Early-stage policy measures in support of the arts in Europe

Around March 2020, governments of many nations have promulgated measures for ‘social distancing’ including the abandonment of arts events and visits. The domestic environment became the primary site for experiencing cultural activities, with artistic providers needing to develop new business models and "building up digital audiences” to be able to reach arts consumers (Sgourev 2020). 

 

As a form of crisis management that has been historically unprecedented, governments as well as private and (semi-)public foundations have been swift in developing measures to cushion the economic and financial repercussions in the cultural sphere. Right at the beginning of the pandemic, the European level of government emphasised the extent to which the cultural sector was affected and adopted complementary measures for small and medium-sized enterprises (SMEs), unemployed creative artists and freelancers and badly affected sectors such as the performing arts (Pasikowska-Schnass 2020). This framework allows member states to be flexible under state aid rules, resorting to actions such as deferring taxes, subsidizing short-term work, issuing state guarantees for loans, among others. The EU also set-up a 37 billion Euro Corona Virus Response Investment Initiative (CRII) to support member states. At the global level, UNESCO (2020) engaged in capacity-building by means of ResiliArt, a movement for a "concerted and global effort to support artists and ensure access to culture for all”. 

 

 

In the first stage of the pandemic (between March and May 2020), nation-states developed various measures with the aims of supporting those individuals and organisations affected by COVID-19 and facilitating the conditions for recovery. Most countries have used the full range of instruments described below, each with different intensity and political motivation.

 

 

Measures related to employment included compensation schemes and direct subsidies, aimed at self-employed individuals as well as organizations and their employees, the latter frequently in the form of a wage allowance to compensate for a reduction of working hours. This compensation allows employers to keep employees on the payroll, beneficial also to those arts and cultural organizations. In addition, several countries such as the Netherlands or Switzerland issued measures for the self-employed, who are strongly represented in the cultural and creative industries, accounting for between 26 in Slovenia and 48 percent in the Netherlands. The support to self-employed individuals often came in the form of a non-repayable direct financial compensation. Across countries, the amounts of those compensations, time windows and eligibility criteria vary greatly. A number of governments compensated absence from work due to the closure of kindergartens and schools. 

 

 

Several countries issued tax measures in order to alleviate the financial and administrative challenges of employers and self-employed individuals. Examples were the deferral and/or delay of tax and social security contributions in order to improve the liquidity of companies and/or individuals. Governments in, for example, Portugal, Slovenia and Switzerland suspended the payments of social insurance; some governments decided not to impose fines for late submissions of (individual and corporate) income tax returns and tax reports, and for late payments of tax claims. In some countries, these came as a package, as in the Czech Republic where a ‘liberation package’ included the remission of entrepreneurs’ June advances on personal and corporate income tax and the extension of the tax declaration period. VAT-related measures have been less current.

 

 

A range of measures has been issued with the objective of keeping national economies at pace and preventing individuals and companies from radically reducing their expenditure. Those stimulus measures comprise loans, guarantee schemes, tax rebates and all kinds of compensations. Different loan schemes for firms have been introduced across countries, commonly with low interest rates or even interest-free. In the Netherlands, for example guarantee schemes were introduced which allowed companies to lend more money than they would be allowed to do under normal circumstances. Some countries issued instruments to support international trade, including insurance or direct subsidies like in the Netherlands, and advisory services as in the Czech Republic. Organizations in the arts have been able to apply for only some of those measures, because many criteria needed to be met, not all of which arts organizations comply with. Compensations for rent, as issued by the Czech government, could benefit arts organizations. As only a minority of arts organizations are capital-intensive, the transferral of credit risks onto the government is expected not to have benefited the arts too much. 

 

 

The vast majority of European countries has developed additional measures and initiatives specifically to promote the cultural sector, one of the few exceptions being Slovenia. The size of this support to national arts and culture sectors varies greatly: Portugal’s culture package at the early stage of the pandemic was worth 1.4 million EUR, while the Dutch government made available 300 million EUR. Non-refundable subsidies or grants prevailed, yet countries as the Netherlands and Switzerland provided culture-specific loans and credits, which the Swiss government converted later into non-repayable ‘loans’. In individual countries such as Slovenia people had criticised their governments early on for not doing enough for the cultural sector.

 

 

First, in several countries, support for the arts and cultural sectors was developed only after more generic employment, tax and stimulus measures came into force. The panic caused by the pandemic made governments turn to the essential factors of production first: labour, capital and entrepreneurship. At a later stage, specific sectors were addressed (hospitality, transportation), frequently with explicit justifications of the support. Related to the arts, for example, public officials in Switzerland made explicit that the diversity of cultural offering needed to be safeguarded; Portugal recognized that the arts are vulnerable and characterized by precarious labour market conditions. The Dutch minister of culture stated that arts and culture provide consolation, distraction and hope in a crisis time.

 

Second, it was the national governments that took up a major role in providing early-stage support for the arts. At a later stage, regions, municipalities and civil society organizations (including foundations) became involved. In Switzerland, the federal government, the cantons and private sponsors got involved almost simultaneously, maintained existing funding and launched specific support measures, often in the form of project funding.

 

Third, many of those measures specifically for the arts entail non-refundable subsidies or grants, on top of the regular subsidies to organizations. Relatedly, the beneficiaries of early COVID-19 culture-specific measures have typically been those organizations that already receive public support, many of which with a not-for-profit earmark. That may be a logical choice, but not necessarily the more efficient one, and not the one leading to frugal, innovative solutions (Abbing 2020). While economists argue that smaller organizations would be better capable of riding storms and developing the innovations needed in times disruptive as these, larger organizations that tend to have high fixed costs have been aided first (Potts 2020; Cowen 2020). Even if central governments have prioritized those landmark institutions for which they feel responsible, support for smaller players came later, yet often with less impressive budgets. Private supporters (foundations, civil society, philanthropy) topped up subsidies.

 

Regardless of the previous point, and fourth, private sector organisations were not neglected. For example, Portugal set up public relief measures to support publishing houses, bookshops, and firms in audiovisual production, and in the Netherlands commercial theatre producers, festivals and art galleries were granted access to special loans. 

 

 

In the first months after the coronavirus outbreak, governments had to react rapidly and make explicit choices (Brown 2020; O’Connor 2020). In Europe, several countries expanded unemployment benefits and welfare payments while relaxing the criteria for eligibility (Reis 2020), and installed fiscal impulses, deferrals, liquidity provisions and guarantee schemes. At the early stage of the pandemic, most measures were of a combined economic and social nature, several of which also applicable to arts and cultural providers. 

 

In the arts, choices that needed to be made were between the safeguarding of capital-intensive canonical cultural institutions, unemployment payment, and measures to prevent the insolvency of companies. Our explorations revealed that the arts and cultural sectors, including their political advocates, were not prepared for this crisis: risk scenarios had never been conceived of and cultural programmers have not been able to rely on valid planning instruments. The crisis has clearly brought to the fore that too little data existed to be able to develop efficient and effective assistance packages. The measures specifically addressing the arts that were adopted in the first months of the crisis reflect a panicking reaction by governments that were making decisions in a survival mode. As the pandemic progresses, more and more funding programmes for innovation, digital transformation, and strategic development projects are being set up with the aim of contributing to the resilience and sustainability of the arts. Therefore, future aid packages can be expected to be more effective. 

 

What the crisis has shown is "how we think about and value art and culture; how we argue for their importance; how governments and public policy actors understand and value them, what they are prepared to do, on what grounds and with what capacity” (Banks & O’Connor 2020). Some would argue that the crisis only made visible what has characterized arts  and culture for much longer, and what has often remained invisible to decision-makers (Comunian & England 2020). The situation has reanimated the ongoing discussion on the value, function and role of arts and culture in society. This time, the discussion is challenged by the fact that the distribution of aid measures among various policy areas depends on its persuasiveness. It remains to be seen how strong the lobby for arts and culture in Europe and its countries will be in the longer term.

 

Betzler, D., Loots, E., Prokůpek, M., Marques, L., & Grafenauer, P. (2020): "COVID-19 and the arts and cultural sectors: investigating countries’ contextual factors and early policy measures.” International Journal of Cultural Policy, 1-19: https://doi.org/10.1080/10286632.2020.1842383