museum that we haven't been able to renew. Unfortunately, that is going to get worse. I echo the comments from my colleagues around the table that the effect there on morale, on keeping a workforce that is skilled and all of those other impacts on the broader tourist economy will reverberate out. By that, we have a lot to be proud of. I'll also start on a positive. We've heard something about the positive way in which the festivals came back this year for the international festival. We certainly saw audiences coming back, visitors coming back and artistically and critically reviewed. It was one of our most successful festivals for a very long time. The quality of the work is there, the skill of the people presenting the work and doing the work is there. However, like other witnesses, there are things to worry about. We've talked a lot about a perfect storm and I have to say that I don't agree with that analogy. A storm is a one-off event. It gathers, it unleashes and then it dissipates. What we're seeing in our case is 15 years of standstill funding, which has led to a 41 per cent reduction in the value of public funding. That's not a storm, that's a climate. We have seen climate change for the cultural sector in Scotland. I have to say that at the moment it feels like a pretty hostile climate that we're living in. It's not one in which we can even survive, let alone thrive. I think that what we are experiencing is a culmination and a coexistence of a series of circumstances that we know about, which relate to inflation, which relate to interest rates and the cost of living crisis that we're living through. It's also a consequence of a series of choices that the Government has made over the last 15 years, not to invest in culture. I think that what we're seeing or some of the sort of difficulty that we're experiencing is borne out of something that Ian was talking about earlier on. We have a strategy that talks about enabling asset to grow and to thrive and to recover. Then we have actions that are not consistent with that strategy. Both of those things can't be true. You can't have a strategy that says, we're going to enable you to grow, and then we're going to cut you in a year. That thing's real, the cut has happened, it's real, which means that the strategy can't be real or the strategy can't be robust. What that does is it leads to a gap in terms of credibility and a gap in terms of confidence because that lack of confidence to enable us to plan or to enable our international partners to want to partner with us for future years to plan. That's gone. The impact of that is not just financial, it's not just planning, it's actually about reputation and it's about credibility and it's about Scotland's place in the world because we are losing credibility and we have lost our international reputation for culture because as an organisation we can't plan with our international parties five years hence because we don't know what our financial situation is going to be in 12 months time. I think it's not lost that the remit of this committee is external affairs and Europe as well as culture and I'm not sure that thought experiment has been done or at least there's a degree of inconsistency there around actions that are taken in a policy sense around culture and the rhetoric around culture and the impact that that has on Scotland's reputation around the world. Thank you for the opening remarks. This is going to be around tables, free flowing events so I already know that there's members coming in but if I could go to a question from Mr Cameron first. I'm very glad, Fran, that you made that point about the committee's remit which, as you say, includes external affairs and obviously one area in which the Scottish Government promotes Scotland internationally is around culture and I just was keen to explore the sort of international element a bit more because you are I think all organisations that have not only a Scottish presence and profile but a very impressive international presence and profile so I just wonder if I could explore the kind of international element with any of the panel here who want to come in on the sort of the impact of funding on their international reach beyond what Fran has said. So, National Theatre of Scotland, along with the other national performing companies, proudly have a remit to represent Scotland internationally as well as within Scotland and to reach all of Scotland. You can tell by my accent that I'm a new Scott myself. When I first had was approached about potentially coming over here I'd seen six National Theatre of Scotland productions outside of Scotland. We are still proudly touring. We've got to show Claire Cunningham's thank you very much in Europe in the coming weeks. We've been in the States this year but it gets harder and harder. I know that all of my national performing colleagues as well are having to say no to some tours because we can't support them. We used to be able to invest in touring internationally. We're now having to make that break even and we're in an international marketplace where governments who support their country's work and this was highlighted in Fran submission are much, you know, those countries are much more active internationally so we see that, you know, we're being outstripped by Canada, by Korea, the list goes on. So we're still proudly doing it as much as we can but it is reducing. I think obviously that the purpose of the international festival is to be international. We was set up after world war two to be a tool for cultural diplomacy through arts and culture to bring different cultures together and obviously that role and that remit is still extraordinarily relevant. I think performing at the international festival is seen as a mark of achievement in an artist's career from wherever they come from, from around the world and this year we presented two and a half thousand different artists from 50 different nations, a third of whom were Scottish, so it's that joy is coming together of international and Scottish but I think that the role that the festival plays in terms of soft power and cultural diplomacy can't be understated. We welcomed something more than 20 different international government delegations this year that came to Edinburgh this August to experience what a festival city looks like and I have to say that in the majority cases they were shocked at what they were finding because the, you know, Chris's analogy of the swan, what we show on stage and what we present outwardly is one thing. The reality of what's happening behind the scenes is a very different thing so they, I know, took away that the sector is in distress and that's a message that has gone out from Scotland to the world so that's not a great thing and I'll just give you a sort of an example of what that looks like. Recently I had a text from a colleague, a counterpart in a European festival who does a similar job to me and they were so worried about the conversations we'd had over the summer about the future of where all of this was going. They said, is there a way that we and a number of other European festivals can put together an aid package for you because that's the sort of scale of the crisis that we're looking at. Now what sort of message does that send out to counterparts in Europe when they're thinking that we are deserving of aid? It's a really worrying external message that I'm not sure we want to be putting out but that is the reality of the reputational damage that's happening through the lack of investment in culture. Chris, you wanted to come in. Like many museums and galleries in Scotland we're a world-class museum and we have a collection that's international in its reach and a number of partnerships. At the moment we have a wonderful small exhibition on rising tide about the challenge of climate change in Oceania and creative responses to that so working with partners and first nation communities in that part of the world is incredibly important to us and incredibly important to our mission as it is with many museums. One of the challenges I think is that we can only do that great work, international work and international reach if the core funding is there to support it. If it's not then it becomes a sort of added value and an extra. I don't think it is an added value and an extra I think it's fundamental to the work that museums and galleries do in order to both retain remain competitive but also to be true to their mission and their vision. International work is a key aspect of what we do as a sector. Some of the challenges we might want to think about as well, I've mentioned rising tide, the drive to net zero for example which is also fundamental to us so understanding how we can work towards what might be seen to be an opposition there is important, cost and value is important. I'm not sure what it's like for the performing companies but it used to be thought that blockbuster exhibitions that travel around the world were the sort of engine of income generation. They're incredibly expensive and complex to put together and actually the profit margins are not so much that they can make a difference so I don't think international work should be seen as an answer to some of the gaps we have in funding but I do think that that international connection inward international connection also remains important to us so international visitors in particular who enjoy our collections and enjoy our experiences. We want to continue to attract and we want to have a thriving international visitor experience across our sites and across museums and galleries. I was going to pick up on that point about internationalism with a net zero trajectory I think that that's one of the things that we've worked really hard over the last five years especially using some of the techniques that we learned during the Covid lockdowns to reimagine what that's like and I think that one of the reasons that the industry and international governments came back so strongly this summer to Edinburgh is that it's a global convention of ideas and debate on the northwest edge of Europe and that we all benefit from that here in Scotland. We've always been an open society that needed to look to the world for our thriving and we are happily in the position where people want to come and have that discussion here and meet with our society and exchange those ideas but we know we need to do it in a more net zero way so some of the techniques that everyone's been developing include longer-term residencies, concept touring where many companies like one of our leading children's theatre companies Catherine Wills is an absolute expert in taking the idea and training people on the other side of the world to deliver the same kind of work, virtual planning of productions so there's not as much mobility and more engagement across the whole country because these kinds of techniques can enable people like Devere and Arts in Huntley or the Wild Goose Festival to become more involved in those interactions. All of that is starting to flourish but this cycle of planning for survival and having to re-plan for survival in year and not having that long-term view of where we're going is very damaging to the possibility for us to continue that very unique position within the world. I'd like to talk a little bit about the soft power of culture as a driver for international trade development. Currently we run a programme called the Culture and Business Fund which the Scottish Government provides the budget for and it can only support cultural and business collaborations that deliver cultural activities for the people of Scotland in Scotland and it doesn't have a mandate to incentivise business investment in cultural exports such as international touring or residencies or participation at festivals etc. So the potential to develop an international component of that fund would really help to incentivise business to utilise cultural engagement as a calling card for developing kind of trade activities which obviously is another key target for the Scottish Government. The issue is that within that not only is the fact that the fund doesn't have an international remit, the fund was also cut by a third in the last financial year by the Government so we're not even able to deliver cultural experiences for the full list of applicants that have actually applied to the fund in order to be able to deliver activities in Scotland and one of the kind of challenges with that is that as much as the outcomes and the values and return investment for business are broad, the funding from the Scottish Government comes from the culture division and it doesn't come from a cross-portfolio approach when it's delivering on the economy and society as well so there's need to be considerations on how those types of initiatives are funded and how they deliver against cross-portfolio agendas. Thank you. Laurie, we haven't come to you, did you want to come in on this this point? I'd just like to say that I would echo everything that colleagues have said, I'm not going to repeat all of those points but there's no doubt that we have an excellent reputation in terms of our culture, both what we export and what we offer entirely. It's the reason that international visitors come because of our our cultural sector but there are significant challenges to working internationally which some have picked up on obviously to do with cost increases but also barriers that are still prevalent due to Brexit are causing barriers for us to be able to deliver at the scale that we have done in the past and we did welcome the consultation around having an international cultural strategy this year but there are concerns particularly now about that level of ambition and the commitment to that and the funding that might be available to deliver that because it needs resources to deliver at the level of ambition that we all want to achieve at. I find those very full answers. I was going to raise the issue. I've got another question as well. I mean I think the testimony there but the impact on international works very, very important for us to hear. Domestically I asked last week about the impact that funding pressures and the trajectory of funding would have on opportunities for children and young people in Scotland and I just wanted to ask if you had any reflections and thoughts on that. Both educational opportunities and employment opportunities as well and notwithstanding I know a lot of the great work that all the organisations here do to support opportunities for children and young people just to get a reflection on what you think the challenges are in relation to that and how funding pressures could affect those adversely. Since we're back on funding, Laurie, I'll come back to you with your earliest wish to comment on it. I took it to comment on the cut. As well as the question around funding. I'll certainly deal with that first of all. I think probably the first thing that I might like to do is to quote the words of the First Minister in his speech when he launched a programme for government a year or a couple of weeks ago. The sector should be assured that this government values the role of culture not just for the substantial economic impact it has but also for the incredible joy that it brings people in Scotland and right around the world. Those were the words that were said in the chamber a few weeks ago. There are not many people within our sector that are feeling assured this morning and my inbox is full of expressions of disbelief at the news of the cut to Creative Scotland. There are, we believe, 500 organisations in the midst of preparing funding applications to Creative Scotland who are going to be feeling incredibly confused and incredibly concerned about what lies ahead. Being on standstill funding over the last 10, 15 years has been challenging enough. The sector lost faith in the government last year with the announcement of the 10% cut despite the wealth of evidence that was provided to the committee and that the committee put forward about the challenges that it was facing. Faith was somewhat restored with the reversal of the cut but that was after a major public campaign with it. I understand that at least 15,000 members of the public spoke up about their views on the cut that was announced last year. Having it restored made the sector feel that it was being listened to and that the challenges were understood. Yesterday's news, this morning's news that this cut has been reinstated, it goes beyond disappointing. It will be a massive knock in confidence to the sector and there is going to be a significant job for the government to restore trust between the Scottish Government and the sector in all honesty. It shows a disconnect between what is being said by us and what is being heard and it ultimately shows that the value of the sector is really not understood. That also goes beyond investment. It puts a question mark over the commitment to the ambitions that are being set out for the sector. We have just talked about the international culture strategy. There has been a lot of work done to move culture forward and to think about its strategy. We know that there are some challenges with that, as France mentioned, in terms of the revised action plan, but it is very difficult to see how this commitment can be taken positively forward and how support for that level of ambition that has been set out can be supported with the news that we have received today. I want to touch slightly on a positive area where the Government has stepped in for the sector, mainly because I want to urge its continuation. That is around the support for various tax reliefs, exhibition tax relief, energy bills, orchestra relief, theatre relief. All of those have been lifelines to the sector over the past few months and have allowed certain organisations to exist and to continue at a level of service. We urge that those dialogues continue to maintain those, but those alone are not going to be enough to rebalance the gap in investment. That is what I would say in terms of this morning's news and how we would view it. I think that in terms of children and young people, there has been talk this morning about those broader impacts in terms of the sector's role in contributing to health, to wellbeing, to young people, to education. We anticipate that there will be challenges in developing the new careers in the sector. We know that that is likely to lead to services and provision of that nature being cut when there has to be a focus on core services. To give two examples of projects that support young people and families in our museums, this week is Maths week, which is a wonderful opportunity for young people to come in and experience our collection through the prism of maths and to increase their numeracy. It has certainly increased my numeracy skills by engaging with Maths week every day. It is funded by education, by the Scottish Government every year. It is year-on-year funding, so we cannot quite predict what will happen in the future, but it has built a legacy and it has built a wonderful story. It is a really good example of cross-portfolio working that culture can and should be funded from other portfolios as much as from the culture budget. I commend Maths week and I encourage you all to go to the activities as they are on and look at it as a model for different sorts of funding models for culture. Digital is also important in terms of the way that we reach school children across Scotland. It is one of the ways that we pivoted during the lockdown and the pandemic years, that we were able to beam out into schools and use our collection digitally when people were learning at home. We now reach every local education authority in Scotland with the curriculum, which is a really great thing. It requires investment in the digital on all sides. My colleagues at Museum Gallery Scotland, for example, offer the example of those in the museum sector that are suffering from underfunding at the moment, using their own laptops and stuff in order to be able to deliver the sorts of programmes. That is a real risk in the future, a risk to digital security and a risk to the survival of these really creative opportunities. One of the risks that we carry is that education and education programmes are everyday experience that children have in our museums and galleries, which is wonderful. We have all experienced it. You remember it for life. It is often seen as an add-on. It is the kind of thing outside of the core that dissipates when funding is at risk. Some great examples of the work that we can do with children, but some thinking about legacy and how they are funded in the future. I think that the evidence of the benefits that arts and culture gives to wider social agendas in terms of health and wellbeing in education and community building is well made. There is a tension that all those benefits are 100 per cent reliant upon the core being able to exist and to happen. Without that core, whether it is a museum exhibition or a festival or a theatre production, without that happening, there are no attendant benefits. In order to enable those to continue and those benefits to be felt across society, you have to fund the core bit. What we have all seen is a retraction away from some of that. The reality is that the work that we do in communities, the work that we do with schools, the work that we do to develop talent within the industry is not revenue generating. We are forced inevitably more towards activities that bring in income so that as organisations we are a little bit more resilient. Sadly, we move away from those things that we care very deeply about. An example of that is that this year we were not able to do the fireworks concert, which is something that is free, it is for the people of Edinburgh, it is fun, it is joyous, but it costs three quarters of a million pounds to put on. We have not got that sort of flexibility within the budget anymore, so inevitably we retreat and retract into those things that we know can generate income, sell tickets, raise sponsorship against, and some of that incredibly valuable work that is an additional benefit falls by the wayside, and it is not what we want, it is the absolute opposite of what we want, but you cannot have that work if you do not have the core. Another thing on that is the sort of displacement of energy and effort. At the moment, I probably spend 70 per cent of my time on this question of how do we balance the books, and I'm not sure that's the best use of my time or all of our team's times in trying to solve that conundrum, where we could be thinking creatively, we could be thinking ambitiously, we could be thinking about how we support communities, we could be doing that, but at the moment we are forced in a situation to be very internally focused and I think the impact on that and the sort of the stresses that it brings to those people working in the centre, whether it's a self-employed creative freelancer who are the lifeblood of this industry or you're running a big organisation or a mid-sized organisation, is huge because that's where the headspace is, that's where the energy is, that's where the effort is because it's such a crisis point at the moment. I wanted to mention what has been a really positive example of how we've been able to increase our impact on young people through quite a marginal increase of investment by the Scottish Government and the City of Edinburgh Council and the festivals themselves through fundraising, so the leverage point about how much is additionally brought in when a long-term approach is taken. It was called the Place programme, Platforms for Creative Excellence, and it allowed us to have that planning confidence that Creative Scotland was talking about over five years, and this is between 2019 and 2023, so although it had to be confirmed every year, there was an agreement between the public funders that this was a commitment, and that was matched then by the donors, and we brought in over 66 per cent more funding from the funding that the Scottish Government put into it through that approach. That allowed us to increase our schools' engagements by 70 per cent, our community engagements by 33 per cent. Unfortunately, that commitment is coming to an end also this year. I asked one of our very faithful private donors if they would consider helping us to keep that going, and the answer was that they're not interested in becoming a funder of last resort if the Government and the public funders pull out, but they are interested in a long-term strategic approach. I think that it's a really important learning point for us about how everybody needs to get round the table and have that strategy for the future because actually our private donors will also start to fall out with a picture if we don't have that strategy. We've all got programmes that we're incredibly proud of and incredibly committed to. For National Theatre of Scotland, we have a programme called Theatre in Schools Scotland that we run with Imaginate, who are a Creative Scotland client, that reaches 16,000 school children in their schools every year with theatrical offers because we know that it's increasingly difficult for schools to get out, although excursions are incredibly important as well. We've had to pick up more and more of the cost of that because it's so much harder for the smaller organisations. At some point, we will come under pressure with that as well, and everybody has an example like that. The other thing that I would say is that we're all really committed to innovating. We have an education portal, which we put recordings of our productions on. We put teaching resources on. We've got to deal with various unions so that if it's for educational purposes that that can be accessed for free. There are 432 drama teachers in Scotland, 700 teachers have signed up to the programme because it's not just about drama, it's about English, it's across the curriculum. We know that this is valued. Seeing something online is not the same as seeing something in real life, but it helps. Again, all of those things are under pressure and I think that every single organisation that you speak to could have an example like that. I'd like to raise the Scottish Government's advisory group on economic recovery, the Higgins report, which recognises that cultures are a significant contributor to social and economic recovery and renewal. It obviously recommends that the culture sector is a high priority because it's inherently innovative and entrepreneurial. The business sector, like the culture sector, has obviously been hit especially hard by the pandemic, Brexit and the cost of living crisis. There are immense trading challenges, but also staffing challenges, which of course we've already discussed in the culture sector, so there's never been a greater need for those sectors to collaborate. Although the Higgins report highlights opportunities for innovative solutions, that's not possible in both the business sector and the culture sector in cost cutting mode. Again, further threats to budgets for the culture sector makes it very difficult to innovate if they're firefighting. Unfortunately, there's very little evidence that any initiatives have been put in place to realise the aspirations within the Higgins report. With culture, I think that the majority is not present or around the table when it comes to setting broader policy agendas and I think that that whole kind of cross-cutting issue of culture, not of the representation, is a significant challenge for the sector and the society going forward. I think that cutting culture budgets is only going to exasperate that situation and I've already referenced the fact that the Scottish Government cut the culture and business fund budget, which incentivises business and culture sponsorship by a third last year and I can't commit to a standstill budget for the current year, so we're looking at not just the main cultural activity that is being potentially under threat but in the centre of funding schemes that are trying to encourage cross-sector collaboration, which is surely the way that we should be looking forward. I've got Ms Forbes, Mr Stewart and Mr Brown. Sorry, everybody wants in but I'll go with Kate first. Thanks very much and thanks for all that you do to contribute to Scotland's culture. You may have heard my question in the previous session, which is that part of our budget challenges are to do with stagnating economy, inflation and a budget that has been largely shaped by austerity over the past 10 years. We, of course, are very much focused on one side of the balance sheet in this conversation in terms of your costs, but there are some figures that jumped out at me in Creative Scotland's submission, which, if it's okay, I'll just read that the increase in GVA of Scotland's creative industries has increased by 62 per cent since 2010 and staffing has only increased by 9 per cent, so fewer people are contributing enormously to Scotland's economy, which should be a cause for great celebration. I have three questions because I know that there are a lot of people, so I thought I'd throw them all out at the same time and you can pick and choose. One, do you feel like that economic contribution, which is enormous, is fully recognised when it comes to funding conversations, either in terms of public funding, private funding or third sector funding? Secondly, how has the funding mix changed in your organisations in terms of the balance across those different sources? My last question is what are the funding opportunities in the coming year in terms of continuing that trajectory of contributing to Scotland's economic prosperity, which in turn raises the revenue to reinvest? You'd like to go first on that. David, can I wash your hand? Yeah, I'm just looking for something. Opportunities. Well, opportunities have already described as being a better and deeper engagement with communities and the business community and thinking about the needs of those other sectors where we know that culture provides instrumental benefits as well as cultural value. We recently undertook a survey to ascertain what the appetite for culture and business collaboration was, which was borne out of what we had seen happening during the pandemic, when we saw cultural organisations repurposing their assets, when they weren't able to perform for audiences, etc. RSNO was doing online percussion workshops for school kids when the schools were in lockdown, Scottish Ballet getting their dancers to do breathing and movement exercises for the NHS staff that were at the coalface of the pandemic. A lot of that stuff was under the radar because only the people that were supporters of those organisations recognised that that was a valuable contribution. We did a survey of arts and heritage organisations and said, looking beyond the pandemic, what do you think are the opportunities to diversify income streams and to look at aspirational development? 195 organisations responded and a lot of that was about how to better engage with business and what they could do for business in terms of the products and services that they might be able to provide. A good example would be in Scottish Ballet repurposing their movement at workshops to provide support for corporate supporters such as the employees of KPMG when they were in lockdown and working from home, so that they would get up and move away from the computer and breathe properly, etc, because they weren't able to have the water cooler moment. We then went out to business and 114 businesses, and we said, right, this is what the culture sector says it can do. It can develop products and services or it can hand tailor, not moving from their core purpose, but develop some aspects of what they do to provide some solutions for business, which we could be transactional and could bring new income streams to the sector. What are important to businesses? Both said that the challenge was that was access to markets and the fact that they didn't know who to go to and when to go to them when they were looking for the cultural solutions to business challenges, etc, but what they said was that 9 out of 10 businesses said that they saw that the culture sector was really important to engage with, but only 20 per cent found it easy to do so, and 96 per cent of the culture sector said that they were actively seeking business engagement and transactional relationships with business, but only 17 per cent found it easy to do. So there is a kind of a kind of potential supply and demand situation there that needs a kind of some kind of brokerage in the middle. The rationale for the businesses who were interested in some kind of marketplace was to achieve certain kind of business targets, a lot of which were internal, which were about staff and health and wellbeing. 73 per cent of the respondents said that they would seriously consider engaging with the business if they could deliver activities to improve staff and health and wellbeing. 76 per cent if they could engage with the culture to support innovation, creative thinking and problem solving in the workplace. 70 per cent to look at enhancing productivity in the workplace and similar amounts of numbers and percentages for team building and improving dynamics, as well as greater engagement with communities. So there is a recognition within the business community that culture can deliver benefits from them, but there needs to be a greater understanding of that across Government portfolios, and it cannot all sit within the culture division because it is addressing cross-portfolio agendas. Thank you very much, David, because it is such a complex picture of the cultural economy and the creative economy that you have set out some of those interdependencies very well. That is one of the reasons why the economic contribution of culture is not well recognised, because it is quite difficult for policy makers to get their head round it, because it is at micro-businesses and SMEs, it is freelancers and it is fragmented across the country. Some of the enterprise bodies across Scotland, particularly Highlands and Islands Enterprise and South of Scotland Enterprise, partly because of their remit from Government, are able to more capitalise on the way that culture infuses benefits across our communities. The role in place making, the role in helping quite fragile communities to thrive, the role in a more wellbeing economy approach, where you are not just talking about monetary, but you are also talking about core economy services that are being provided. But to turn to the more monetary aspect of the overall national economy, on that change in the funding mix, Edinburgh's festivals on the average are about 15 per cent funded by public sources, and the 85 per cent that is self-generated is, of course, ticketing and commercial donor and sponsor income. That is a source of astonishment to many of our international peers, because their national-level festivals are the other way round. There may be 80 per cent state-funded and 20 per cent self-generated, so it is an extraordinary achievement already. It is very interconnected into those other bits of the creative industries that are pulling away so much from the rest of the economy because people who act as technicians in our sectors, who do a lot of the underlying software design and so on, are also working across gaming industry, music industry and all interdependent parts. Fran is the expert on that, because she just sat on a committee about this very thing over the last couple of years. That has built up over decades, but it changed greatly after the financial crisis, because a big chunk of that for the Edinburgh festivals was corporate donors. That has almost dropped away completely. Individual donors have now replaced that component, and the segment of individual donors has grown by over 200 per cent in that time. Obviously, it is much less stable, and it is much less of a commitment from the whole business community of Scotland, and that is not good. Finally, in terms of opportunities in the next 12 months, many of our festivals have been doing great work in the United States in activating the kind of diaspora interest. I know that that will be the case with nods elsewhere around the table. That is fantastic, but they are interested in commercial opportunities. If you want a less dependent culture sector in Scotland, we can go and get those opportunities, but they are commercial opportunities. The other opportunity that I am working on is around the Edinburgh and South East Scotland local authorities coming together on a regional prosperity framework. That provides us with an opportunity to link together Edinburgh festivals and organisations and individuals based around the other five local authorities to try and develop more of a regional tourism, cultural tourism economy. We are really excited about that, but that will take public investment. I will go to David, and then Fran. About the economic development agencies, I think that Highlands and Islands Enterprise has got a track record of working closely with the culture sector. I have invested in both capital and revenue in places such as Comar and Antobar and Mill. I proactively encourage and enable arts and heritage organisations to attend things such as Expo North, which is great. South of Scotland Enterprise is proactively working with and funding people like the Stove Network and Alchemy Filming Arts. There is recognition of the economic contribution that culture brings, particularly in those more rural and regional areas. We have struggled to see a similar understanding within Scottish Enterprise. That has possibly been because of the change of leadership in the organisation. There was a lot of positive response when Steve Slater came into the Enterprise Agency and there was a sense that culture was going to become more of a mainstream player in it, but since he has left, it seems to have dissipated again. We would like to see how there is a consistent national approach within the economic development agencies to the understanding of the value that culture brings. Yes, thank you. I might pick up on some of that. I think that culture as part of the creative industries is an absolutely fundamental foundation and we know that the creative industries are growing at one and a half times the rate of the rest of the economy. Investment in creative industries, including culture, means that the whole economy grows. There is a golden thread from the subsidised culture sector right the way through to the commercial sector because it is the public investment in arts organisations and the creation of artwork that enables us to take the risk that commercial operators will not or cannot take. You take something like a warhorse or a tilder, as are the examples that are always used. They started in the subsidised end of the spectrum and have been commercialised and have brought huge benefits, but you have to support the initial origin of the work in order that you can get the consequential economic benefits later on. There is an opportunity for greater joining up across Government in this respect because I sometimes fear that there is a bit of a sort of silo mentality that happens, that culture as part is over here and economic development or trade or investment is over there and never the twain shall meet. An example of that is the investment that is coming from UK Government and Scottish Government jointly into investment zones. There is £80 million coming into two different zones, Greater Glasgow and the North East, in both of those areas. The creative industries, including culture, is one of the priority sectors that can benefit from those investment zones and be part of those bids. In early conversations that I had with culture ministers, they were not aware of that ability to be part of those bids, so I do not know what that may have changed now, and I really hope that it has. Obviously, those decisions are made locally, but I think greater joining up between the potential of the creative industries and culture to contribute to economic growth locally and nationally. I think that there is definitely more work to be done there. Just to one of your other questions, the make-up of our income. Whilst we have seen a 41 per cent drop in public subsidy, at the same time our levels of philanthropy and corporate sponsorship have grown by 200 per cent. We have worked incredibly hard to backfill that gap. It does not make it up. In future years, if we stay even at standstill—let us not talk about cuts, but if we stay just at standstill—we have a deficit opening up between £1.5 million and £2.5 million a year. That is the size of the gap that we are talking about. Julia Bell is completely right. I think that the generosity and support of our donors and philanthropists in Scotland is extraordinary, but they will not subsidise Government. What they want is to have a partnership and have that confidence that there is a long-term strategy there that they can support and play their part in, but that long-term thinking needs to be there and needs to be joined up for them to come in. Just one other example of perhaps where there could be greater join-up and thinking is that there is the concern around the impact that alcohol has on the population and the desire to introduce some sort of restriction around alcohol advertising on sponsorship. The desire to address that problem is shared by everybody. One of the unintended consequences of that legislation would be the disappearance of alcohol sponsorship within the arts and culture sector. If that goes, that is another plan because we rely on that form of sponsorship hugely because of the nature of the entertainment industry that we also reside in. Just the joining up and the thinking through of some of those implications of some of those policy decisions and movements would be really welcome. Very quickly, I will go through those three questions. My grasp of stats is not great, as I said earlier, but there are some really interesting ones here in terms of the first one on both economic impact and value. We did some really useful research, quick research, on grant and aid spend per visitor across different nationals across the nations of the UK. National Museum of Wales is £17.86 per visitor. National Museum of Northern Ireland is £15.36 per visitor. The England nationals are an average of £10.52 per visitor. This is great news. National Museum of Scotland, if you read it one way, is £7.97 per visitor in grant and aid. We are delivering equal, if not better, programming and experience than any other. We drive real value for the funding that we receive from grant and aid. The last time that we did a more detailed economic impact study of our museums—that is the National Museum of Rural Life in East Kilbride, the Museums in Edinburgh, the National War Museum and the National Museum of Scotland, and the National Museum of Flight across the peace just before the pandemic. We contributed £116.8 million to the economy, supported 5,190 jobs, 13 per cent of tourism jobs in Edinburgh. We have seen a rapid recovery post-pandemic as well. It would be an interesting exercise to run now. The National Museum of Flight alone contributed £8.4 million to the economy and 390 jobs in East Lothian. That is great news and a lot to build on. In terms of that mix between grant and aid and commercial, philanthropic and other sorts of funding, grant and aid accounts for 70 per cent of our funding. I have been in Scotland for 13 years, best years of my career in terms of the institutions that I have worked for. I came here from a London national at the time of the last financial crisis, when the proportion of grant and aid for the London nationals at that point went down to 30 per cent of their total budget. I commend the Scottish Government for its continuing support of that 70 per cent. It has meant that we have been able to deliver that value above and beyond. One of the challenges is that the funding ecology in London or New York or anywhere else is very different to Scotland. Building up that extra 70 per cent from high net individuals is perhaps more of a challenge where we are, so we have to think much more creatively. In terms of those opportunities, I am glad that you talked about the alcohol sponsorship problem. I can give you two examples where we have worked in incredibly creative partnerships with Glen Morangy and with William Grant. I think that I am talking about individual companies, but they have done such great things for us. William Grant, in order for us to be able to properly publish and catalogue our amazing world-class collection of tartan, we could not have done it without them in that partnership. It was added value on top of that core. Similarly, Glen Morangy, in terms of interests in early Scottish history, extraordinary work on Viking era archaeology and getting that out into communities. More of those partnerships are important to us and support for that work going back to the international question that Julia and others have raised in terms of the potential of the Scottish diaspora, that high net worth issue. I am off to New York in November, as many colleagues across the cultural sector are to work with our American Foundation to build on that, but any support help that we can receive from Scottish Government is always gratefully received. I know that David wants to come back home. I am conscious that some people have contributed. Does anyone else want to come in before a final thought? I thank you for acknowledging the value that culture brings financially as well as in other ways. Like colleagues, our investment from Scottish Government is going down as a percentage of turnover, philanthropy, box office income and co-production income is going up. That can be a really good thing. Our production of burn with Alan Cummings in it last year was co-produced with a theatre in New York, a very Scottish production that they invested in it this year, Dracula, which is rooted in Doric and is a co-production with Aberdein Performing Arts, has also been invested in by Belgrade Theatre in Coventry. Those are really valuable things, but if we are also going to, as we must, village halls in Nen in Strathpeffa, if we are going to reach Moll, if we go into schools and subsidise that heavily, then that investment piece from Scottish Government is absolutely vital. I would also echo that there are commercial opportunities, but having that foundation of Scottish Government investment and having that long-term, because we, as the other national performing companies, are on annual funding, means that commercial investors will have confidence that they will be around to deliver and that, at the moment, is slightly sugarly. I just want to come back on to the sponsorship issue, because I think that we focus quite a lot on big sponsorship here and you know about the nationals etc, but there is sponsorship activity happening all across the country that we see through the culture and business fund and we know that since 2017 the fund has matched the funded cultural activity of business sponsorship in all 32 local authority areas across the country. That is about £2.5 million worth of investment in 148 projects. Of that, about £1.4 million comes from business, so that means that for every pound of Scottish Government money, business is investing £1.21 in match funding for business. So that is a pretty effective leverage of generating new investment in culture, hence another concern that the fund has been cut by a third in the last year. The issue for that is also, as I said, about its small business. Things like the Festival of Small Halls and Sky, supported by a local hotel, is sponsorship, but it is targeted marketing because that hotel recognises that if they create a generation and create a cultural destination and a cultural activity, the hotel will be full, the restaurant will be full, the bar will be full. It is investment in something that is actually good for the local community, so we need to look at it further enhancing the opportunity to do that, or somewhere like the Stonehaven folk festival doing the similar kind of thing, the local businesses. A lot of those businesses are not the big nationals, it is the butcher, the baker and the candlestick maker who invest in a small scale, some time in kind, which is bringing significant economic value through cultural tourism, and we need to look at that. How is that funded by Government going forward and does that sit just within the cultural division budget, or should that be cross-portfolio? Perhaps the various representatives share some of that data with the committee, and I also thank commendations for passing the numeracy test during maths week. You have made it very clear today that the sector is in distress. I think that we got that information last week and also from the previous guests that we have had here today as well. The reputation of the organisations that you all represent are at risk and continue to be at risk, but you have all been extremely inactive in what you have done to manage the crises that you find. Your sector has diversified its income and process to try and manage that, but there is still a mismatch between what all you are trying to do and what Government is saying and doing. I asked last week about the working groups, strategies and action plans. I am sure that you are all listened to. Last week, I was told by the groups that were being listened to, but you were being listened to with one hand tied behind your back. After recent events, it would appear that both hands at the moment seem to be behind the back. It is about trying to engage in how we go forward. We all want a long-term strategic approach. We know that sectors bring in more than £5 billion a year with thousands of organisations and tens of thousands of people employed. They are all at risk if you are at risk and at the moment you are at risk of where you go for the future. How do you attempt, as organisations, to recruit development roles for the future and see that development? At the moment, you are stagnating and you are living from hand to mouth, but you all want to achieve, and you are all achieving what we punch about. We get it, all of that. Each and every one of your organisations is doing that, but it is about the strategy that needs to be required. There needs to be much more co-operation and understanding and respect. Without that respect of the culture sector, the confidence will continue to be eroded, and that confidence is being eroded every day at the moment. I can see that, and you all feel that. It is about where we take this long-term strategic approach. How do you develop that recruitment role and that development role to give yourself a chance for the future? Thank you for that question. Absolutely, a sustainable funding model is what is needed. That is going to provide the investment levels to support the sustainability of the sector, and we need that on a multi-year basis. Those are things that the committee has called for, and we have all been talking about it. There have been lots of suggestions over the last few years about potential solutions for that. To be honest, we have not seen much progress in taking those things forward. One of the key things that we think and have been mentioned today is taking that portfolio approach or that whole systems approach, which I know was highlighted in the Culture and Communities report that you launched a couple of weeks ago. Work has already been done across multiple areas, but we need to identify ways to access investment from a portfolio basis that is beyond project funding. It is that embedded understanding of the benefits of culture and where it is meeting those other portfolio priorities. There have been discussions about transient visitor living and the potential of that, and there has been some progress made in that, but that is not yet something that has been launched. There have been discussions about a percentage for arts or a culture scheme. That was a 2021 Government manifesto commitment, but we have not seen very much progress in that particular area either. That would obviously see funding coming from Government infrastructure projects. There are other ways to be looking at it. There could potentially be flexibility for local authorities around changes to the Verity house agreement. There are a number of different ways that we can look at making changes, but what is needed is a clear leadership and a commitment and an ambition and drive to want to find those solutions and take them forward. That ambition to place culture at the heart of Scottish society has been reiterated in the literally dozens of speeches that Scottish ministers have made at Edinburgh's 2023 peak season festivals. We feel that culture is appreciated by them, and we hear that. Some of the things that would make that feel real is making progress with that cross-portfolio approach that Laurie was mentioning. There is a very interesting blog that I am sure that you have all had access to by Matt Baker from the Stove Network in Dumfries and Galloway about the approach to funding professional and community sport, for example, and how a pot of funding that is hypothecated from cross-portfolios could be available to make that approach to culture contributing to those policies real. We would like to see that combined with a set of shared high-level outcomes, because the other thing that Scotland suffers from is small scale. It is a benefit. It is very much a benefit. Our international peers come and say that it is wonderful that you can get your system in a room. I think that it does make beautiful things happen, but at the same time, our counterparts down south are experiencing the kind of overheads Fran was talking about managing their budgets. We are experiencing that more because the greater proportion of our human resource is dedicated to that. If the public funders could be working around a shared series of high-level outcomes rather than a very detailed series of individual key performance indicators, that would be a big contribution to us all thinking more strategically about that. There are three years until the next election, so if we are talking about a serious restructuring of Scottish culture, which everything that we have heard last week and this week suggests that we are, we would like to see a multi-year commitment to that, even if that needs to be reconfirmed every year. Finally, there are non-financial things, some of which have been touched on today, that can be done to reduce the costs of the culture sector operating and the kind of proofing of policy regulations so that we do not have unintended consequences coming forward. Obviously, alcohol regulation is one deposit return scheme, detailed workings are another. Particularly for Edinburgh, the short-term lets legislation, whereas you might know that the festivals collectively are looking for home sharing and home letting to come out of that agreement, not in any way disagreeing with the policy intent of better regulating that market. However, there are three things that could make a significant difference. That is where we need to start. We need to take a step back and go over what is the ambition that we have for arts and culture in Scotland and be similarly ambitious as we have been in other policy areas. This is a country that has free NHS prescriptions, free tuition fee for students, free travel for the under-25s. Those are really bold and progressive, ambitious movements that we can do as a country. What is the equivalent for culture? With the greatest respect for all the work that has gone on to date, I would take the culture strategy and put it on one side. I would take out a blank piece of paper and I would talk to everybody around the table and I would talk to our artists and creative freelancers and I would talk to our communities up and down the country and I would talk to the people around the organisations and go, what is that equivalent? It is not taking the spend from 0.58 to 0.79. It is not a bit of tinkering around visitor levy. Those are all levers that you can pull at the right time. What we have not got is that overarching ambition. With that comes probably a restructuring of some of the mechanics to make that happen, whether that is in departmental terms or funding routes or mechanisms or the joining up between different parts of government that is necessary to ensure that coherence of the economy and social outcomes and creativity. However, without that ambition, I am not sure that we have a clear sense or perhaps a common sense of what that ambition is. That is where we need to start. I think that our time is better spent on focusing on the ambition. Does anyone else want to come in from that? I am conscious of time as I am moving on. I have got two more members to come in, but David, final thoughts on that. I think that that should take into consideration some key pillars of things that we need to think about. We need to look at cultural tourism and the importance of culture to the tourism economy. We need to better measure that and get a sense of the true value of that across the whole of the piece. A lot of organisations that are contributing are too small and do not have the resources to do that on their own. There is an opportunity to work most strategically with the economic development agencies there. Obviously we spoke about them earlier. Try to make sure that culture has a voice at that table when we are looking at national and local policies, particularly around food and drink, tourism, hospitality and so on, because it is disjointed at the moment. We are a small country and we should be able to work more collegially. Infrastructure, we have already touched on that. How much influence or how much of a voice did the culture sector have in the city and regional deals? It is not very much from what I have heard. We need to rethink about how that voice is at the table. We need to make sure that our development agencies, such as Creative Scotland and Historic Environment Scotland, are invited as statutory consultees to all those kind of government infrastructure projects, which I know that they are not at the moment. We need to look at skills development. We have already covered that and economic sustainability. We need to look at how our culture ambition aligns with the community empowerment act and think about the opportunities there, particularly around how we support local authorities in a drastic budget time. What can we do in terms of the high street and empty house, empty lots and empty shops, and where culture can play a role there in a more strategic and collegiate approach with local authority working as well? I know that the culture and communities report has been mentioned by a number of contributors, but one of the recommendations in that is about cultural representation on community planning partnership levels. The Government is yet to respond to that, so that should happen soon. I am going to move to questions from Mr Ruskell. I am aware of time and it has been a really enlightening session. I have got loads and loads of notes and lots of questions, but I will just focus it on one. I was aware that within submissions, there was a lot of reflection on transient visitor levy. Obviously, you see that as an opportunity to invest in culture. However, the point was made that, when straightened times local authority budgets, councils might just spend that on their statutory duties rather than on discretionary spending on culture. That was a question to you about ring fencing and how you think that that could proceed. Any comments that you have about late confirmation of grant and aid budget—obviously, that has been a theme this morning with Creative Scotland—but just if that is being reflected across the sector, has that caused any particular issues in terms of delay of budget that has come in? I will pick on both. On the visitor levy, I am not so hopeful about what will come out of that. It has the potential to do something very positive for culture, but I think that an observation that I am picking up is that the conversation within local authorities is around localism, and it is around very specific local benefit, as opposed to investment in that core infrastructure. I think that there is a way to go to square those two things, and Julia perhaps will talk about it more eloquently than I am. However, the latest advice from City of Edinburgh Council is that investment is definitely not around cultural product that brings tourism into the city—the people that are paying the levy—but it is about local communities and it is about very small-scale activity. There is a disconnect between those two things, so I am a bit nervous about that. On the late confirmation, that has a huge effect. Again, a real-life example, the festival will put to bed the programme for the 2024 festival by Christmas this year. We do not know what our budget is next year. What that does is that it pushes the risk on to the organisations. As Ian was saying earlier on this morning, it causes our boards and auditors to have some very uncomfortable questions about going concern. If you have a situation where the national development agency, funding agency, national organisations, international organisations—and I am sure that all the way down, all the way through—are having conversations about whether they are going concerns, the system is fundamentally broken. That is why I come back to the point about ambition and strategy. We cannot keep just twiddling at the edges and hoping that we are going to have a different outcome. The system is broken. We need a fundamental reset that is ambitious and in line with the overall ambitions that have been shown in other policy areas. I think that is where we need to get to. I am really just repeating what Francis says in a way, but that going concern issue is extraordinary that our national organisations are having those conversations at board level and boards feel unconfident to sign off annual accounts. It is quite extraordinary. Mid-year, we are moving towards—in a positive way, hopefully—pay negotiation with our staff, but it is corrosive to our ability to recruit and our ability to reward our colleagues appropriately. There is a real risk of continuing industrial unrest within the culture sector as a result of that uncertainty and being able to settle for our colleagues. We need a three-year planning horizon. For almost everything that we do, we cannot be ambitious in the way that we want to be ambitious when we are not sure what is coming in the next two months, year on year. It is a really challenging time, and I would love to spend more of my time outdoing those creative things rather than worrying about the next month's budgets. I am quite new to the committee, and I stunned about how unimittingly bleak that experience has been, although it has been made lighter by the really high-quality analogies used in aquatic ones and ones about climate change, which are better than any other committee I have been on. Going to the financial pressures and the international aspect is quite interesting. We heard about high-interest rates, inflation, Brexit and 400 per cent increase in energy costs. I think that we brushed over those quite quickly because implications will be for the Scottish Government across the board, not just in relation to culture. It was the international aspect, and I think that we heard a range. For the festivals that we have done, the international reputation has gone to the extent that people who come here are shocked and want to give us an aid package. Although I heard elsewhere people saying that we still had an excellent reputation to take it that way for the non-festival sector. There are also a couple of examples that are raised about Canada and Korea, who are vitally different from Scotland in some quite important respects. First of all, they will not have the same extent of the financial pressures that I mentioned, and they will not have Brexit, for example, but they are not devolved. They do not have a predetermined budget, so rather than get answers to those questions just now, it would be useful if people can give—and there was some reference to London, which is not quite as relevant as it might be—to devolve, whether in Europe or in the UK, what the situation is there. If people are able to provide any information on that, I would certainly find it useful. The only other thing I wanted to raise was Mark Ruskell's question on transient visitor levy. I think that there is potential there, but I wonder if it might end up having a very unequal impact given what the likely dividends would be for different local authorities across the country. For my part, I wouldn't be averse to trying to safeguard—I think that we heard that it was real danger that it might just go into core funding. There are ways in which it could be safeguarded. Local authorities would be real against ring fencing, but they might be through the Verity House agreement and others that they can get some agreement. However, would it not be the case that it might just strengthen those areas that are already strong and do very little for areas that are especially more rural and dispersed population areas? It would be interesting to have any thoughts on that. I think that it is always valuable to look at that wider context, particularly with the international comparators. For Edinburgh's festivals, what comes through when people visit us is that they are absolutely astonished at what Scotland is able to achieve, given the constraints that you have just described. Their desire to help us is because that is an asset that is really important to Scotland as a nation. We should take that as a point of strength that we have to build on for the future, rather than a feeling that we are now past the point of no return. We also deal with regions such as Catalonia, Flanders and Quebec, which are very strong partners for us and share work with us and exchange work with us very regularly. I guess that some of the things that they have that support the culture sector more is statutes about the status of the artist, about the status of itinerant workers when they are not on active jobs. For the long term, we can definitely build up those policy relationships with those comparators to help us to understand how, as a currently non-state actor, we can strengthen that relationship. For the whole of the country, the questions about how the creative workforce is nurtured can benefit from that kind of analysis. A lot of us have been saying that people who work in the performing arts also work in the screen sector, and we have seen how the focus on the screen sector has hugely benefited Scotland's economy and Scotland's workforce. That is not being backfilled at the moment. The increased demand that there is for those kinds of technicians is not being backfilled into other bits of the creative sector. By working in the country and with some of those international partners, we might be able to safeguard a talent pipeline and start to regrow a talent pipeline for the future. That is just an example of how we can harness some of those relationships. What I was keen to find out was that, in relation to other devolved areas, if there is something that the Scottish Government could be doing with the powers at Scotland, which are quite different from Quebec and Catalonia, whether it is in terms of taxation or other things, things that the Scottish Government is not doing that it has the power to do, or there are analogies that betray the Scottish Government either favourably or unfaithably to give us a better picture of what it could be doing. If anyone is able to provide that in writing at a subsequent day, that would be quite useful. We have had some good discussions with civil servants about that around the international cultural strategy. I think that quite a lot of us around the table have probably submitted some material about that. We have not heard anything about the international cultural strategy for quite some months, but if people wanted to revive that discussion and have a go at some of those questions, we would be very happy to take part. I am conscious that we have run right up against time, so there are no more questions. I thank everyone for coming along for the evidence session today and, as always, for your submissions in writing beforehand, which are really helpful to the committee for today's session. On that note, I am going to close this meeting of the Constitutional European External Affairs and Culture Committee.