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Arts Council England hedges its accounts

Our attention has been dawn to a pair of questionable statements in Arts Council England’s Annual Review.

Here’s the first:

The Arts Council owns the freeholds of the National Film Theatre, the Museum of the Moving Image, the Hayward Gallery, the Queen Elizabeth Hall, the Purcell Room and the Royal Festival Hall, which are leased to the Southbank Centre. Since the lease is long term and we derive no income from the freeholding, the value of the asset is immaterial and has therefore not been included in these accounts.

This is one of the most valuable strips of land in the UK, perhaps in the world, and the ACE declares its value to be immaterial…. There is a public debate going on about the future of the South Bank and a sell-off cannot be ruled out. If the site were to be put up for sale, the Government might have to remove it first from ACE ownership in order to deliver greatest benefit to the arts up and down the land.

southbank

 

Here’s the other:

At 31 March 2013 there were a small number of potential employment tribunal cases which may give rise to a contingent liability. At the balance sheet date these cases were at a stage where the outcome was uncertain but none of the cases have the potential for large awards. As the outcomes were not known, the potential liability could not be measured reliably and was deemed not material enough to include as a provision.

The ACE has been snuffling off senior executives, some with handsome pay-offs. Others appear to be disgruntled. We shall be interested to learn what the employment ribunals make of these cases. What is clear, however, is that the ACE may have managed to spend more in slimming down than it actually saved. The organisation remains shambolic.

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Comments

  1. Interesting that they claim the freehold on the Museum of the Moving Image, which closed – temporarily – in 1999. Of course, the space, part of BFI South Bank, still exists but is now a repository for staff transferred from Stephen Street. Perhaps the BFI’s long-held hopes of selling that building (which they own) have evaporated in the face of the economic situation and the fact that they suddenly had to accommodate former Film Council staff decanted from their easier-to-leave rented offices.

    Does that mean that MoMI is still a legal entity (possible, if the closure really was envisaged as ‘temporary’), or is there some problem with the Arts Council knowing what they actually own?

    Nevertheless, I believe that the BFI pays only a peppercorn rent, so the Arts Council’s income is, as they claim, nominal. The value of the land is something else. But were ‘commercial rents’ to be introduced, the BFI might well argue that, to stop it moving out, the freeholder should pay for improvements to a building that has long presented multiple problems and was itself a ‘temporary’ home – starting in 1957. The situation might then descend into a Leone-esque Mexican stand-off.

  2. I don’t mean to be rude, but I don’t think one R4 programme and your report in this blog amounts to a “public debate going on about the future of the South Bank”.

    Is there something else?

  3. Kenneth Griffin says:

    The value of the freefold is immaterial for the reasons given by ACE. I expect that the leaseholders record their long leases, which entail taking substantially all the risks and rewards of ownership of the land, as tangible fixed assets in their balance sheets at an estimate of the open market value of the land for its existing use.

    • Sebastian / LondonJazz says:

      SBC March 2012 Accounts Note 7:

      “The leasehold interest in Southbank Centre vested in Southbank Centre Limited having approximately 131 years unexpired at an annual ground rent of a peppercorn was valued on a Depreciated Replacement Cost (DRC) basis as at 31 March 2008 using figures provided by Davis Langdon LLP.

      The DRC valuation of £273 2m compared to a net book value immediately prior to the valuation of £105.5m, and the surplus of £167.7m on revaluation was credited to the capital reserve.”

  4. G Feldt says:

    IMO, the whole area is a mess, consisting of a collection of ill matched buildings and facilities which very few people have any affection for, although I don’t dislike the interior of the RFH visually.

    Every part of it seems to be subject to some sort of preservation order which has nothing to do with original function. I wish someone would have the courage to say “Look, we’ve got wrong. We’ve thrown good money after bad. Lets start again and give London buildings that actually work, instead of the Maginot Line”.

    Can’t see much happening – we’ll end up with more string and sellotape modifications, but good luck to the lobbyists and backstage activists all the same.

    • G Feldt says:

      And, while I’m still thinking about it, another pie-in-the-sky addition: come to some agreement with the ENO to provide a theatre on the South Bank that they can actually afford to run. Smaller and more flexible. Sell the Coliseum.

      There, done.

  5. Talking about London’s concert halls in general makes me wonder that if the speculation that Simon Rattle will come to the LSO comes about will he not argue for a new concert hall as he did in Birmingham.

    Despite improvements over the years, the Barbican is not ideal…

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