Cynulliad Cenedlaethol Cymru

I nominate Alun Davies.

Diolch, Gadeirydd. I'm Owen Hathway. I'm the assistant director at Sport Wales, covering insights, policy, public affairs and our community investment streams. 

Good morning. My name is Jennifer. I'm the head of policy and strategic partnerships at Community Leisure UK, and the lead for Wales. 

Good morning, everybody. Bore da. My name's Andrew Howard. I'm the new chief executive officer of the Welsh Sports Association. We've got 141 members across the sport and leisure sector. 

I think probably I'd better defer to other colleagues on the call to talk about maybe the specifics in terms of actual facility providers and organisations, perhaps. But, just on the broad ability to participate issue, I think we've already seen the issues around the deprivation gap. The committee has done a recent inquiry and made some really strong recommendations around that. So, without wanting to revisit all that evidence, we already know that if you live in an area of deprivation then you're far less likely to participate in sport regularly. And we also know the intersectionality of those issues when it comes to gender, race, disability, for example.

So, those already exist in the 'best' of circumstances, and what we've seen over recent weeks and months are issues around cost of living, around energy prices; more recently, inflation, mortgage concerns, et cetera. It's going to have a compounding effect. We're going to see significantly more people placed into material deprivation. That's going to significantly impact on their ability not just to participate but, crucially, to volunteer in sport. We know from the national survey of Wales that around 5 per cent of people who are living in material deprivation volunteer, as opposed to 10 per cent who are not. Therefore, if more and more individuals are placed into material deprivation, we are going to have issue in terms of the volunteer network, which has already had a staggered return post COVID anyway. So, that's going to be a huge concern.

I will say I think there is an issue in terms of the cost of the actual sporting offers, and that may increase if providers feel it necessary to pass on some of that concern to the consumer. The broader issues here, of course, are the macro-level economic issues. It's not so much the cost of the sporting offer itself, although that's a consideration for everyone in the sector, but it's the cost of the fuel for the individual or the guardian of the children to actually go to and from those offers; it's the energy costs of washing that kit. We've heard some stark feedback from partners around guardians of children who are taking decisions not to take sporting offers up because they're concerned that that increased use of energy from the child means that they are hungrier, and there's a cost in terms of actually providing the food that goes with that, and that's before we've seen these issues in terms of the cost of food increases.

I think, in our evidence, we did state that around two in five people have already said that it's negatively impacted their ability to be active, because of the cost-of-living crisis; around 30 per cent are saying they're less active. That was from our Wales activity tracker, which took place before the last energy increase. So, even mitigating the work that the UK Government have done on energy caps, that data was before the latest increase and before those issues around mortgages and inflation. So, I think we would be naive to think that this isn't going to be a stark issue in terms of being a barrier for deprivation, but also that this could potentially be a sustained one over the long term as well.

Thank you for that, Owen. As soon as you start to pick under any of the headline really awful impacts that this is going to have—the point that you were making about, of course, when children are expending more energy, then they're going to be hungrier—they're just things that wouldn't immediately occur to people, but it's obviously compounding it even further. Thank you so much for that. Jennifer, you had your hand up.

Thank you. Just to add to what Owen said. Everything he says is true. Unfortunately, it is true. From our perspective, just for context, our members are leisure and culture trusts in Wales, so all charities and social enterprises working in collaboration with local authorities. They manage around 115 community assets across Wales, and collectively they welcome 16.6 million visitors. In preparation for this session, we asked them what impact they've already seen on participation, and they're actually reporting this month—sorry, it's October now, so last month, September—that people are unwilling or unable to commit to direct debit memberships from a leisure perspective, from a gym perspective, and, instead, they're taking out monthly or pay-as-you-go options. People are also missing payment dates as well on the leisure memberships that they have already, and also there's an increase in the number of people that are applying for concessionary rates due to their changes in employment status or their access to benefits as well. This is on top of what Owen mentioned already, the participation and attendance rate being around 80 per cent of where it was pre COVID, because we have to remember that that's obviously still effective as well—that hasn't gone up. The cost-of-living pressures for people and the pressures on their disposable income are very real and are being felt across the sector in terms of participation rates, but consequently also for the income of organisations or local authorities who are managing these services as well. That, of course, will make it harder to provide more activities and programmes that are cross-subsidised, such as health and well-being programmes and outreach programmes as well. That is, of course, then compounding all the other pressures. I'll leave it at that for this question.

Thank you, Jennifer. We're going to be going into more depth in a lot of how this is going to impact in particular ways. Thank you. That's really helpful as well. Andrew.

Similar themes to both Jennifer and Owen: our members have reported spiralling costs in energy, chemicals, food and beverage, and that's set across a landscape where post-COVID activity and customer numbers seem to be around 10 to 15 per cent lower than they were before the pandemic. Obviously, with disposable income reduced, we know that sport and leisure is one of the things that will go, and that will just intensify the issue for our members and particularly the leisure providers.

The outlier, really, is swimming. Our members are reporting—certainly the leisure trusts—that there is a real demand for swimming that is actually more than it was pre pandemic, which is most welcome. But there's also an issue with, obviously, the energy costs and the crisis that could hit the leisure centres and the swimming pools. Specifically, one of our members, who is responsible for their energy costs, because they're outside of the local authority, has seen their energy costs increase from 2p a unit to 11p a unit. When I asked the question how long can they go on, he doubted whether there'd be swimming pools in his area in the next 12 months. So, we've got latent demand for swimming and this huge issue with swimming, which really is more than just a sport, obviously; it's a life skill, and it's something that children need to be safe. 

Another example that we've had from the Lawn Tennis Association is that their energy costs have increased by 17 per cent. The majority of tennis, as we approach the autumn and winter seasons, is indoors, and lighting and energy obviously means that those centres are going to be compromised because of the energy costs increase. We're already seeing operators' contingencies with reduced opening hours—which then reduces the availability for people to use those facilities—reduced staffing levels, increased prices already, which then obviously hits people who can't afford to go to the leisure centres anyway. Also, a contingency that we're seeing with pool operators is reducing the temperature of the pools to save on energy, and of course, that's not a welcoming environment for children or the elderly, which will impact on their participation as well. 

Thank you, Andrew. I think Hefin wanted to come in on something you were saying there. 

Something you said brought to mind the fact that, in my community, groups use swimming pools for children with additional learning needs, and they find it hard enough now to book sessions for those groups. Do you think that that will have a disproportionate impact on, particularly, children with additional learning needs?

Yes, absolutely. I think what we're seeing across some of our members is the reduced opening hours. So, if there's reduced opening hours, then something's got to give. It's obviously up to the operators how they manage that, but it could be a threat. 

Thank you for that, Andrew. 

Thank you. It ties in quite nicely with what Andrew just said. I know we spoke about the effect of swimming pools reducing the temperature perhaps to get around cost-of-living pressures. I just wondered whether there were any other particular sports, or particular clubs, organisations, venues that are particularly adversely impacted.

Andrew, do you want to pick that up first?

Yes, absolutely. I think it's generally across the board, actually. There was a good example yesterday, again in Hefin's area, with Caerphilly rugby club, where they showed a really well drafted infographic, explaining what their monthly outgoings are in 2022 versus in 2021. The energy costs have gone up 400 per cent, and their monthly bills have gone up; they've doubled, which is just going to be unsustainable for what is the top rugby club in that area. That's just one example of a rugby club, but it's common across all sports that own their own facilities. These clubs are obviously affiliated to national governing bodies, so this threat is real, and this threat is real for the whole of the sporting sector. 

Diolch, Andrew. Owen. 

Thanks, Cadeirydd. Certainly, in terms of participation, I think it's a real issue for all sports. When it comes to the specific impact on individual sports, obviously there are different operating models. The likes of rugby, football, golf, cricket, for example, sustain some of their offers through the clubhouse business, their bar takings, functions et cetera. And, obviously, if consumer spend is going to be down, then that's going to have an impact on the sustainable financial positions of those sports. I think Andrew did highlight that example in Caerphilly, which is a really good way of demonstrating the financial costs and increases on an individual club basis. There's also sports like gymnastics that will have perhaps more of a commercial model in their delivery, so that will have a different impact and at different speeds to some of the other more informal sports.

The flip side of that, of course, is the way in which we saw through the pandemic sports reinvent themselves in their delivery. It is relatively cost-neutral for someone to go out walking or running, for example, although there are issues there, of course, in terms of barriers of safety and disability in different areas, but we may see the more informal development of sports. So, it might be that whilst we see the challenges around the financial costs for the delivery of those sports, there are opportunities as well to grow participation in a more informal setting, but that doesn't then, obviously, help and benefit those current providers in terms of how their offers are able to manage through this crisis and be able to take advantage of some of that informal development of sport over time.

Diolch, Owen. Jennifer.

Yes. I just wanted to add to what Owen and Andrew were saying already, and specifically what Owen just said around the informal settings in which sport and physical activity take place. From our members' point of view, it is of course the facility, but in addition to that, as I mentioned earlier, they do a lot of outreach programmes as well, taking place in communities or in care home settings as well, and that activity will be reduced because there is less capacity due to lower numbers of staff, but also due to income levels being reduced and therefore there is not enough funding to actually cross-subsidise those programmes. So, there isn't one particular sport, but there is physical activity generally being provided in community settings, whether that's in neighbourhoods or in care homes, as I mentioned. And also, in addition to that, it is social activities and programming that isn't necessarily, again, one sport in particular, but it is an opportunity for people to be active in a more informal setting, in a fun way to be active, and also an opportunity to socialise and connect with people in your community. Those activities are affected as well.

And if you're all right, Chair, for me to come in with a follow-up. You talked—. I think, Jennifer and Owen, you talked about the rise or potential rise of the informal setting of sport. Do you think that's something the Government should be encouraging, during the cost-of-living crisis, for all the benefits that you've mentioned? Or is that something, perhaps, to be avoided, because it is inherently informal and perhaps people aren't developing a skill, perhaps, in the same way they would in a professional setting.

Thanks, Tom. Yes, I wouldn't say it is something that would need to be avoided. The reason I mention it now is because it's at risk, at the moment, of not happening any more, so I think in itself those programmes are truly really important to increase participation levels and physical activity for well-being in a health perspective, and therefore they should be invested in, and they are currently at risk. So, yes, it's definitely something that should get attention, in addition to, of course, the individual sports as well.

Thank you. Owen.

Yes. I definitely don't think it should be avoided; it should be encouraged. How people want to be active is entirely up to them. What I'd like to see, obviously, is that that development of informal activity through enjoyment and social networks is something that organically rises, not because someone has to do it because it's the only option to them financially. We did see, through the pandemic, that type of informal activity develop through necessity, because some facilities were closed due to lockdowns, et cetera. But we've also seen social running groups, for example, spring up because people don't want to be part of a formal sporting club; they want to be part of an informal network of friends doing sport in a non-competitive environment. What we do want to make sure is that as they gain confidence through those networks, if they then want to transition into a formal club setting, or if they want to take that social group—be it running or any other sport—and actually take advantage of the facilities, that the facilities are still there long term for them to be able to parlay that into. But certainly, it's to be encouraged. We want people to be active and doing sport in any way that they find enjoyable, at the end of the day.

Thank you.

Diolch, Tom. Before we move on to Carolyn, can I ask, on the back of one of the things that you were saying, Owen, about how there are safety implications for the fact that—? Okay, there are some types of physical activity, like running, that will mean that you're not going to have to have like a gym membership or something, but maybe if someone used to—. I'm thinking of women; this this will affect so many different people in so many different ways, but for one example, a woman who used to go running on a treadmill after work, we're going into the winter months, she can't afford that gym membership any more, so she's going to go running outside instead. It's going to be dark much earlier, so by the time she's finished work it's going to be dark. Are there any specific things that you think can be done, or should be done, to help people who are going to be facing that kind of situation, because obviously they'll still want to keep active, but there are going to be safety implications, as you set out?

Yes, and without trying to create any particular alarm around that particular issue, that is exactly the issue that I was personally thinking of when I mentioned those safety issues. We did see that through the pandemic, some concerns around female participants in darkened areas running at night. What we don't want is for there to be a barrier to those participants being able to do that. There were campaigns during the pandemic around awareness and support, and I know Welsh Athletics did a lot of work to try to raise awareness and try to create those social networks that allowed that to be facilitated in a safe environment. And it's not specifically a running issue, of course, or particularly a female issue, but certainly what we want to do is make sure that, where and when people participate, they are in a safe and welcoming environment to do that. That's, again, why facilities, formally, are so important, but we also want to make our communities a safe environment to do that in. Even if the cost of living wasn't an issue, people want to participate in that particular way. So, there's work we can do in terms of a connected sector around that and working with different organisations outside the sporting sector, both around safety and awareness, but certainly it's something we will want to look at longer term, if this is the transition of sport, but also just to allow that to happen irrespective of cost-of-living issues.

Thanks, Owen. Okay. I don't see anyone else's hand up at the moment. 

Thank you. To what extent has the UK Government's energy support mitigated the worst impacts? Has it made a difference?

Jennifer.

Thank you, Carolyn. Yes, so this is something that we’re still unpicking, this question, but we have consulted our membership—across the UK, I must add—on this since the announcement of the energy bill relief scheme, as I believe it is called. Unfortunately, it is not enough. That’s really the summary of it, but I’ll unpick it a little bit more for you.

There are three areas that we’ve identified that are really causing the challenge. The first is that—and excuse me, I’m looking at my notes, because it’s so new still, on this. The first area is that the cap that has been announced only covers wholesale prices. And what I’ve learned in the past few weeks is that utility costs for operators are made up out of commodity and non-commodity prices, and therefore only part of their increased cost is covered through the energy bill relief scheme, and therefore it isn’t actually providing as much support as we had hoped when initial announcements were made about business support. That’s the first area.

Secondly, when we then do look at the cap that is there, unfortunately, that cap is still much higher than energy costs in the previous year. I don’t have time here today to give you all the specific examples, but the costs in the past few years have been much lower when we look at the unit price specifically. So, one example that we have from a member is, for example, that they currently pay 15.5p for electricity and 2.2p for gas. So, that is still significantly lower than the cap that has been announced by the UK Government through this relief scheme.

And then the third area is, and this may not come as a surprise to you, the time frame. The time frame is not reflecting the immediate current pressures in the public leisure and culture sector. One, because there will be organisations that fixed new contracts just before 1 April, for example in December last year or 1 January this year. I know colleagues in Wales have had that situation, where they had to renew contracts. They’re currently left out. We also have members with contracts coming up in April 2023, so they will be left out as well. But, that time frame itself is of course a challenge, but it’s also that it’s just not enough in terms of support now in the next six months. So, it’s not enough to cover the impact over the next 12 to 18 months, and it’s also not enough for the next six months. So, sorry to not have a more positive response on this for you.

I know Andrew had his hand up, but just quickly, Jennifer, you never have to apologise for checking notes. This isn't meant to be testing what you know off by heart, so, please never apologise for that at all. Andrew.

Thank you. Sorry to reiterate some of the points that Jennifer's already made, but it's important that we make these as well. Certainly, whereas we do welcome the support, because it is support, there are some clear issues associated with it as well.

Firstly, it doesn't tackle the already baked-in increased costs that we've seen for our members—[Inaudible.]—beforehand, so the example that we've given you of Caerphilly: an almost 100 per cent increase in energy costs. That's what they're already paying. So, that's the first issue, really, for the members.

It doesn't help those that are on fixed-price tariffs as well. They're coming to the end of their tenure and then they need to go back off to market and renegotiate something more. They're going to be hit with huge, significant increases also.

And the third point, really, for us is that six months doesn't get us anywhere near where we need to be because there needs to be continued support beyond those six months. It's just kicking a can down the road and it's not anything that gives our members any long-term secure comfort at all.                                                                                 

Thanks, Andrew. Owen, did you have your hand up on that? No. Carolyn.

Okay. And do you expect venues to close because of this and which venues, in particular, are at risk? I know you mentioned before, swimming pools. I know they have high energy costs. The ice-skating rink at Deeside leisure centre was due to open, I believe, as well, so I think there'll be concerns as to whether or not they can open. What are your views on it, please?

Andrew.

Yes, thank you. I think any organisation that has got to power its business in order to open is under threat, isn't it, whether that's to heat the pool or to cool the ice or to light the centre—anything that requires that. Our organisations in the leisure sector are very energy reliant and the units that they use are significant, and the increase in the price per unit is even more significant. So, I would say that any centre is under threat because of this, unless they've got a really, really good deal and a long-term deal that they've benefited from. So, yes, I think it's a real issue and I also think it's unreasonable for Sport Wales to try and step in because the scale of the problem is huge and eclipses their annual budget as well. So, this is a huge issue for sport and leisure UK-wide, not just in Wales, and the UK Government need to tackle it first and foremost, particularly here in Wales if we want a healthier Wales.

Both of you at the same time. Okay, I'll go to Owen first and then I'll go to Jennifer. Owen.

Thank you, Cadeirydd. Sorry, Jennifer. Just to add, and I'm probably preaching to the converted in saying this—Andrew's absolutely right and Jennifer, I'm sure, is going to add more colour to that in terms of the current position—but we shouldn't lose sight of the fact that we're just coming out of the COVID-19 pandemic as well for providers.

So, I think the Welsh Government did some remarkable things in terms of the sport and leisure recovery package in supporting leisure trusts, local authorities and, through Sport Wales, we also provided funding for private providers, but we should not pretend that that was in any way, shape or form mitigating the actual financial impact that we've seen through COVID-19. But certainly there was a level of support there that we wouldn't have otherwise seen. But it's just to recognise that, for the sector, coming through that was a bit of a Herculean effort, and the financial resilience that they have going into a cost-of-living increase is quite small. If the pandemic hadn't happened, the cost-of-living increase, currently, might be more negotiable, but we are compounding two issues, which are obviously leading towards a much worse impact when that cost-of-living increase is hitting providers in terms of their energy costs and other issues.

Thanks, Owen. Jennifer.

Yes, I think Owen makes a really good point; Andrew too, by the way—both of them made really good points. To answer your question directly, Carolyn: yes, facilities are at risk of permanent closure. We will first see a service reduction—stopping certain programmes—as we have previously discussed in this session already, but then in the medium term, yes, facilities are at risk.

One of the examples that we gave in our written evidence, if I may quote from that, is one of our members—and this, again, is from September, the information that we gathered from them—is saying that:

'Proposed increases in utility bills of between 250% and 300% mean an increase in our cost base of between £1.9m and £2.3m, to retrieve that cost we would have to double our prices (assuming that we could retain our current membership base).'

Obviously, that will become unaffordable for people to actually participate, and we have examples from operators in Wales specifically that have increased their prices by 10 per cent already. So, yes, it is a real risk.

Can I just ask: so that is with the current package that's being proposed coming forward? They still might have to double prices, and so it's not really touching, then, the issue.

Yes. Just to clarify that this quote in particular that I just used was obtained just literally a week prior to the announcement, so there might be a decrease in that overall cost; it may be, instead of 300 per cent, it might be 150 per cent, so it may not have to be a doubling in cost, but because, as I just explained, with how the price cap isn't enough, there will still be needed a significant increase in cost—in activity cost, that is. So, yes.

I think this is something that we'll be returning to later in the session as well. Carolyn, is there anything else you wanted to ask?

No, that's fine. That's fine, thanks.

Is there anything else—? We've covered a lot of what I was going to ask about population groups, but is there anything else the panel wants to say about specific population groups affected by the cost-of-living crisis?

I'll take that as a 'no'. Oh, no; hang on. Jennifer. [Laughter.]

Thank you, Hefin. Yes, it's really difficult, because I don't want to single out one particular population group, but what our members said, again, in response to this consultation when you released the question, was that the impacts will not fall differently in terms of their customers, but it will be felt harder in certain groups, and particularly those with less disposable income, because they will not be able to access services because of the price increase, but also they may not be able to travel to a facility or to their sport of choice, or to whatever activity they want to do to keep physically active. So, for them, they are already feeling the pinch of the cost of living and mortgages et cetera, like Owen was saying earlier in the session, and therefore they will be hardest hit.

A lot of leisure facilities in particular, they are in communities of higher deprivation as well, and so they are a really important point for the community to be active in a safe and accessible way, and that will be almost taken away, while still being there, because it's unaffordable at this point.

This is why I raised ALN groups, because they need ring-fenced time, maybe an hour of ring-fenced time within a leisure centre through the course of the day. And that time, as rationalisation happens, is harder to come by.

Absolutely. Yes, that's a real risk and a real concern.

Okay. So, what about the sporting workforce and the impacts on the workforce? Can you just highlight some of those impacts, the panel? Andrew, I think you had your hand up there.

Yes. Thanks, Hefin. A really good point to raise as well. During my meetings with a lot of the national governing bodies and the leisure sector, since I've been in the new role, it's been quite clear that there is a concern about talent within the sport and leisure sector leaving this industry, because it can't compete with salaries. The Sport Wales budgets are not going up to national governing bodies. The Sport Wales budget is not particularly going up either, and that has a knock-on effect in terms of salary costs, and the fact that governing bodies are not able to increase salaries for their staff, and then you put that against the cost of living and the cost of inflation, and they're at a net loss. We're then seeing the talented staff leave the sector for other jobs that are more well-paid, so that's an issue that we've got already.

And I think the other key point for us is the volunteers, and I think Owen touched upon it earlier: the volunteer nature is becoming less, because people, rather than volunteer their time, are just trying to earn extra money just to be able to live and be able to put food on the table. So, it's a cost. So, the two key issues here are the talent that we've got coming into the sector and being able to sustain the sector, but also the reduced number of volunteers that are crucial to make sport and leisure work.

Owen.

Thanks, Hefin and Andrew. Just a bit on that volunteer point: sometimes people forget that volunteering isn't free to the volunteer themselves. There's a cost, both in terms of the point that Andrew made there, that it's time that otherwise would be spent—and potentially needs to be spent, now—on supplementing incomes, but it also a cost in terms of their own travel et cetera to volunteer. So, I think that is a real concern for us, and it was a concern and is a concern of the sector in terms of the speed of those coming back to volunteer post pandemic. There are various issues around that. People were concerned about coming back to volunteer for health issues post pandemic, but also we've probably lost 18 months to two years of upskilling new volunteers during that period of time as well, so we were already at a deficit.

On the broader workforce issue as well, we did an economic report in 2019, and it showed that there are 31,000 sport-related jobs linked to the economy in Wales. Obviously, that's a wide range of different types of roles, but, certainly, if they are providers that are facing financial difficulties, if the club network is facing financial difficulties and volunteer difficulties, all of that is going to be a concern.

Also, I think it's important to note that sport is a multiplier in terms of the economy, so investment in sports has a knock-on effect in terms of investment in hospitality industries, tourism. So, whilst we are looking at the sporting workforce here, there is a broader economic workforce consideration linked to sport as well, and I think probably is a consideration. Each of those will have their own economic issues in terms of rising energy costs as well.

Okay. Jennifer, did you want to add anything to that?

Thank you, Hefin. Yes. It's very similar to what Andrew and Owen have already mentioned, so I don't want to repeat too much, but just to emphasise that people are leaving the sector and that is a real issue. There is a real issue and challenge with recruiting staff at this point, and that has been going on during the pandemic, but it's only got worse in the past six months.

And then the second element, which I believe hasn't been mentioned yet, but apologies if it has, is that, because of the cost pressures at the moment on the organisation, while they are having challenges with actual recruitment, for some positions, when people leave, they don't have the funds to recruit again to fill that position. So, that's another issue that we've heard from members in the past month or so.

Okay, I won't ask any—. I'm just conscious of time, Chair, so I'll stop there.

If there was anything else you wanted to ask, you're welcome—

No, it's fine.

Happy? Okay.

I'm going to come into the next session with a couple of other things.

Thank you, and I'm grateful to you for what you've been saying this morning. 'So what?' is my question, because it's very easy to describe the problems that face the sector, and it's also, bluntly, quite easy to say that you need Government support. I've sat in this place for 15 years, and I've heard that pretty regularly from this sector, as well as others. So, that's going to be pretty unlikely, isn't it, because the Welsh Government is facing some considerable challenges on its own budget. Each Member in this session today is receiving many, many e-mails from constituents who work for the NHS, talking about some of the challenges they're facing, and so, 'What is the sector going to do?', is my question. What are you going to do to meet some of the challenges that you've been describing?

Owen first.

Thanks, Alun. Just to put on record, because I think it would be remiss of me not to say that, obviously, at any point, we want to be saying that we want more investment into the sports sector et cetera. It would be remiss of me if I didn't say it, of course.

I think you're absolutely right. What we're looking at here, as I've indicated previously, is this isn't a cost-of-sport concern, specifically, it's an economic crisis, and therefore the level of support is around tackling wages keeping rising with inflation, the issues of inflation, mortgage prices, energy prices. So, to be honest, it's not something that I do think that we are here today saying that Welsh Government need to specifically address, because it's a much broader issue than that. That doesn't mean that we can't do some things with the Welsh Government. We are always in constant discussion with the Welsh Government as and when budgets become available, particularly around capital towards the end of the financial year, and how we can best deploy them. But within what we're already able to try to look at doing—and I recognise in the crisis of a cost-of-living issue that this is maybe taken around the edges in some instances, but it's still an important thing to be doing—we have an £8 million capital budget per year at Sport Wales. We are trying to ensure that that is focused on things such as how are we supporting providers at the moment to shift towards more energy efficient delivery, which is going to have an impact on their costs, but also in terms of the sustainability agenda. We do have community funding streams, and we're looking at how we deploy them in a way that supports the club network in becoming more resilient, again in terms of how do we prioritise areas of deprivation towards that, and make those sporting offers and the outreach as best as possible and work with our partners in terms of how they can best be deployed. And that capital funding stream—as I've just said, we're currently working on an expression of interest that's moving forward and hopefully delivering quite soon.

I know that there's a lot of good practice going on out there. I was on a call with leisure providers—and Jennifer was on that call—around a week ago. There's some really good innovation going on. We need to make sure that those ideas are shared and are being able to be implemented. But, ultimately, this is about how do we shift to a more collaborative approach, pooling resources—that's part of a sport partnership development that we've put in place—but also that we are looking at this in a broader sense of an inclusive sport sector. Sport is going to have to be delivered in a different way: people are going to have to access it in a way that appeals to them, not just in terms of cost, but that they see the benefits of that investment, that they see that, if they are going to utilise what little resource people have on a day-to-day basis, that they get a return on that that is positive, not just for some physical activity, but their mental health, well-being, educational attainment, health, preventing ill health, and how we link in with other sectors to make sure we utilise the funding that's already available, as well as, obviously, working towards anything that does become available within those financial years. 

Thanks, Owen. Andrew, I think you had your hand up as well, and Jennifer as well. Okay. Andrew, and then I think Jennifer wants to come in. 

Diolch. Some of the initiatives that we at the Welsh Sports Association are working on—. Firstly, picking up on Owen's point regarding innovation, one of our members, Newport Live, are currently building a new facility, which is going to be an energy-positive model. I think it's the future for the leisure sector going forward. It obviously needs the capital investment to start with, but I think that's something that should be shouted from the rooftops, really, and we will use that as an exemplar to our members in that sector.

A second project that we're working on is a procurement portal for our members, where they can collectively buy together to reduce their overheads. That's something that we should be launching in the next few days, which we really hope will reduce overheads for a lot of our members that want to use that procurement portal. The shared services model that, again, Owen mentioned is something that the Welsh Sports Association is providing for the sector and where they can come to us and use our shared services facility to, again, try and reduce their overheads. And then, the fourth, and perhaps the most important, which is a key objective in the new WSA strategy that we've released, is a foundation, and we want to work with Welsh Government and Sport Wales to develop a sports foundation. And we welcome your report recently regarding levelling the playing field, and particularly that example from New Zealand was really important. We need to try and roll something similar out in Wales to those who can't afford to access sport or sports equipment and clothing in the future, and the foundation that WSA is working on will, hopefully, be a result of that. And that should be able to get some philanthropists to invest in that as well, to bring new money into sport and to try and help cut that gap.

Thanks for that. I think Jennifer wanted to come in as well, Alun.

Thank you. Everything, again, that Owen and Andrew have said is absolutely true. Just adding to that is that the leisure sector—leisure and physical activity buildings—two thirds of that has passed its replacement date. It's old; they're ageing buildings. We know from the Welsh Government free Energy Service that our members' leisure facilities are consistently in the top five of most carbon-intensive buildings for local authorities. They know this and they have been working on this in the past years, decades, on increasing the energy efficiency of their buildings. That includes LED lighting, improved building management systems, pool covers, and, also, the capital projects that Andrew and Owen mentioned, that I won't go into more detail on them. However, because of the current cost pressures, that's literally the limit of what they can do; they can't do more than what they have already done without further funding. And that brings us then to that question that Alun asked, in terms of 'So what?' The sector, in particular leisure trusts, produce £201 in social value per person using their facilities and engaging in their offer. If you calculate 16.6 million visitors across Wales, £201 of social value, and what does that social value mean? It's reduced crime levels, it's improved health and well-being and it's a reduction in people needing NHS services. So, there's a real health and well-being argument here, where sport, physical activity, leisure in any way that you are physically active will benefit the health and well-being of communities, and will also help achieve the well-being of future generations goals. So, that would be the main reason to invest in the sector, not only in sport for sport's sake, but because of that wider health and well-being angle. 

I'm aware of that, and, quite frankly, committee said that, and people have said that to the committee a number of times, but it doesn't answer the question, does it, about the issues and the challenges that you've all described that you're facing immediately. You can produce as many impact analyses as you like, but that's not going to heat a swimming pool in November. My concern is the actions that you as a sector are taking to face up to the challenges that you're facing in the coming months, and I want to be reassured that you're doing more than simply asking the Government for funding—that's basically it—and that you're taking responsibility yourselves to be proactive. And, to some extent, what you've said has provided some reassurance, but I think you're also relying far too much on—. It's very easy to create alliances with various people, but you need to do more than drink coffee, don't you? So, to what extent are you being proactive in meeting the challenges in the next coming months? I think the point that Andrew made about shared services and joint procurement are very good points, but they take time—they take time to get right. Local government has been doing shared services for 20 years and have got nowhere. So, to what extent are you going to be able to meet the challenges in the coming months? 

Owen. 

I'd want to take that question to Andrew, but I would guess that, you're right, Alun, that they take time to get right, hence why you can't rush them, because we've got a cost-of-living crisis now, and get them wrong. It doesn't mean that we can't accelerate them and focus on them. But ultimately if this inquiry acknowledges things around some things we need to get right, then we need to get them right. It would be a false economy to try get them quick, but that doesn't mean that we can't do things here and now, as you say. The way we deploy our current existing funding—and this is the point of not asking for more funding here—the way we apply our current existing funding around capital funding or our community funding streams is really focusing in on how we can, building that sustainability agenda, get money out of the door ASAP that is allowing our facilities, both at community level and those larger scale facilities, to be more energy efficient to tackle some of these issues. I think we do need to recognise, probably a little bit in the sports sector, that the cost-of-living issue is accelerating at a speed that is slightly beyond our capabilities when it comes to the finances that are currently available, and that is going to lead to some tough decisions, but, I think, what I, Jennifer and Andrew have hopefully given assurances on is that there is no risk of underplaying how seriously that we and the sector are taking the need to respond to this.  

Thanks. I think Jennifer wanted to come in. 

Yes, thank you. I agree with everything that Owen said, and one of the things, in addition to obviously making sure that there are energy-efficient buildings and that we do as much investment as we have been able to afford, really, as a sector, is that when we're talking about price increases not everyone has increased prices, and, where prices have been increased, it has really been in consideration of how much people will still be able to afford and how much the organisation needs. So, price increases don't come in very lightly in this sector, and they have been frozen for years as well, in terms of activity prices.

One of the other things that organisations are looking for—forced, because of the situation at the moment—is, of course, looking at restructuring of organisations and roles as well within the sector in terms of staffing. Of course, we still have concessionary pricing in this sector as well, and that, of course, is being used more now by people who need it, who have less disposable income.

One of the things also to mention is that, from a leisure trust and a local authority perspective, they reinvest the profits that they make. So, any commercial activity will, actually, subsidise the concessionary pricing and the reduced access cost for people who need it. So, the model is set up in such a way that profits stay within the sector and, actually, are all going towards either improving facilities from an energy efficiency point of view or, actually, reducing access costs and increasing participation levels in that way.

Alun, was there anything else that you wanted to ask?

No, that's fine, thank you.

Okay. We've got about nine minutes left of the session. There were just a couple of things I wanted to pick up. Are there any further streams or methods of support that you think could be made available that wouldn't have a financial cost? That might be an impossible question to answer. Jennifer.

Yes, taking away or notwithstanding the importance of direct financial support, there are two areas that our members have asked for specifically as well. One is, again, when we're talking about energy efficiency, the Welsh Government energy service and Salix funding is quite difficult, sometimes, for leisure trusts to access, because they have to go through the local authority—the local authority needs to apply. I think we're getting there with local authorities, and we've been working closely with our members in the past six months to encourage those conversations between local authorities and leisure trusts. But, it's still sometimes difficult for them, where the local authority doesn't manage the facilities itself—for the leisure trust to then access that funding. So, that is one thing that, potentially, the Welsh Government can work on—on actually clarifying that eligibility and making it easier to access that funding for capital investment. But, again, even if that happens, it's a medium to long-term solution; it won't alleviate the pressures now, but at least we'll make sure that we invest in more efficient buildings in future.

Then, the other area that they ask for support on is in terms of the energy deals available and support on that in particular from energy providers, because, at the moment, because leisure is seen also by energy suppliers as an—do I say 'vulnerable'—at-risk sector, it's sometimes difficult to actually get new contracts in place. Energy suppliers are asking for larger deposits upfront or refuse to make new offers. That has been improved since the energy bill relief scheme has been announced, but, again, that is something that, potentially, the Welsh Government could support with. 

Thank you, Jennifer. I don't see anyone else with their hands up. Can I ask one final question, in that case? 

—the ones that are needed most radically for the help to be there?

Who would like to take that first? Don't all jump at once. Jennifer.

Yes, but I'm happy to give the mike to Andrew and then Owen as well. One of the immediate areas for support is to local government budgets. At the moment, with local government budgets, a lot of it is still in what was the forecast for this financial year but there will be that squeeze for the next financial year. So, local government budgets are incredibly important to support local leisure, sport and physical activity delivery, and if there is a stronger directive to support preventative well-being services, that would be a real help, because then we can recognise physical activity as, obviously, contributing to health and well-being and we have that directive to actually support sport and physical activity as well as wider arts and culture activities that benefit health and well-being. That’s a way to support the sector specifically.

Thanks, Jennifer. Andrew.

Yes, just a couple of points from me, Chair. I think, as we’ve mentioned, swimming pools are really the immediately most vulnerable, and the nature of swimming means that it’s inclusive of all ages, as Hefin mentioned, and for ALN, so I think that’s an immediate issue, and obviously it’s a life skill as well, important for beach safety et cetera. I think the other key point for us is we need to represent the whole membership, which is governing bodies, which is local authorities, and we’re independent in that case. So, I think the key message from our sector is that these decisions should be made by the sector for the sector, and perhaps greater flexibility in delivery contracts for local authorities would be another key priority.

Thanks, Andrew. Owen, is there anything final that you’d like to add on any of this?

Thanks, Chair. I think the broader issue for me in terms of the community participation is those ancillary things around sport that I just talked about is a major economic package. So, looking at it, if there was any targeted funding, then I think Andrew and Jennifer have probably highlighted those areas most at risk, which perhaps would be the ‘easier’ issues to solve financially, rather than trying to put money in the pockets of individuals to be able to allow that sport to take place, because that’s a much bigger, more complex issue, multifaceted across multiple sectors. In fairness, many of the interventions that are already in existence as well are being expanded. So, if we’re looking at a specific, targeted intervention, then it probably would be around those providers and the costs for energy, and I think Andrew’s highlighted swimming as being a real particular one. But we obviously have to look at the existing budgets in the sector at the moment in terms of how we are able to support those in the interim as well.

Michael Elliott, interim chief executive of Arts Council of Wales. 

Thank you, Michael. I'll go to Clara next. 

Clara Cullen, venue support manager at Music Venue Trust.

Thank you. And Louise—would you prefer Louise or Lou, because you've got Lou on your—? 

Yes, either. Lou is fine, yes. I'm the director of Creu Cymru. We're a membership organisation for theatres, performing companies and individuals working in the performing arts in Wales. 

Thank you for that. 

Whoever wants to go first, if you want to put your hand up—Michael.

I'll kick off. I think we're dealing with a cocktail of issues coming out of the pandemic. We've only seen, generally, a return in box office of 60 to 80 per cent of pre-pandemic levels across Wales. So, there's a starting point that is a low base of income, particularly for performing arts organisations and venues. That is compounded then by cost-of-living increases with participants and attendees finding it more difficult to afford travel, to engage with programmes that are available for a variety of reasons, but change of habits, and going for safer programming—well-known programming, event-type programming, rather than the more creative, riskier programming that many organisations are involved in.

We then have increasing energy costs, which, even with the UK Government's intervention for businesses over the next six months, looks like at least a doubling for most arts organisations of their energy costs. And obviously, beyond six months, there's a greater impact again, with something like a third of organisations—sorry, 40 per cent of organisations currently in fixed energy contracts coming out of those in 2023. So, compounded impacts from a lower base at the moment to a much increased one later next year. 

Cost of living and the increases, then, obviously, inflation generally is affecting all parts of the businesses that we support. The inflation rates within the performing arts for the production activities of organisations can range from 20 to 40 per cent inflation, rather than around the 10 per cent general inflation that we're seeing. And then, there's a variety of factors around touring companies, again, with transport, accommodation costs, complexity of international travel post Brexit, and so on. So, there's a cocktail here, Chair. I just emphasise, we can unpick that, but it's not a single issue, it's a culmination, with organisations telling us that they can see their way, perhaps, through the next three to six months, and beyond that, some 40 per cent of them are telling us that they can't see how they're going to cope longer term.

Thank you for that, Michael. We will be delving into the detail on many of the different aspects of that, but that's really helpful. Thank you so much. Clara.

I would agree with Michael. It sort of feels like, at the moment, that there's a distinct sense that we're lurching from one crisis to the next. At the grass-roots level, which is the segment of live music that Music Venue Trust focuses on, tickets typically tend to be around £8 to £10, so we're on the more affordable side of the live music ecosystem, but I do think that there's an issue that, if people have to make very tough choices about what their essential budgets are, there is a risk that arts, culture, live music, even at the affordable end of the scale, could become seen as either a luxury or an ancillary choice—I hope that that's the right word. So, yes, I agree with Michael that we're moving out of the COVID period but it doesn't feel like we're heading towards recovery; it feels like this is an additional crisis on top of what we've already seen.

Thank you, Clara. Lou, was there anything that you wanted to add to that?

Yes. I completely agree with everything that Clara and Michael have said so far. I think the other thing in relation to ticket prices is that balance for the actual producers and the venues, if they've got increased costs, trying to still keep the ticket prices low and accessible—I think that's a really difficult challenge that many are facing at the moment. If costs are increasing, where do they find the additional money from, and is that from audiences at a time where we still want to keep ticket prices low?

The other thing to think about is actually the people who work for these organisations, who are also going through their own cost-of-living crisis themselves. In an industry that often doesn't have particularly high wages, that is the other thing that we might end up finding; we're already finding that there are skills shortages and people have left the sector. If we can't match wages from, perhaps, more affordable comparative organisations—. You can do marketing in, say, a commercial organisation or you can do marketing in a theatre, and obviously there are some specialist skills, but if you can get paid more in one organisation, then there's a risk that we're going to start losing staff because of that as well. So, like Michael said, there are lots of challenges. There are a couple of others that I could mention.

Thanks, everybody. Good morning. Thank you for coming. I appreciate that you're all here representing different segments, if you like, of the cultural pie, so to speak, but I'm just wondering if there are any particular areas that are particularly impacted by the cost-of-living crisis—are there particular venues or practitioners that are particularly affected, and are there other ones that, perhaps, can weather this storm a little bit better than some others?

Again, if I might try and tackle that. I think those that are embedded as venues or companies in a local authority context or universities at the moment are likely to weather the circumstances a little better in the way that their finances are managed. I think, in terms of who's particularly affected when it comes to organisations, perhaps galleries and those without box office income are particularly affected with the rise of energy prices—where do they turn to? Fundraising is more difficult in this circumstance from both individuals, trusts and foundations regearing where their priority for support is. So, those without box office or a range of income sources are clearly going to be affected.

I think, also, Lou has rightly referred to those employed in the sector, but to widen that up a little, artists and freelancers in the sector engaged by arts organisations or doing their own work as makers and creators are affected by all those circumstances that the general population is, plus the ability to get work and the consistency and security of work in this climate if organisations are cutting back on engaging them. So, again, there's that talent issue that Lou has referred to that makes it more difficult for those who earn not a consistent salaried or waged income working in the sector, which they rely on to find work, to travel to work, and manage their overheads as individuals.

Thank you, Michael. Did anyone else want to add anything? Are you happy? Okay. Tom, was there anything else—

Just to follow up, then, on that. I'm interested in what you said there briefly, Michael, if I can just follow up, on people who operate perhaps on a charitable donation basis or a fundraising model. Are you actually seeing a decrease in people making donations to those sorts of things?

I haven't got the direct evidence. Anecdotally, that is what we've received from organisations that we've canvassed. You certainly see it in the major trusts and foundations, who, given the impact on society more widely, will adjust their priorities in times like this, where they direct their support to more basic issues of poverty, shelter and so on, rather than the wider well-being and health contribution that arts and culture make to the nation. So, there is a concern there.

The counterbalance, if I might say, is that those participating in the National Lottery, for instance, as individuals, you see that remaining buoyant, and that is often the case during periods of challenge to the economy. That seems to be the case at the current time. Those revenues are holding up, which is good news from our point of view, and other lottery distributors, in that there is a bit there of benefit, clearly, with what we distribute in Wales of lottery money, along with other lottery distributors. If there is an impact on National Lottery uptake, then we're in for an even greater challenge, because outside of, certainly, our Arts Portfolio Wales of 67 organisations, much else that we fund in Wales is funded through lottery funding.

That's great. Thank you, Chair.

Thank you. Clara or Lou, did you want to add anything to anything that Michael said?

Sure. I think what I'm seeing across grass-roots music venues—some of our venues are structured as sole traders, some of them are limited companies, some of them are not-for-profits—is that everyone is finding this current period very challenging. We have a few not-for-profits who have been able to access the Crown Commercial Services procurement scheme, and that includes things like energy procurement, so that's slightly different across our membership. I think that's the thing that we've found recently as, I suppose, a benefit that a not-for-profit model can access, as opposed to a limited company. So, there are slight variations amongst the models, but generally speaking, every model of structure is finding it very difficult.

Thanks, Clara. Lou, was there anything you wanted to add?

No, it's fine—I think everybody's covered it.

All right. Thank you.

Thank you. I think this has been touched on already, but do you expect that venues might have to close because of everything that's happening at the moment, and with the level of support that's available, if it's not enough? And what venues in particular might be at risk?

In the recent survey we conducted, the full results in our submission to your full inquiry later suggest some 50-plus per cent of those who responded—it was quite a large response rate—are actually saying in the next few months they will have to reduce activity and reduce programmes. Some will have to consider periods where they close during the week because it's not viable to open, and obviously that will have an impact on the number of shows, for instance, or the number of opportunities for participation in arts projects, as a result. I think, as a funder, that obviously concerns us. We have funding agreements with organisations that we fund that expect levels of activity to be maintained, and I think we will have to seriously consider a relaxation and a reassessment of those funding agreements in this situation, because obviously we have the concern of the balance between the current level of activity provided by the sector and, most importantly, the longer-term sustainability of the sector. So, working with the sector to ensure that there is as much survival as possible through this period is key. I think it's around that sustainability that I'm particularly concerned that whatever we're able to do is the focus of our attention in support, if we have it available to us. This is a time where I think there will be contraction, but keeping in place the infrastructure in Wales I think is key.

Diolch, Michael. Lou, you wanted to come in as well. 

That's exactly the same as what we've been told: that it may not be at this point full venue closure but a reduction in programming, and certainly a reduction in the type of programming—so, looking at more commercial, as Michael has already mentioned, which does have an impact in terms of audiences and the type of work that audiences are exposed to and have access to. And coming in from the COVID closures, it's making sure that people are aware that their local venue is open. If it's maybe one week off, one week on, or however people are planning to do it, it then makes that drive for audiences and audience development that much more difficult, really. 

Thanks, Lou. I know Carolyn has something else that she wants to ask, but Clara, was there anything you wanted to add?

In my role as venue support manager, I manager our crisis service, which is where venues can come in when they have crises, and I'm really concerned. I don't want to sound like I'm catastrophising, and if the Music Venue Trust has anything to do with it we will try as hard as we can to stop venues from closing, but I am really worried that we are in a period of time where we will see venue closures because of this crisis, potentially at a scale that we were thinking we might see during COVID. I think it's also because these issues are wider than just the venues themselves—it has things to do with the sustainability of the energy market and affordability and reliability of supply. I am really worried that we will see closures in the next six months. The venues that are coming to me in the crisis service are really concerned that they just won't be able to last very much longer. 

Do you think if they close that they might not reopen again? Do you think it's just temporary?

I think once a venue closes, it's very difficult for it to reopen. We've seen historically, across 10 years of working in the sector, that once a venue closes, because there are so many sunk costs associated with establishing a new venue, it's very, very unlikely that it will reopen. 

Do you think there'll be an impact on the workforce as well? The cost-of-living crisis, does that impact on the workforce? Because we have to think about that as well. 

Yes, absolutely. Grass-roots music venues are spaces where lighting engineers, sound engineers and artists get their first introduction to working in the live music industry, and often they then go on and become production managers, run tours and things like that. So, if there are fewer venues where you get your introduction to doing those bits of work in, it's harder to then establish your career in the live music industry. It really does have this knock-on effect. It's not just a loss to the local community and local audiences, it's actually a loss to the general ecosystem within the live music industry. 

Thank you. 

Diolch, Carolyn. Lou and Michael, is there anything that you wanted to add on that in terms of the impact this would have on the workforce across the creative sectors?

Yes, just to add in obviously that the staff traditionally who work front of house, in the box office and behind bars, tend to be on zero-hours contracts. Obviously, if there aren't shows, there aren't wages. So, that's the impact in terms of venues having a reduced programme: it's just less wages coming in for those staff.

Thanks for that. Michael. 

As we touched on earlier, I think we could see a loss of employment in the sector, almost certainly in the scenario we painted about potential closures. We will certainly see, I think, a reduction in opportunity for freelancers and artists engaged by organisations over this period. We'll also see, like the point I made earlier, a lack of security and reward in our sector around employment, with others looking for shifts into sectors that give them greater reward and give them greater security than is available in our sector. In the survey we did of the general public, some 19 per cent of the responses were from those who had previously worked in the sector, who quoted those reasons I've just alluded to for leaving the sector and finding employment elsewhere.

Thank you very much. I'm grateful to you for your time this morning. You've described all potential impacts of the current situation in different ways and in different parts of the sector, and I think we're very clear on where you believe the impacts are going to be felt. So, to what extent have Government schemes—Welsh Government, UK Government—alleviated the problems you're facing?

I'll jump in again. I think, clearly, the £17 million plus invested in the cultural sector more widely through COVID recovery funding, during the pandemic, was absolutely critical to the sector's survival. And whatever challenges we're facing now, many organisations would not have got through that period without that support and the support through the furlough schemes and so on.

I think it is welcome that the UK Government is stepping in on energy costs, and the sector will certainly benefit from that. That will ameliorate some of the challenges that the organisations face. But it is only for six months, and I think the case we need to make in our sector is, whilst there's a lot of talk about the hospitality industry in general being a focus for attention the other side of the six-month period of support and cap on costs to business, we need to widen it to embrace our sector as well, which is closely aligned to the tourism and hospitality sector and suffers from many of the same challenges as that particular sector.

So, I think it's welcome. It won't save some of the aspects of what we've described to the committee this morning, but it will certainly lengthen the timescales, I think, for some in terms of what's the period in which they have to take action, along the lines we've described, in reducing activity. So, it's to be welcomed, but it's not the answer to the problems for the sector.

Can I come straight back at you on that, please? You make the comparison with the hospitality sector, which I think is a reasonable comparison to make. You seem to be—and I don't want to put words in your mouth; I want to clarify what you mean—suggesting that you would like to see a support programme from Welsh Government that provides tailored support to your sector over the coming months. Is that correct?

I think I'm a realist. I recognise that there are lots of challenges for Government and for the public purse through this next period, so my expectations are not—although they are the case in the sector as a whole—that we'll have anything approaching the cultural recovery funds we've seen over the last period. But I do think there is a case for increased support that looks specifically at the sustainability of organisations. What do I mean by that? I mean a clinical look at the real risks here and the cash flow of organisations. If there is a perceived longer term future with a here-and-now investment to help that organisation through a difficult period, that is the sort of support that might be manageable by us in partnership with the Welsh Government, if there was a significant additional input at the moment, but nothing like the scale that we've experienced during the pandemic. That won't solve all the problems for the sector we've described, but it would be a way of targeting support more specifically that will help stabilise companies through the critical period. But that still leaves an uncertainty; if an organisation is facing cash-flow problems in a particular moment, what is the projection of where the income's going to come further down the line that will make it worth the investment of public funds to help them through a particular period? That's my broad thinking that needs a lot more detail around it. It would be absolutely great, and it will be the sector's call publicly, for there to be a continuation of the scale of funding we had through cultural recovery funding. But if we're being realistic, something that is more targeted, at least, is absolutely needed in this period.

So, the answer to my question is 'yes'.

Additional support, yes. But realistic about expectations about what is possible.

I understand that, Michael. We've all sat around these tables for a long period of time. We understand where we are. But we also need clarity from you, and that means saying what you think. Diplomacy is an underrated skill in our business, I appreciate that.

A most definite 'yes'.

So the answer is 'yes'. And do you have any thoughts about the quantum that you're looking at? You've made comparisons with the COVID recovery fund, and that's a reasonable comparison to make, again, but I want to press you harder on this, frankly, because if we're going to go to Government as a consequence of today's work, then we need to understand what exactly you're saying.

You've pressed me hard there. We invested our arts council funds initially, and then the CRF money through Welsh Government; some £36 million over the last couple of years. On that scale, if we were talking a third of that, it would be absolutely brilliant, and I think it could really make a difference through this period; anything less would still be significant. So, I think if I was to say, in what I was specifically talking about—. A fund of £5 million to £10 million would be useful in the targeted way in which I was speaking earlier.

Thank you for that. The other witnesses, perhaps.

Clara, you've got your hand up.

Yes. I would like to say as well that I think Welsh Government were really fast out of the gates during COVID. Our Welsh grass-roots music venues were the first in the UK to actually access funding, and it was really, really essential. I do think it did the job it was intended to do. I think moving forward, in comparison to the kind of funds that Arts Council England and Creative Scotland have—. At least, in Arts Council England, they have a fund called Supporting Grassroots Live Music, which is small-scale grants—£15,000 and under—which is really targeted. I'm not aware if Creative Wales or the Arts Council of Wales have a similar scheme, but I think looking into something like that—. It's for programming, it's for increasing skills, it's for taking those kind of artistic risks, and it would be interesting to see if an equivalent could be created in Wales.

We do have those sorts of funds.

But what would be the purpose? I'm quite happy to use public money to take risks in the arts, quite frankly. I think we can be a bit too pompous sometimes in taking these decisions. But is this the time to take risk? Or is this the time just to put a tin helmet on and get through the next few months?

I think it's a difficult one to call, because at the moment, we're seeing—at least at a grass-roots level—even shows that would have previously been sell-outs, or you would have expected to have a good turnout, still 20 per cent down on the door. So, even kind of—. I don't know, I would never say 'run-of-the-mill', but your typical kind of standard shows are not doing as well as we'd expect, so perhaps, actually, it is time to take risks, for sure.

But surely that's an argument not to, isn't it? Because if you're in the situation we're in—which you've all described in different ways, and I've got no issue with the descriptions that you've given us this morning—surely it's the time to get through these couple of months; we can experiment in the spring, possibly, when things may be better. In the next few months, we might want to do less, but, you know, keep our heads above water.

I'm going to bring Michael in here. Michael, I think you wanted to clarify an earlier point as well, and then if you wanted to take on what Alun was saying. Then I'm not sure if, Clara, you were saying that you couldn't hear something properly. I'll bring Michael in first, and then we'll come back to you, Clara. 

Yes, it was in response to Clara. So, we've got that range of funds supported by lottery funding and we are looking across our lottery portfolio as well to see what we can direct for specific purposes that would help in this context going forward and looking at new schemes that might benefit activity. So, absolutely.

I think the risk issue—I already see risk being minimised in the sector in the type of programming and activity being undertaken. There is a natural response to trying to balance between what they consider safe and that that will excite, where there is risk but has real relevance that would bring in audience. So, I think those things are always balanced in this context.

What we haven't focused, perhaps, on, though, so much in this discussion is that, in the performing arts particularly, the Christmas shows are particularly important to the sustainability of the organisation for the rest of the year. I think there's real threat coming this Christmas to box office in terms of not just ability to pay but people as audience members being a lot safer and less—not just the ability to fund, what I'm trying to say is, actually, looking to the future, not wishing to spend so much on their leisure and their cultural activity. And if they're not buying the Christmas shows, there will be real impact.

In response to one of the inquiries we did with an organisation, somebody working in the sector wanted to share with us their personal story of a family that would normally spend on arts activities some £870 a year. In this circumstance, on the family budget, going forward, they had decided they only had £125 in the family budget for the year, compared with the £870 they'd previously had. That's somebody working in the sector who is committed to attending arts events with their family and sharing those experiences. I think that's typical in budgets, and then there's that nervousness, even if you have the money available at any particular time, do you need to save it or spend it on other priority activity rather than the leisure activity you might previously have expended upon. So, I think there are key threats to come around audience habits that we see have changed during the pandemic and that ability and propensity to spend in the next period.

Thanks, Michael. Lou, I'm going to come to you in a moment, because I know you've got your hand up. I just wanted to check, Clara, could you hear us properly? I know you were holding your—

Yes, I could. I think Alun's screen froze for a little bit, but I could still hear his voice, so it's okay.

Was there anything that you wanted to come back on on any of that? It's fine if not, I can go to Lou; I just wanted to check.

Yes, just two things. One, if Michael could let me know the name of the fund specifically for grass-roots venues, I'd direct all of our grass-roots venues in Wales to do that, to go towards that fund. And I think—. Yes, I think it is a balance. The purpose of culture and art is to be the cutting edge of culture in the community, so you have to balance between what will people want to see, what's going to be a sell-out and what's you taking a risk on a new band, particularly at a grass-roots level. The purpose of a grass-roots music venue, often, is to put on acts before they're famous, and that could be a performing to your mum and your dog sort of thing. So, there is an inherent nature of risk at that kind of level inherent to what we do in the sector, and so I think it's balancing how do we continue to nurture and to take those risks and be that kind of cutting edge of culture alongside that there is an economic reality and you have to sell a certain amount of tickets to break even. We'll always be finding that balance.

No problem. Just a couple of points based on what's been said. Risk is a really difficult thing to balance. I think what's been interesting to see this summer—just one example—Theatr Na Nóg, based in Neath, have put on a brand new musical called Operation Julie. It sold out in Carmarthen, sold out in Aberystwyth and sold out in Brecon. Now, you could say that was a risky product, because it's a brand new musical that nobody knew about, and the venues tend to be the venues that would just take things for one or two nights, these week-long runs. So, it's really difficult to know where that balance is with that risk-taking side of it.

Just talking about the audiences again, and Michael's point about Christmas, the other thing that we're very likely to see is in the all-in crucial secondary spend. So, a family might choose to take their family to the Christmas show, but it's going to be less likely that they buy the sweets, buy the merchandise that, again, helps the additional income for the venues. And one suggestion that is turning it on its head in terms of the support that Government could do is not just looking about how we can support the venues and the companies, it's can we do anything for audiences, can we look at the campaigns that happened across the UK in terms of Love Your Local Theatre. There were two-for-one tickets that venues distributed, lottery funds to—. So, all the venues got, I think it was, £16,500 if you were part of UK Theatre, which is an organisation based across the UK for mid- to large-scale venues, which was then distributed under a ticketing scheme that offered two-for-one tickets for audiences. So, you're encouraging audiences to come back at a time when you're recognising it's risky for them to do so. Or is there—? You know, culture passes, like they've got in France—is there something that we can do that's the other side, recognising that it's difficult for audiences, and can we support audiences in terms of coming see shows, which will, in turn, obviously, then, help the venues? 

I think all of those are really good ideas about how you can work together with funders and Government to deliver some very innovative ways of dealing with the current situation. Has Government been—has Welsh Government been—sufficiently proactive, do you think, in working alongside you to explore some of these options? 

I think the fact that we're meeting today, for me, is really positive. The fact that we are talking about it.

But we're not Welsh Government. We're not Welsh Government.

Well, okay. I think, in general, the discussions that are being had, it's being talked about.

Lou, I want to stop you there, because I'm talking about specifically Welsh Government. I'm not talking about politicians, I'm not talking about press releases, I'm talking about Welsh Government officials and Ministers. It's quite a specific question.

Then I'll say 'no'. No-one's reached out to me to discuss any of those ideas.

Thank you.

Michael.

I must defend my colleagues in Welsh Government and say I'm—

You're supposed to be an arm's-length body, Michael, you know.

Absolutely. I have to say they've entertained my wild ideas and we've had constructive discussions and they take a very keen interest in what is happening across the sector at this time. So, I have no complaint there. I know the challenges from the other side, as it were, that they face, and I know the Deputy Minister is keen to be kept informed of developments within the sector.

My question, of course, was proactive, not being kept informed, because that's a—[Inaudible.]—isn't it?

It's not always me picking the phone up, if I might put it that way. They are actively on the case.

We've had different views on this, amongst witnesses, and that's fine. That's fine. I'm grateful to you both. Thank you.

It's interesting sometimes to have a plurality of takes on something like this, and there are always things that the Welsh Government will, obviously, be—. We're sure that they'll be following carefully what everyone has said today and will be looking to see what more can be done. So, it's all going to be very helpful. Clara, was there—? I think you might have had your hand up as well on Alun's point.

So, for us, during COVID, our main contact was with Creative Wales. We had a lot of meetings with them. In the more recent months, I would probably say 'no'. We probably do need more engagement.

Alun, was there anything else?

My question was going to be about long-term support, and I think Alun has pursued that to the nth degree. But I'd like to give you the chance say your wish list. What long-term support does the sector need?

Michael.

I'm trying not to say, but I have to say, it is increased financial support that—

Why are you trying not to say that?

Well, because I don't want to get into a situation of saying that our need is greater than others' at this particular time; it is great, but the arts sector, as you heard earlier from Lou, I think, in terms of terms and conditions in the sector, and the way in which we rely heavily on volunteers and that as well within the sector—there is a need to better support what we're already supporting, and there's a need to attract talent and involvement in the sector for the future growth of the sector as well.

From the point of view of the growth agenda of the UK Government, this is a sector that has consistently shown that it grows at a rate greater than gross domestic product generally. It provides a pull factor to localities and nations in terms of what it offers. So, I think, from an economic point of view, it has a lot to offer, but it is a sector, to be sustained, that does rely on significant public investment, whether that's through Government or the lottery. It's about continuing to recognise the importance of that investment and to recognise that costs in the sector are increasing at least at the rate of inflation, if not greater, so there is an increased demand for funds. 

But that is, again, back on the problems rather than the long-term support and the solutions. I think the issue I've got is—. You know, I'm passionate about additional learning needs participation. The kind of outlet that the arts sector gives, in creative terms, to people who have additional learning needs difficulties is incredible and should not be underestimated or downgraded according to the health service; it is providing a service that is ancillary to that, in many ways.

Also, when you think about arts venues locally, they provide things like warm places for people to meet and to spend time, and I think in a cost-of-living situation it is not unworthy of identifying that and saying, 'Well, long term, we need to be providing funding and support for that', I would say. I don't want to put words in your mouth, but that's something I feel quite strongly about.

Yes, we work extensively, as you probably know, across the health and education sectors as the Arts Council of Wales. We have an agenda that is very much focusing on equipping communities to engage artists and deliver programmes locally as well. So, I'm with you there entirely, but that all needs that future investment. We need investment in the sector in terms of the things our note to the committee says, in terms of energy efficiency and generation within the sector, which will improve the sustainability of the sector in a wider environmental as well as financial context. So, there's a lot to be done, and I think, if I'm understanding you correctly, then this is a sector that needs the levels of investment that stand alongside those in education and health as a public good. 

Yes, and it's complementary to it. If you're talking about the new curriculum, if you're talking about respite—all of these things—you need to feed into public services to recognise the role you have; for example, gifted children with additional learning needs who have no other outlet for their creativity. You know, there are opportunities there. Can I just ask Lou and Clara to comment on those points as well?

Who wants to go first? Lou, you've unmuted yourself, so go ahead.

Hands-free unmuting. [Laughter.] I totally agree; I think there are some amazing examples of work that's happening on grass-roots levels. One example that really stuck with me during COVID was somebody outside a local library on a beanbag trying to access their Wi-Fi because the venue couldn't have people in; that's how much people rely on venues. We know that there are venues preparing to be warm banks across Wales this winter. So, they're always community places, regardless of whether they're in a main city or whether they're in rural Wales—they are community hubs on different, varying levels. I think the point, in terms of long-term funding support, is if it doesn’t increase, it’s effectively a cut, because of inflation rates. So, that’s the point for us—that we understand that times are tough, and there are lots of people vying for lots of different pots of money, but if funding doesn’t increase, it is still a cut directly to the venues and to the companies that are making the work to go on to the venues and to support local communities, and to create projects and tour outside of Wales and take the work from Wales beyond. So, there's a myriad of things that we could be doing to support people for the future.

And I’ll be attending the opening of the Aber valley arts festival with my children on Saturday. This is the kind of thing that gives that creative outlet. My daughter’s got additional learning needs, and it gives that creative outlet that needs Government support. Clara, did you want to come in?

Sure. I think what Lou was saying about cultural venues as the kind of hub to their community is really true. I’m interested in specific targeted funds as opposed to big funds—in having targeted funds specifically for grass-roots music venues, the money can go very far. I like the idea of grass-roots music venues as almost training hubs for the music industry, for people wanting to get involved in live music. So, some kind of targeted fund I’m particularly interested in. I’m also really interested in what Le Pub in Newport has done historically. So, they’re a kind of community interest company, a community-owned venue. They moved from one location to another, so that’s a really interesting model of how they reinvigorated their entire community. I think, in the medium term, more funding, targeted funding, is something that I definitely would be interested in discussing. I also think, in the longer term, the issue of business rates is a bit of a ticking time bomb. The cultural sector as a whole hasn’t recovered. We’re not in a stable place, and I think that’s going to be the next big issue, of how do venues service that cost, and I don’t think that’s yet been resolved.

Okay, thank you very much.

Or to put it another way—forgive me if I'm speaking over the translation—what are the most important things that need to be targeted? What will be at the peak of the crisis, almost? Michael.

I think, again, there are so many levels that, to target it—. I mean, to take Clara’s point, and going back to a point I made about having lottery funds to respond, Creative Wales is our partner in funding music venues as a focus and they will have a different view on the needs of those categories of venues, I’m sure. There’s the wider museums sector, and so on, as well to account for. When I was talking about the levels of funding, I was focusing specifically on what might make a difference in the arts-specific sector, so the pot, if we had one, would be greater across the wider cultural spectrum, I think. But as I think I said earlier, my main concern is this difficulty of sustainability through this period. If there was an overall enhancement to grant in aid to the Arts Council of Wales, that would address, I think, the points we’re making here between keeping going through a difficult period and being able to fund with increased costs in the longer term.  I think it was Lou that highlighted the fact that, with inflation, actually, the pound that the arts council distributes is going to be worth less to those organisations. Therefore, growing at, I think, 1.5 up to 3 per cent indicative funding over this spending review period isn't going to address the scale of the problem faced by arts organisations or secure the long term. It will leave the arts council having to make very tough decisions about funding well but not funding as many, if I might put it that way, within that restricted envelope. So, again, we'll be adding, if I might put it that way, to the challenge faced by the arts sector going forward in that we won't have the funds to support well everybody. So, we will have to make tough decisions about who we do fund well and who therefore doesn't benefit from our funding for the future. And that's growing an ever bigger gap as we go forward to be filled.

So, I would focus that limited pot I was talking about on just helping organisations get through the next six months to a year, and hope that the UK Government does more in support on energy costs, that the world situation changes such that there's an improvement. But, I guess we'll see a level of prices reached that are not going to reduce for the future within the sector and that are going to have to be met, as will the general populous that we rely on to buy those tickets and engage with arts activity. You can put a quantum on the help needed that would exceed anything that's been plied into the sector during the pandemic, frankly, to see it sustained and grow, longer term.  

Sure. I recently had a meeting with Creative Wales. They don't currently have a targeted fund for grass-roots music venues—they did during COVID—so I'd be interested in carrying that conversation forward, because what you don't want to happen is to get into a bit of an odd position where a venue in, say, Hereford could be in receipt of Arts Council of England's supporting grass-roots live music fund, and then you cross the border into Newport and a venue there won't. It's a bit of an odd, disjointed approach. Obviously, as I'm sure the committee will be aware, I will be calling for more targeted funding for grass-roots music venues— that probably isn't a a surprise 45 minutes into this conversation—but I would like to see that type of equivalent fund for programming or skills that could run for three or four years. 

Thank you, Clara. Lou, I didn't see that you wanted to come in on this, so I'll just ask one final question. We had an earlier session with sports groups and we were talking about the—. Well, they're very comparable. I know that, in sport and the arts, there'll be so many cross-overs, and what kept coming up in both sessions was if venues close and can't reopen what impact that will have. I know that, in some ways, the impact of the arts in so many ways will be less tangible—no less important, but less tangible. How would you quantify or calculate the loss that could come about if this targeted support is not made available, because that might sometimes be—? To some audiences, it might not be as immediately apparent as it would be with sport, although I'm not saying—. None of us would think it would be any less important. Lou. 

The word that comes to mind is 'devastating' for me, and it goes back to the heart of the community. We've seen venues close elsewhere, and they become derelict shells. There's then nowhere for those communities—. You might not see a performance at your local theatre, but you might engage in activity or you might have somebody come and do outreach in your local school. There are so many facets to what a theatre does. It's not just about the touring company. You might go and see this one touring company that comes once a year. That company will no longer come to your area because that theatre doesn't exist anymore. So, for me, the closure of a theatre is devastating on a huge scale.

Thank you, Lou. Michael.

Beyond venues, community arts groups and so on, which are such a vital part of the activity in a community, benefit individuals as well as the wider community. The loss, over time, will be considerable in those losses of opportunities to engage. I might combine that by saying that if there is support more widely for warm hubs in this context, as we go through the winter, I think we ought to bear in mind the opportunity to provide activity in those warm hubs. So, if they're not arts venues, what about some of that support going to engaging artists actually to work with communities in those warm hubs, if they're not arts venues? So, extend any definition at a local authority or Welsh Government level about what support is needed for a warm hub to operate to include creative opportunities for the participants and the engagement of artists. 

Diolch, Michael. That's a really good point. Thank you. Clara, was there anything that you wanted to add just at the end?

Yes, I think it could sort of be summarised as 'see it to be it'. I think, in the grass-roots live music venues, there is no such thing as an overnight success; you don't just get catapulted to arenas and stadiums. You start at the grass roots, you build your fan base, and you learn how to hone your craft as a performer, as well as all of the things like learning how to do sound engineering and lighting. So, I think, if these venues close, the knock-on impact not only to the communities who love them, but also to artists and new and emerging talent, is that it's very difficult to create a sustainable and long-term career in live music unless you've built that up, and you can only build that up by performing at these venues. 

Thank you. Well, you've all put that across really powerfully, I think, because taking together the session that we had earlier this morning on sports and what you've all been saying here, it's people's bodies, people's minds and people's souls, really, that get enriched and helped by everything that we've been discussing today in both sessions. 

The Government's response isn't very positive to the report. I think we should consider that in a bit more detail because, to some extent, I can see where they're coming from in terms of the money, because it's very difficult for an individual Minister to give those commitments outside of the budget round, but there are other recommendations where you've got 'accept in principle' and 'reject' and all the rest of it. It doesn't feel like there's a very strong and positive policy approach being taken by Government on these matters. Rather than discuss it now, I think we should give this some consideration and return to it. 

Yes. Does anyone else want to say anything on the record about this? That point has been noted on the record. Is everyone else happy with that? So, we'll have this discussion in private, but I think it's useful that that's been said now, as well.

Is everyone happy for us to do that? Yes. Okay. I'm not seeing anyone shaking heads, so I'm going to take that as people being happy. Yes? Okay.