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I think that cultural organisations are right to describe the pressures under which they are operating. We have heard about that in previous sessions and I have given evidence to you on that before. We are well aware of organisations such as the Filmhouse, Dance Base and the King’s theatre—which has had additional requirements—that have been flagging up that they are under significant financial pressure. We acknowledge that and that is why we have been working with Creative Scotland, which has been working—and continues to work—with organisations that are facing particular financial challenges.

I entirely acknowledge the evidence that has been given that there is a wish for culture to receive additional funding and, if I am able to secure additional funding for culture, that is exactly what I would like to happen. However, we also need to approach the funding and support of culture in other ways so, if it is possible for us to help in terms of commercial income to the cultural sector, we need to do provide that help and, if it is possible to secure additional support from philanthropy, we need to ensure that that is done, too. Right across the piece, we are focused on making absolutely sure that the Government provides the maximum funding that we are able to secure.

I refer Mr Bibby to our wider financial pressures. It is not as simple as saying that we would like more money and then, magically, more money appears. I think that he understands that, if we want more money for one area, it means that the cost needs to be borne elsewhere or, indeed, cuts need to be made elsewhere, so that is not a simple situation.

Having said that, I think that there is an understanding not just of the pressures that have been shared with the committee but of the significant benefit that is accrued—not least to the Scottish economy—from the creative sector. Again, the committee has received evidence of the financial benefits that are brought from festivals—as a good example—and the screen sector, when measured against the amount of money that is invested from the public purse. There is a really strong financial case, as well as a really strong wider societal case, because of the role that culture plays in social inclusion, health and wellbeing and all of the things that are key priorities for the Scottish Government. We need to make sure that we match the ambition of all of those things with the funding that we can secure in extremely pressed financial times. If colleagues on the committee—and, indeed, in other parties—have particular suggestions about how that can be best achieved, I would be pleased to hear them.

I have given the assurance to the Creative Scotland board. It has accepted my assurance, and it has been prepared to use the reserve. It has accepted my assurance; whether I can persuade Mr Bibby to accept it is clearly a different question.

It is absolutely my pledge that Creative Scotland will see the £6.6 million that it is now releasing from its reserves restored to it. I understand why that is important, for the reasons that I gave earlier in relation to multiyear funding. That is something that will go ahead next year.

I was not aware of £780—I am sorry, let me get the number right. I do not know whether Mr Bibby was aware of £785 million in additional pressures, because I was not. That has happened since the time that he refers to. Again, I make my point about fair mindedness and the acknowledgment that that is an additional and new pressure. Nobody had a crystal ball about the extent to which funding settlements would be pursued. I also draw colleagues’ attention to the fact that they have not all been resolved, so there is the potential for additional pressures above and beyond budgeted measures.

One has to make decisions on the basis of the facts as we find them now, towards the end of the year. Now that we are at the end of the financial year, I and my colleagues are doing everything that we can to ensure that there is not a cut to Creative Scotland’s ability to fund the regularly funded organisations. As we have heard repeatedly at this committee—as, in fact, this committee heard last week from Iain Munro himself—there will not be detriment to the regularly funded organisations through Creative Scotland’s budgetary processes. Beyond that, the uncontracted spend right across the culture sector that otherwise would have had to face massive cuts is now not doing so.

There is a lot in that. The first thing is to acknowledge the scale of the hugely significant economic benefit of the culture sector. We must do all that we can to ensure that that success continues, which is about Government providing the funding that it is able to. However, it is also about creating the circumstances in which the culture sector can thrive and be sustainable on its own terms. We must ensure that there are parallel funding streams.

One of the areas that I am most optimistic about, because of its new significance to the wider economy, is the screen sector. Film festivals have been successful since their inception: we know that the Edinburgh international film festival goes back to the late 1940s. What is new is that we have moved beyond having a comparatively small-scale screen sector making occasional films, along with work at the BBC, STV and, increasingly, Channel 4 and others, to having a burgeoning wider screen sector.

We have gone from not having a single large-scale studio, despite appeals for famous Scottish actors to open them in the 1980s and 1990s, to us now having studios across the country, with more to come. As has been borne out by Screen Scotland’s report, we have got to a situation in which the value of screen—this figure is from memory, but I think that it is right—is nearly £650 million GVA, with a trajectory for it to be worth more than £1 billion by 2030. That has a massive positive impact on our economy, and we want to do everything that we can to support that. We want to make sure that that brings benefit everywhere in Scotland, and we need to embrace the opportunity that it will give for a new generation of people to find employment in those sectors.

Previously, in those sectors, we exported our talent and did not have the financial benefit of it being here. We need to acknowledge the value of—and do everything that we can to support—the established and successful parts of the cultural economy and the newer bits of the wider sector. That is a really good example of where, compared to the level of value, the intervention through Scottish Government funding—via Screen Scotland, with the likes of its production growth fund—is minuscule in comparison with the wider value that is accrued to the Scottish economy.

The challenge is to make sure that we provide funds in a way that helps sustainability, growth and new starts and, at the same time, is what is required for more established events, including festivals, at a time of change. That is exactly the kind of thing that I am interested in discussing with colleagues in the festivals sector, to make sure that things are as successful as they can be.

Goodness—there was a lot in that.

First, with regard to the regularly funded organisations, I can do no better than quote Creative Scotland’s Iain Munro who, in his evidence to you, said that the use of reserves by Creative Scotland

“will enable us to maintain the payment for the RFOs as planned, without the cut being applied.”

He went on to say:

“given that this £6.6 million is a one-off and that we are using our reserves to offset it, we are protecting the balance of the reserves position to enable transition support, as far as we reasonably can.”

He then said:

“It stabilises the situation.”—[Official Report, Constitution, Europe, External Affairs and Culture Committee, 28 September 2023; c 2, 3, 4.]

That is Creative Scotland’s perspective, and I am immensely grateful for the collaborative approach that we are taking to dealing with the funding pressures that we are all having to manage. In effect, we have been able to ensure that there is no impact on Scotland’s cultural organisations as a result of the funding decision. There will be discussions about the finances for next year and the year after that; however, the commitment has been given with regard to the £6.6 million from this year, and it will be paid during the next financial year.

To those who might have been given the impression that a cut was going to be imposed on cultural organisations as a result of this decision, I have to say that that is factually inaccurate. Indeed, I do not think that such a view is particularly helpful, given the wider concerns that quite rightly exist about the financial pressures on the cultural sector.

On the wider point, the first thing to reflect on is that the particular challenge right now is that we are coming to the end of a financial year in which there have been unprecedented additional cost pressures, which I have outlined and which included the funding settlements for pay. That means that money must be found elsewhere, but one has already allocated a significant part of the annual spend earlier in the year, so one is looking at a far smaller part of the budget and a reduced amount of money for the end of the year. That is why we are in a particularly challenging situation with in-year budget finance.

As you would expect from someone in my position, I must look at that and work out what the options are. The best way to explain that is to say that there are three dimensions to the funding challenge within the portfolio. The first relates to major events that are part of the portfolio, including, this year, the UCI cycling world championships. The common consensus is that those were an amazing success for Scotland, but they led to extra costs. The second part of the funding challenge relates to the £6.6 million final payment made to Creative Scotland within this financial year. The remainder of the challenge comes from the uncontracted remaining spend on culture. We must find solutions to all three things because they are not going to go away and we must face them. What are we going to do about that?

On the first part of that equation, although the final figure remains to be worked out, I have acknowledged that something in the order of £8 million will be required in relation to the UCI cycling world championships. Those events brought benefits across Scotland and across Government, and the Scottish Government has agreed that the cost should be borne across Government, rather than simply within the portfolio. That is a hugely significant decision for the portfolio, which is the second smallest in the Government, meaning that that amount would be very significant for our budget.

The second challenge relates to the £6.6 million end-of-year finance payment to Creative Scotland. The fact that Creative Scotland made the decision to use reserves means that that challenge on the Scottish Government budget, which is under significant pressure, is obviated, and that the challenge is also obviated from the point of view of the regularly funded organisations that expect imminent payments. I understand that Creative Scotland is in the process of informing and assuring those organisations that they will be paid as they expected to be.

That leaves the final amount, which is the uncontracted spend for the rest of the year. Although there will be challenges, I am confident that, as a result of decisions made in the three areas, we will be able to ensure that we can fund areas across the culture portfolio that would otherwise have been under threat and where there would not have been the opportunity to use reserves.

That is the key thing to understand about trying to find a solution to funding pressures. None of this has been easy: it has involved colleagues in the culture sector working with Government to ensure that we can get ourselves into the best possible situation in a very challenging context. Given the pressures, I think that we have achieved a very good result.

Did I answer all your questions, which were packaged together?

My key reflection on Mr Cameron’s observations is that, to use his own words, the evidence was given before last week. It was given before the assurances by Iain Munro of Creative Scotland on the use of reserves; it was given before the assurances that have been given to the regularly funded organisations; and it was given before this evidence session, in which I have repeatedly given clarity on the zero detriment point in relation to Creative Scotland’s funding.

I view that issue separately from the particular concerns being expressed about the significant challenges that are faced by venues, of which theatres form a big part, and I know that Creative Scotland is working with venues and theatres to ensure that we are able to do everything that we can so that they can continue to operate into the future. There are some aspects of that that do not fall within the powers of the Scottish Parliament. I worked very hard with the theatre sector on the issue of tax reliefs for venues, which is a UK Treasury matter, and we were successful in increasing the timescale for the operation of tax exemptions for venues, including theatres, which I know is materially important to venues’ ability to continue trading. We must be alive to that pressure and to others, too, and I look forward to continuing to work with the theatre sector in that respect.

The key point in Mr Cameron’s question, though, was that the evidence that he cited was given before all that. It is important that we reflect on the assurances that Creative Scotland and I have given, and the self-evident fact that there is no detriment to Creative Scotland’s ability to fund the regularly funded organisations, which will be receiving the funding that they were expecting in the next weeks.

I completely agree with Mr Stewart, in as much as he says that things cannot remain the same. Things around us are changing and we need to react to those changes and ensure that our cultural organisations and our cultural funding organisations are best placed to deal with those changing circumstances.

I am sure that Mr Stewart would not want to create the impression that changes are not taking place in cultural organisations or their funding. We have discussed multi-annual funding this morning, which is a demand from the sector, is supported by the Scottish Government and is being introduced by Creative Scotland. That will lead to a set of wider questions about how bodies that are not part of the multi-annual funding system can have the stability that they want.

What I am trying to say is that change is the only constant in all this and we have to find the best way through that. I am gently trying to make the point that, given the anxiety that exists out there, it is really important that, where there is certainty of funding and finance is assured, we do everything that we can to help people to understand that that is the case.

I have provided evidence to the committee this morning about particular funding challenges with major events. We have been able to secure progress on that issue, but we will have to return to it and find the right funding mechanism across Government for it. Scotland has an excellent reputation in that regard. Mr Stewart was right to talk about Scotland being world leading, and one area in which we are world leading is major events, as we saw with the cycling world championships. We have other events coming up, including major footballing events, so we must ensure that the funding mechanism across Government is in place.

Creative Scotland is assured of its funding situation through the use of reserves, and the regularly funded organisations are being informed that they will get the support that they expected to get. There is no detriment there.

On wider non-contracted spend, we are now in the significantly better place of being able to provide the stability that Mr Stewart has quite rightly underlined as being so important to the sector.

I absolutely acknowledge that that is where the concern lies. For those who are watching our proceedings who are hearing all this terminology around culture funding, the importance of multiyear funding is something that we all understand. It is a new approach that I think has cross-party support as the best approach for cultural organisations, and there is a wish to roll that out more widely to the third sector. It is a way of helping organisations to not have to apply every single year for funding and, instead, when a strong case is made for financial support, an organisation would receive it for, in this case, three years. That will be to the benefit of cultural organisations.

As Mr Ruskell has indicated, that is a change from the current situation, and there is an expectation that many of our leading cultural organisations will be in receipt of multiyear funding. However, some organisations are concerned that they will not receive that, and Creative Scotland has been working hard to ensure that those organisations are still financially supported. That is the requirement for the use of Creative Scotland’s reserves.

That is just the background to Mr Ruskell’s point—

I have given assurance—

The key word, which I have mentioned a number of times, is reserves. Not just in the culture sector but right across Government, there are parts of the public sector that are in a position to hold reserves, which are there for times of duress. If reserves will make a material difference to the extreme situation that we are in, frankly, they should be used, and that is exactly what is happening. It is really important to land the point, which I have made a number of times, that zero cuts are being passed on to regularly funded organisations in the culture sector, because reserves that are being used now will be replenished in Creative Scotland’s budget next year. I have also explained the rationale as to why there is a difference between the start of this year and the end of this year, given the massive additional and unforeseen pressures that have been brought to bear on public finances in Scotland.

To answer Mr Bibby’s question, the key point in all this is reserves. Creative Scotland has reserves—the Scottish Government has provided funding to it, and it has been able to build up those reserves. Given that, and my explanation about the three areas of particular pressure on the portfolio budget, if those reserves were not going to be used, that amount of money would then have counted against all of the remaining uncontracted spend in the culture budget. You can take it from me that if people’s concerns about Creative Scotland’s budgetary situation, even with the use of reserves, are significant, that approach would have caused concern in the culture sector of considerably higher order.

We have managed to get ourselves into a situation where the Scottish Government is recognising that when there are major events and the potential for additional associated costs, those should be borne across Government. That is a really good result for culture. With regard to Creative Scotland’s situation, without detriment to or impact on regularly funded organisations—they have reserves, and that position will be maintained next year—we have the best potential outcome, given the three challenges, that we could have. I am pleased that we have managed to get there.

The short answer to Mr Bibby’s question is that reserves are the difference. They are there for difficult circumstances, and those are what we find ourselves in financially at present.