Save The Arts: Enter cash, stage left?

The creative industries: London's theatres need a Budget boost, says David Brierley

THE GREAT and the good of the British stage are pressing Gordon Brown for tax breaks for corporate and private donations in Tuesday's Budget. Sir Peter Hall, Stephen Daldry, Sir Richard Eyre and Sir Trevor Nunn believe that easing tax-free donations will significantly reduce the theatre's chronic financial difficulties.

"We have to make it easier for people to give money," said Mr Daldry at the Royal Court in London. "Everybody is chasing after the same pot of gold and it is not large enough. We have to increase the size of the pot. We want to enable people to support theatre projects that they love."

There are currently various schemes offering tax relief to donors such as Gift Aid or charity credit cards but they are exceedingly complex and have failed to increase the level of personal donations in recent times.

The theatre campaigners for tax change would like a new, simple system which would allow individuals and corporations to have tax relief on donations and sponsorship payments.

David Oliver, tax partner of Arthur Andersen and author of a report that has been passed to Gordon Brown, explains: "The laws are a hotchpotch. An entirely new approach is needed which would make all bona fide contributions tax deductible. Eliminating uncertainty would provide a massive boost to the arts."

With business contributing pounds 95m to the arts and pounds 16m to drama last year, reforming the law could easily contribute tens of millions of pounds. However, as Sarah Tanner, of the Institute for Fiscal Studies, points out, there is a danger that the Government might claw back the money lost by grant reductions. She says: "Any money the Government does not get is a cost. It may regard tax relief as an alternative source of funding."

That is the last thing that Mr Daldry wishes. He says: "The most important thing is that private giving does not replace public subsidy."

Next month, Professor Tony Travers, of the LSE, will publish a major report underlining the importance of London theatres' contribution to the economy. It will show that government subsidy, vital to the survival of London's theatres, is massively outweighed by the income they generate.

Professor Travers estimates that London theatres directly produce revenues of pounds 500m, including spending on meals and transport as well as box office takings. He says: "That would make the theatre a significant industry and a very big export earner."

London is clearly the world's largest and most successful theatre centre. Last year, the 50 West End theatres sold 11.6 million tickets. Broadway admissions reached 10.6 million during the last season. But the West End figures do not include venues such as the Almeida or the Bush, or local theatres such as the Orange Tree in Richmond. London has 300 theatre companies and a total of 350 venues, ranging from the large West End houses to pubs such as the Bush and a Soho patisserie called Maison Bertaux. Total theatre attendances in London approach 12 million and London theatres attract nearly 40,000 visitors per night.

Professor Travers says: "London is a much more efficient theatre centre than Broadway, the only one that is in any way comparable. Its costs are significantly lower."

Ticket prices on Broadway are much higher, reflecting its higher costs and stronger unions. Paris theatre has much higher state subsidies but suffers from frequent labour disputes.

Professor Travers emphasises that London theatre contributes massively to other related industries through training and employment. Actors work not only on the stage, but also in film, advertising and television. Technicians and musicians similarly combine different careers.

Government statistics notoriously fail to reflect the economic importance of the arts in general and the theatre in particular. One recent report said: "It is easier to get figures about slaughterhouses than opera houses."

No official body has the responsibility for collecting data about creative industries such as the theatre. This means the economic significance of London theatre for tourism is often ignored. Yet it is considerable. Up to 40 per cent of all theatre seats sold in London are bought by foreign visitors. One-third of all visitors - foreign and British - come to London just to attend the theatres. The 13.8 million foreign visitors to London spend pounds 6.7bn in the capital. On the reasonable assumption that 15 per cent of overseas visitors come solely to see a show, London theatre contributes pounds 1bn to Britain's invisible exports. That equates to 2 per cent of national exports of services, a figure that rises significantly when related industries such as film, television and advertising are included.

The success of the theatre is not ignored by the wider business community, although theatre has been traditionally less popular with sponsors than opera or music. "Bringing clients to the Royal Court is not the same as taking them to the opera," admits Stephen Daldry.

Spurred on by large capital projects such as the rebuilding of the Royal Court, London's theatres attracted significant corporate donations in the last year. They rose from pounds 5.5m to pounds 12.3m, with capital projects such as the Royal Court's new look receiving the bulk of the money.

Despite this generosity, the day-to-day finances of publicly funded theatre is precarious; deficits of the national companies are rising, the Greenwich Theatre has been closed, the Cheek by Jowl company disbanded. The Royal Shakespeare Company lost pounds 1.6m last year and is reportedly heading for a much larger loss this year. This was one reason for the sacking of four senior RSC managers last week.

Because of the long-term decline in state subsidies and higher spending on buildings and marketing, there has been a squeeze on funds available for productions. Anna Stapleton, drama director at the Arts Council, observes: "The theatres are forced to do less work. The diversity of repertoire is reduced for audiences."

Those theatres that have attracted lottery money for refurbished buildings have to obtain more corporate donations. The Royal Court is seeking pounds 6m to complement the pounds 16m provided by the National Lottery to reconstruct its Sloane Square theatre. It has obtained pounds 2.5m for the building to date, which means it is on budget. However, it also needs to find pounds 500,000 from sponsorship to fund current productions.

Stephen Daldry admits: "Our business is on a knife-edge. Our demands on sponsorship are in excess of what it is currently possible to get. We have to make it easier for people to give us money."