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The British Film Institute NATIONAL AUDIT OFFICE REPORTBY THE COMPTROLLERAND AUDITOR GENERAL The British Film Institute ORDEREDBY THE HOUSE OF COMMONS TO BE PRINTED 28 JANUARY 1994 LONDON : HMSO 178 f8.15 NET THE BRlTlSH FILM INSTIT”TE This report has been prepared under Section 6 of the National Audit Act 1983 for presentation to the House of Commons in accordance with Section 9 of the Act. John Bourn National Audit Office Comptroller and Auditor General 13 January 1994 The Comptroller and Auditor General is the head of the National Audit Office employing some 800 staff. He, and the NAO, are totally independent of Government. He certifies the accounts of all Government departments and a wide range of other public sector bodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources. THEBRITISHFILMINSTITUTE Contents Pages Summary and conclusions 1 Part 1: Introduction 6 Part 2: Sponsorship by the Department of National Heritage and financial management at the Institute 7 Part 3: The National Film Theatre, Film Festivals and the Museum of the Moving Image 12 Part 4: The National Film and Television Archive 21 Part 5: Widening access through regional support 26 Appendices 1. British Film Institute performance measures (as shown in DNH Annual Report, 1993) 29 2. Abstract British Film Institute financial statments 1992-93 30 3. Main funding relationships for support in the regions 1992-93 31 4. Directly funded Regional Film Theatres -Funding sources and performance 1992-93 32 5. Institute Services to Regional Film Theatres -Findings of a survey by the National Audit Office 33 THE BRITISH FILM INSTITUTE Summary and conclusions Introduction 1 The British Film Institute provide a wide range of facilities to encourage the development and appreciation of the art of film and television in the United Kingdom. Their activities include the National Film and Television Archive; the National Film Theatre; the Museum of the Moving Image; the London Film Festival and other film festivals: the production and distribution of film and video; Research and Education; a Research Library and Information Service; and funding and other support for film and activities undertaken by regional and other bodies. They received El5 million grant-in-aid from the Department of National Heritage in 1992-93 and generated El0 million of income. 2 Against a background of reductions in budgets and staff members at the Institute and lower than expected income from their trading operations, the National Audit Office study focused upon sponsorship by the Department and financial management arrangements; the operation of the National Film Theatre, the Film Festivals and the Museum of the Moving Image; the operation of the National Film and Television Archive; and measures designed to widen access through regional support. On Sponsorship by the Department and financial management at the Institute (Part 2) 3 The planning process is the fundamental mechanism for accountability to the Department and for assurance as to value for money from the grant given. The Department receive and analyse the Institute’s Corporate and Business Plans, their annual accounts, forecasts and financial information. From their detailed analysis of the Institute’s latest Corporate Plan the Department concluded that, whilst it provides good overall coverage, they will be suggesting, for discussion in 1994, a number of ways in which future plans might be developed. These include a closer articulation of Divisional plans, targets and budgets with the core aims of the Institute; and details of staffing levels. The Department consider that the Institute have made substantial efforts to produce performance indicators and they wish to encourage them to find additional reliable measures which will help demonstrate how far they are meeting their overall aims and the extent of improvements in value for money. 4 The work of the Board of Governors is crucial to the success of any sponsored body. In the case of the Institute the quality of papers for the Board was high in almost all cases, as were the demonstrations of the commitment and contribution of the individual governors. Two members of the Department attend meetings of the Board of Governors of the Institute. 5 The Institute’s senior management have progressively sought to introduce more realistic forecasting and budget setting and improved financial monitoring. In 1992-93 trading income was El.3 million below forecast and there were some expenditure overruns albeit much less significant than the 1 THE BFZTISH FILM INSTITUTE income shortfall and not calling for special attention beyond tighter budgetary control. This financial outturn represented a serious problem for the Institute which they were able to cover by recourse to sources of private funds. 6 More cautious income forecasts for 1993-94 and beyond, lower than expected funding from the Department and thus the need to contain costs, have led the Institute to review fundamentally their financial position. They have made staff cuts, reduced capital expenditure and deferred grants. Their financial management information systems are basically sound but there is less than full awareness of the imperatives of good financial control in some areas of the Institute. Consequently, continuation of the active Finance Department policing of budgets and senior management’s close attention, together with realism on the part of all budget holders in 1993-94 and beyond, is vital to future viability. On the National Film Theatre, Film Festivals and the Museum of the Moving Image (Part 3) 7 The overall progressive and continuing decline in attendance levels at the National Film Theatre is in part a reflection of falling membership levels and represents a threat to future financial viability. There are many contributory factors to this decline, some of which are to do with the physical environment at the Southbank. The overall programming policy of showing large numbers of different films, many short seasons and no long runs of particular films, had remained broadly unchanged in recent years until late 1993. Programming decisions were not significantly influenced by forecast income levels or past attendance levels. In 1993 management, including the new head of the Southbank, took firm action to strengthen and improve liaison between programming and marketing and to revise some elements of their programming to improve attendance levels. 8 The Institute made major changes in management at the Southbank in 1992-93 and introduced cost saving measures including staff restructuring. They also improved financial control. A new box office system, attention to services to annual members, marketing efforts and other measures should help attendance levels. But if they do not pick up significantly the Institute will have to take difficult decisions if they are to sustain the current levels of operations without ever increasing subsidies. The Institute set up a Governors’ sub-committee in the summer of 1993 to conduct a fundamental review of Theatre activities including programme planning and medium term options. 9 For the London Film Festival - an area of audience growth -budgetary planning, monitoring and control need to be enhanced if net subsidy overruns (E108,OOO or 42 per cent in 1992-93) are to be avoided in future. The Institute have improved the management arrangements for 1993-94. The National Audit Office considered that a staff member dedicated to providing financial advice and support to the Festival Director might be needed and might focus upon detailed and frequent monitoring. The Institute put this into place in Autumn 1993. The National Audit Office consider that the Institute need to operate to a clear film festival plan which contains break points for senior management review and options to be considered if planned income levels are not achieved. 2 THE BRITISH FILM INSTITUTE 10 The Museum of the Moving Image face particular challenges since they charge for admission and, unlike many museums, receive no subsidy from the public purse. Audience levels are in decline for reasons including the recession and being away from the tourist mainstream. The audience levels have declined from 536,000 to 368,000 in the last three years and now stand at around half the level needed to break even financially. This decline represents a threat to financial viability. The Institute’s review of the Museum’s future needs to view realistically the longer term calls on Institute financial resources and their capacity to sustain them. 11 The Museum give high priority to marketing and, having learned lessons from experiences in 1992-93, they developed a new marketing strategy in 1993. They need to monitor these new marketing initiatives closely and evaluate their impacts. 12 Properly functioning equipment is critical to the Museum and failures have not so far affected the quality of service to visitors. But the Museum forecast of essential equipment maintenance, repair and replacement costs in the years to 1995 greatly exceed budgeted allocations. They therefore need to take a realistic and careful view of equipment lifetimes and budget accordingly, making better use of asset accounting systems. 13 Southbank Retail and Catering Services have underperformed against financial targets and the retail spend by visitors has fallen. The financial projections for catering at 30 June 1993 were well below original income forecasts and management have resolved to remedy the situation before April 1994. On the National Film and Television Archive (Part 4) 14 The Archive hold some 275,000 titles and are expanding the collection by acquisition or donation wherever possible and appropriate and by recording television programmes. Preservation of decomposing old film, especially nitrate based film, presents an enormous challenge. From 1895 to about 1951 most film was produced on a cellulose nitrate base which is highly inflammable, and deteriorates irreversibly through chemical decay. At current rates of throughput, the preservation programme for nitrate film may well take 60 years to complete compared with the 24 years originally planned in 1976.
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