Committee of Public Accounts

Press Notice No. 33 of Session 2003-04, dated 20 July 2004


Mr Edward Leigh MP, Chairman of the Committee of Public Accounts, today said that income raised from fundraising, trading and admissions had been variable in recent years, and museums and galleries needed to be much more business-like to tap into the potential for further growth.

Mr Leigh was speaking as the Committee published its 33rd Report of this Session, which examined the scope for the museums and galleries sponsored by the Department for Culture, Media and Sport to generate more income, creating the right conditions for income generation, and balancing financial and wider objectives. The 17 non-departmental public body museums and galleries sponsored by the Department together received grant-in-aid of £270 million in 2002-03, and generated additional income of £108 million from fundraising, trading activities and admission charges. Besides its contribution to operational costs, the museums and galleries use their self-generated income to invest in developing their collections, facilities and services and to promote access through touring exhibitions, education and outreach work. From their own experience as constituency MPs Committee members record with pleasure the changes museums and galleries are making which, for some, have transformed how a growing proportion of the public perceive them.

The Committee found that the museums and galleries have achieved a creditable performance in generating their own income but there is unrealised potential. There is scope for growth across a wide range of activities including catering, shops, mail order and e-commerce. Fundraising and venue hire continue to be promising areas for income growth which usually give a high return. And there are opportunities to learn from new and innovative ways money is being made at some of the museums and galleries, and in the wider museums sector.

The museums should set five year targets for income growth, with milestones, against which they and the Department can monitor progress. Targets should be supported by plans based on a systematic review of their assets and opportunities, an appreciation of which areas are most profitable and an assessment of the risks.

The museums and galleries need a better understanding of the costs they incur in generating income. Many of the museums and galleries do not know with any accuracy what profit they make on some of their income generating activities and some have lost money. For each of their money-making activities, including those not undertaken solely for commercial reasons, they need clear objectives and financial targets, and accounting systems to measure financial performance.

The Department should explore with Partnerships UK how to make investment funding for income generation schemes more accessible to museums and galleries. Museums and galleries are heavily reliant on finding private sector partners for new business ventures, which can be difficult and time-consuming.

The museums and galleries need to be more entrepreneurial. To help identify new ideas for income generation and advise on how best to deliver them, the Department should see what can be done to draw on the knowledge and skills of experienced entrepreneurs. The Department should appoint more entrepreneurs as trustees and encourage Boards to appoint entrepreneurial Directors.

The museums and galleries need to develop their skills for income generation across most of the core areas, such as retailing and fundraising. The Department should promote greater sharing of knowledge and skills by: exploring the pooling of staff resources; establishing an exchange programme; and putting on events and training, for example in collaboration with the Museums Trading Association.

Charging policies for special exhibitions should not exclude people on low incomes from seeing the best of what the museums and galleries offer. Income from paying exhibitions has doubled since the introduction of free admission to the main museum or gallery in 2001 but the Department cannot say what impact these charges are having on attendance by people from lower income groups. Museums and galleries should collect data on the socioeconomic status of visitors to paying exhibitions. If people on low incomes tend not to visit special exhibitions, the Department, with the museums and galleries, should review pricing policies.

Mr Leigh said today:

"Income raised by the museums and galleries from fundraising, trading and admissions enables them to invest in their collections and provide better access, facilities and education to the public. Earnings have been variable in recent years, and museums and galleries need to be much more business-like to tap into the potential for further growth.

Unbelievably, some museums and galleries have made losses on activities that were supposed to generate income, and have an inadequate grasp on the costs involved. All museums and galleries must be more robust in their planning. They should establish five-year targets for income growth and set out how these will be achieved; in doing so they must properly identify which activities are profitable and the risks to be managed.

 The Department for Culture, Media and Sport also needs to do more, including promoting the sharing of skills, and helping museums and galleries access investment funds for new income generating ventures."

Click here to view Report