Arts Council of Wales leaders have used a Senedd committee appearance to paint a picture of a resilient but increasingly stretched cultural sector, warning of significant financial pressures while arguing that investment in the arts delivers benefits far beyond culture alone.
Appearing before the Senedd's Culture, Communications, Welsh Language and Sport Committee, Chief Executive Dafydd Rhys, Chair Maggie Russell and Director of Finance and Business Services Lorna Virgo faced questions on funding, participation, workforce development, arts and health, regional inequalities and the future sustainability of Wales' cultural infrastructure.
The session revealed a sector navigating a complex mix of rising demand, long-term financial challenges and changing public expectations.
A Sector Under Financial Pressure
One of the most significant revelations from the session concerned National Lottery funding.
While previous expectations assumed relatively stable income levels, the Arts Council confirmed that Lottery returns are currently performing around 18 per cent below budget assumptions for the current financial year. According to Lorna Virgo, this equates to approximately £3.4 million less income than anticipated.
The organisation has already adjusted its budgets and utilised reserves to absorb some of the impact, but committee members heard that difficult decisions are now being made about future programmes and strategic investments.
Dafydd Rhys described the situation as particularly concerning because Lottery funding supports many of the Arts Council's development and project-based initiatives.
The discussion also highlighted broader structural challenges facing public investment in culture. Rhys noted that Welsh Government funding for the Arts Council has risen only modestly since 2010, despite significant inflationary pressures during the intervening years.
He argued that, had funding kept pace with inflation and rising costs, Arts Council Wales would be operating with a substantially larger budget than it currently receives.
The witnesses were keen to stress that these pressures are not entirely new. Rather, they described a cumulative effect of long-term underinvestment that is becoming increasingly difficult for organisations to absorb.
Participation Remains Strong, But Warning Signs Emerge
Questions were raised about a decline in participation figures among multi-year funded organisations.
Arts Council representatives acknowledged the reduction but argued that headline figures require context.
According to Rhys, overall audience numbers across Wales have continued to recover following the pandemic, with attendance levels often outperforming wider UK trends. However, the number of participatory opportunities has fallen as venues and organisations grapple with rising operating costs.
A particular concern is the reduction in opportunities for children and young people. Rhys noted a marked decline in youth participation and linked much of this to practical pressures affecting venues.
Several organisations, he explained, can no longer afford to open throughout the week, reducing the amount of community activity, workshops and engagement programmes that can take place.
Committee members questioned whether this suggested a problem with the funding model itself, but the Arts Council maintained that the underlying framework remains sound and that broader economic pressures represent the primary challenge.
Workforce Numbers Continue to Lag Behind Pre-Pandemic Levels
The health of the arts workforce emerged as another significant issue.
The committee heard that the Welsh arts workforce remains approximately 20 per cent smaller than before the pandemic.
While permanent roles have declined, the greatest reduction has been among casual and freelance workers, where numbers have reportedly fallen by around 30 per cent.
For Arts Council Wales, this raises concerns beyond immediate staffing levels.
Freelance and casual roles often represent the first step into creative careers, meaning today's workforce reduction could have long-term implications for talent development and sector sustainability.
The issue also has equality implications. Rhys noted that women represent a significant proportion of the arts workforce and are therefore disproportionately impacted by reductions in employment opportunities.
Committee members asked whether artificial intelligence was beginning to influence employment trends within the sector. The Arts Council's response reflected the wider debate currently taking place across creative industries.
While acknowledging concerns about AI replacing certain forms of work, particularly in areas such as film production and content creation, witnesses also recognised opportunities.
AI is increasingly being used to support grant applications and administrative processes, potentially lowering barriers for smaller organisations and individual artists who may previously have lacked the resources to compete with larger institutions.
The Council's position appeared cautious rather than oppositional, emphasising the importance of maintaining the authentic voice of artists regardless of the tools being used.
Addressing Cultural "Cold Spots"
Questions from committee members also brought renewed attention to geographical inequalities in arts provision.
Several members highlighted what they saw as significant gaps in cultural infrastructure and funded organisations across parts of the Valleys and Mid Wales.
Chair Maggie Russell acknowledged that some areas have historically received relatively few applications for funding and described them as long-standing "cold spots".
The Arts Council outlined a pilot programme currently focused on Anglesey, Neath Port Talbot and Torfaen, where partnership models with local authorities are being tested to increase arts activity and build stronger local cultural ecosystems.
The hope is that investment in local capacity, staff and partnerships will generate new projects and stronger funding applications over time.
However, committee members questioned why local authorities such as Blaenau Gwent and Merthyr Tydfil were not currently included in the initiative.
Arts Council representatives accepted that more work remains to be done and stressed that addressing regional disparities remains a priority.
Welsh National Theatre and Funding Clarification
The committee also sought clarity on funding for the newly established Welsh National Theatre.
The Arts Council confirmed that the organisation is not currently a Multi-Year Funded Organisation and does not receive ongoing revenue support through that programme.
Instead, support for productions such as Owain & Henry has come through project funding streams, including the recently established Major Productions Fund.
This clarification may help answer questions that have circulated within parts of the sector regarding the organisation's funding position and relationship with Arts Council Wales.
The Growing Case for Arts and Health
Perhaps the most optimistic section of the session focused on arts and health.
Rhys described Wales as an international leader in this area and repeatedly returned to the argument that investment in arts activity delivers measurable benefits for public services.
Examples included dance programmes designed to reduce falls among older people, arts-based interventions supporting mental health and creative activities for people living with dementia.
Rather than presenting these primarily as cultural initiatives, Arts Council Wales framed them as preventative interventions capable of reducing pressure on NHS services.
The organisation argued that relatively modest investments in community arts programmes can generate significant savings elsewhere in the public sector while simultaneously improving wellbeing and quality of life.
This appears increasingly central to how the Arts Council is making the case for future public investment.
Traditional Music and National Collections
Towards the end of the session, committee members asked about progress following a review of traditional music in Wales.
Arts Council Wales highlighted increased investment in the sector, including support delivered through Ty Cerdd, development posts focused on traditional music and dedicated funding for community-level projects.
Members also discussed the National Contemporary Art Gallery programme.
Witnesses reported encouraging audience growth at participating venues and suggested there is strong public interest in seeing works from the national collection displayed closer to local communities.
However, the Arts Council acknowledged that the project does not currently have a self-sustaining financial model and will likely require continued public support if it is to develop further.
Questions remain over future expansion and whether a more permanent anchor site may ultimately be required.
Looking Ahead
While many of the committee's questions focused on challenges, the session also highlighted the continued ambition of a sector determined to evolve despite difficult circumstances.
The evidence presented suggested an organisation attempting to balance multiple priorities: sustaining major national institutions, nurturing emerging talent, tackling regional inequalities, supporting workforce development and demonstrating the social value of culture.
Yet the message from Arts Council Wales was also clear. Without greater long-term investment from both Welsh Government and Lottery funding streams, maintaining that balance will become increasingly difficult.
For policymakers, the debate is likely to continue to centre on a familiar but unresolved question: whether culture should be viewed primarily as a discretionary expenditure, or as part of the essential infrastructure that supports education, health, communities and the wider economy.
Judging by the evidence given to the committee, Arts Council Wales firmly believes it is the latter.
Watch in Full Below:
