We're worth four times what you pay for us, arts leaders tell Government

Dossier follows Maria Miller's demand to see 'value of culture'

Arts public funding has helped to create global success stories such as the National Theatre's production of War Horse

The British arts community has hit back at government demands to focus on economics and profitability by producing a report showing it offers the country blockbuster profits on the back of arthouse funding.

Just weeks after the Culture Secretary Maria Miller challenged the arts to "hammer home the value of culture to our economy", the Arts Council has published a 113-page dossier showing it receives less than 0.1 per cent of government spending but produces more than four times that for the country's gross domestic product.

The sector also generates more per pound invested "than the health, wholesale and retail, and professional and business services sectors", according to the Centre for Economics and Business Research (CEBR) which compiled the study for the Arts Council. At least £856m of spending by tourists visiting the UK can also be attributed directly to arts and culture. If the outputs of music, film and theatre can be judged not by quality of entertainment but by the ability to make for convincing black-and-white documentation, they have received the dry, statistical equivalent of five-star reviews.

Sir Peter Bazalgette, the new chair of the council, believes the figures could provide Ms Miller with crucial ammunition to convince her cabinet colleagues to protect funding for the arts at next month's spending review.

The report claims to provide the "first comprehensive analysis" of the value of arts and culture to Britain.

It ranges from the arts' contribution to the economy, the effect on tourism and the job market to the "vitally important" role that public funding plays in creating global hits such as the stage production of War Horse, pictured above, and the support for the next superstar film directors such as Danny Boyle.

Ms Miller had called on the arts to "demonstrate the healthy dividends that our investment continues to pay", and Sir Peter believes the report proves concrete evidence of the returns from public funding.

He said: "There are some people who are convinced by the intrinsic value of the arts, but unconvinced by the economic benefits. This report is an important part of pointing those out. Our hope is we can get the best possible settlement for the arts in the summer."

Arts and culture make an "impressive" contribution to the UK economy, the body said, making up 0.4 per cent of gross domestic product despite less than 0.1 per cent of government spending. The CEBR report found that turnover from the arts and culture was £12.4bn in 2011, slightly down on its peak three years earlier, and makes up 0.45 per cent of total UK employment, equivalent to about 110,600 full time positions. The sector also paid £1.7bn in tax in 2010-11.

The Culture Secretary also demanded that arts executives should look to generate funds from different sources. Sir Peter said the report also showed this was being achieved. "There is a breed of cultural entrepreneur out there who are highly imaginative and very able and they are developing a range of revenue streams and that's laudable." Adding that many have slashed their costs, he said: "The business of the arts is getting better, and the people running it are getting cleverer and more resourceful."

Arts Council funding for the 695 organisations it has chosen to support now averages at about 33 per cent of their overall turnover – 10 years ago the figure would have been more than 50 per cent, Sir Peter said, showing the sector should be congratulated for succeeding in finding private sources of money.

Yet government funding still plays a "vital role" in encouraging innovation, the CEBR report said. "Public funding creates a seed-bed for innovation… and can, in some cases, go on to great commercial success."

Sir Peter continued: "It is the bedrock, the money that enables the other things to be done. People give money to successful, well-run, supported organisations."

The organisation highlighted the success of War Horse, a play developed by the National Theatre using wooden puppets that has gone onto worldwide success, seen by more than two million people in versions touring around the world.

Others that started life as risky projects in publicly funded institutions include The Curious Incident of the Dog in the Night-Time, which last month picked up seven Olivier Awards, and Matilda the Musical, which won the same number a year earlier.

The Arts Council now plans to study the link between publicly funded arts and how the talent feeds into the commercial sector to further underline its cause. Sir Peter pointed to the Olympic opening ceremony, masterminded by Stephen Daldry, director of Billy Elliot and Danny Boyle, director of Slumdog Millionaire. Both directors, whose films have achieved huge commercial and critical success, have hailed their backgrounds in publicly funded regional theatre.

"Everybody agrees you don't put money into the arts primarily for economic benefit. What it does for our quality of life and how it fires our imaginations, the fantastic contribution to education and our sense of identity is clear," Sir Peter said.

Yet he continued: "Maria Miller wanted to say when you put money into the arts there is also an economic benefit and that needs to be pointed out. This report is part of that."

A spokesman for the Department for Culture, Media and Sport said: "Evidence which helps us understand better the value of the cultural sector is very welcome. DCMS will consider the evidence and findings further."

By numbers

0.1 per cent Arts and culture sector funding makes up less than 0.1 per cent of total Government spending despite its lucrative return rate

855m The amount in pounds generated in spending by tourists visiting the UK that is attributed directly to arts and culture

2m The number of people worldwide who have seen 'War Horse', a play originally developed by the National Theatre