I will summarise orally the opening statement submitted in advance. I thank the committee for inviting us before it. I hope a few brief remarks about the Arts Council's work will give the background to the issues before the committee today.
The Arts Council is tasked by Government with two central jobs, expressed differently from time to time. For example, we have a strategy at the moment but the two objectives are for the public to have the widest access to the arts, across the country and in every part of society; and that the arts in Ireland are of the highest standard. This means not only that our artists be proficient but that the arts are relevant and reflect our contemporary society.
We have had some success in achieving these goals with the assistance of Government funding over the past number of years. I will deal first with the public access goal. People here will be very familiar with new and upgraded facilities which have appeared right around the country. We have Spraoi from Waterford, the National Sculpture Factory in Cork, Artspace Studios in Galway, the Lighthouse cinema, Axis in Ballymun and DanceHouse on Foley Street. Dublin has done well too.
Our specific performance indicator on this is what do these figures show, what does the public know about these projects and do the public consider these an improvement in the availability of the arts. Is there an increase in numbers attending and participating? The answer is a resounding "Yes". Things have greatly improved. In our recent study, The Public and the Arts 2006, we looked at changes over the last decade. In 1994, 73% of people said they had difficulty in attending and availing of the arts. By 2006 this figure was reduced to 17%. That means, as a result of sustained investment in the arts, the tide has turned, and 83% of the population say they do not experience difficulties in attending or participating in the arts. We think this is very important.
We know from recent research that 100,000 people saw shows in a touring programme we had. The Dublin Theatre Festival, which is on at the moment, is having a record box-office year, and people are joining in as well as attending. We published on Tuesday a new policy on choral music. There are at least 400 choral groups around the country, and 10,000 people sing in these every week. We would say that from a public access point of view our policies have been successful and our objectives have been met. I have some copies of the Raising Your Voice report, which was published on Tuesday, for members.
The second indicator — this is relevant to the issue of the Abbey — is standards. It is always difficult to measure artistic standards in finite numerical terms. We have ways of doing this in the Arts Council, but one rule of thumb for artistic standards is international recognition. We are all aware of Ireland's success globally in terms of literature. We await the outcome on Monday of yet another Booker Prize competition featuring an Irish writer, Sebastian Barry. Ireland's theatre has swept the boards with recent international successes by Druid and the Gate, and indeed the Abbey itself won the Fringe First Award at the Edinburgh Festival this year. Internationally, people say the arts in Ireland are of a very high standard. The value of this international success is proven by figures from the tourism sector, which is worth €5.1 billion to the Irish economy. Of the 400,000-odd products the Irish tourism industry has to offer, by far the largest category — 1084 — are directly related to arts events. Thus, people are coming to Ireland because of the high standard and public accessibility of the arts.
With these two core objectives in mind — public access and high standards — I want to set out the background to our grant aid for the Abbey Theatre during the period in question. The council's decision to offer funding to the Abbey Theatre for the three-year period 2006 to 2008 is relevant to this report. In 2004, members will remember that the Abbey Theatre was suffering a severe financial crisis. In response to this crisis there was a major debate in Government, in society and in the media about the need for a national theatre. I hope my colleagues from the Abbey will discuss that later. The consensus at all levels was that the people of Ireland wanted a national theatre, a strong institution of which we could be proud. Following this debate we, with the Department of Arts, Sport and Tourism, looked very carefully at whether an investment in a national theatre would meet our public sector objectives for arts funding, which, as I mentioned, are public access and high quality. After careful consideration at many levels it was agreed that if properly structured, managed and resourced a national theatre would be an important cultural resource for the country. The board of the Arts Council, with the express backing of the Department of Arts, Sport and Tourism, and in exchange for significant financial support, insisted that the Abbey carry out an organisational review, which recommended the steps required to place the theatre on a secure footing for the future.
On the basis of additional funds provided by the Department from Government, the council provided the Abbey with exceptional funding at the end of 2004, amounting to €2 million, in order to secure the survival of the company at that point. A further €4 million was offered at the end of 2005 to wind up the old National Theatre Society Limited, as was mentioned in the introductory report. The council's offer of December 2004, together with the offer of revenue funding in 2005, was explicitly conditional on the implementation of the recommendations of an organisational review and a comprehensive change process. The board of the Abbey agreed to these conditions and during 2005 full implementation of the recommendations followed. Additionally, in 2005 the Department of Arts, Sport and Tourism commissioned KPMG to undertake a detailed audit of the Abbey's financial control systems and to make specific recommendations in this regard.
The impact of these changes has been highly visible and, over the course of the period 2006 to 2008, the theatre has clearly benefited from the use of responsive and timely systems of financial control. In October 2005, the organisation submitted a three-year business plan to the Arts Council. Following long and detailed consideration the council decided to offer three-year funding to the value of €25.7 million in revenue. This was broken down as follows: 2006, year 1, €7.2 million; 2007, year 2, €8.5 million; 2008, year 3, €10 million. Our view, backed by the Department of Arts, Sport and Tourism, was that having started this journey to reform the organisation it was a priority to stabilise it by supporting this initial three-year plan to the best of its ability. The funding was also an opportunity to radically change, reform, improve and modernise the Abbey, which was a very out-of-date organisation, and real momentum was built up around this change. For the first time in many years we felt there was an opportunity to sort things out in Abbey Street. Second, there was a strong conviction among everybody that the vital and vibrant role the Abbey could play should be an important aspect of the life of the nation.
When we were finalising this three-year plan, we were unable to respond to the request for capital funding. Despite the fact that the Abbey asked us for €2.29 million in capital funding for the three years 2006, 2007 and 2008 to go alongside the revenue current funding, we were not in a position to do this initially. After a mid-term budget review in the middle of 2006, we were able to find, from savings, €484,000 from our own expenditure to be used to upgrade the front-of-house areas and external signage. This, we felt, was crucial. I do not know whether anyone remembers this, but at the time there was a vox pop on the “Six-One” news, in which the newscaster was outside the Abbey Theatre with a microphone asking people if they knew where the Abbey was. Nobody knew where it was, and they were standing in Abbey Street. We felt that if public access is an important goal for the Arts Council, this work — to make sure the foyer was people-friendly, so that people did not feel intimated when going in, and to make sure they knew where it was — was vital. That is why we found this funding from our internal budgets.
Subsequently, on being notified of a Supplementary Estimate from the Department, we found we were in a position to offer €600,000 to be used for essential maintenance and upgrading of equipment to ensure compliance with health and safety regulations. We were very concerned about health and safety not only in the public areas but also for the people rigging, those using the lights, the actors and so on, who were at risk. We were very concerned, for example, about the possibility of a lamp falling on somebody during a show. We thus decided to prioritise the €600,000 grant for essential maintenance and health and safety once we had the extra funds.
While most of this funding was drawn down on the basis of invoices received, the Abbey Theatre told us in December of 2006 that it would not be able to get everything finished before the end of the year. The reason was that while contracts were agreed and the work was ongoing, it would not be completed before the end of the year. Members may remember that it was the very height of the building boom and it was impossible to get builders to do anything, and when one did get them it was hard to get them to focus on the job in hand. They could not complete it before the end of the year. We were fully confident that the Abbey would use the money for the purposes outlined, and this was borne out subsequently when the theatre drew down the money from us in February 2007 for the completion of improvements to the interior of the theatre.
Given the advanced state of the works, and recognising that the Abbey had entered a new era of financial management, we required the Abbey to establish an escrow account in which the Arts Council subsequently placed €286,000, the outstanding value of the work of the project. The reason we did this was that the works were very nearly complete; of €1.084 million, only €286,000 remained to be drawn down. However, we did not have the formal evidence of certification and invoicing. Thus, we felt that the most prudent thing to do was to put the money in the escrow account and release it only when the invoices were certified. The subsequent decision by the Comptroller and Auditor General to accrue the €286,000 supports our assessment that the expenditure related to 2006 and that drawdown conditions were the real issue. We are very satisfied that the money was used exclusively for the purposes agreed and that payments were not made on any invoices without certification.
We understood that the Abbey Theatre was going through a procurement process. It is our policy that all bodies should follow public procurement guidelines and we now set this down explicitly. Where we make capital grants we have new grant conditions and these can be shown to the members. I can give an undertaking that every capital grant offered by the Arts Council in the future will have these strict public procurement conditions outlined, specifically and explicitly. We take on board the comments made in the report and if this end of year issue happens again we will accrue the amount rather than use a net escrow account.
On the liaison between the Department of Arts, Sport and Tourism and the Arts Council, we had a very close informal liaison during that period but have now established a new liaison group consisting of officials from the Department and the Arts Council. It meets six times a year and the Abbey Theatre is a recurring item on its agenda. We can ensure there is a good flow of information regarding the management of that organisation's funds. I am satisfied these procedures will be followed in the future. It is hoped that, with investment from Government, oversight by the Arts Council and supportive communication with the Department of Arts, Sport and Tourism, the Abbey Theatre's future will be rosy. It is a welcome situation to be in, from the perspective of the Arts Council. Looking back at where we have come from, we are happy to be here and we can be confident that situations such as end of year accounting or public procurement will not arise again.
