The government commissioned an independent review of Arts Council England (ACE), led by Baroness Margaret Hodge, to examine how the organisation operates and how effectively it supports the arts, culture and creative industries across England.

The Review considers Arts Council England’s role as a national, arm’s-length body responsible for distributing public funding, supporting artists and organisations, and ensuring access to culture across all regions. It assesses whether current funding models, strategic frameworks and governance arrangements are fit for purpose in the context of rising costs, increasing precarity across the sector, and long-standing regional and structural inequalities.

The review was published on 16 December 2025. Find a summary of recommendations below or read the full report.

Summary of recommendations:

1. The government must retain the Arts Council.

2. The government must maintain and strengthen the Arm’s Length Principle at all levels of government to ensure that arts funding is protected from politicisation and the Arts Council must rigorously uphold that principle.

3. Whilst recognising that the fiscal constraints limit the government’s ability to increase Grant in Aid funding for culture and the arts, the government can and must find innovative ways of responding urgently to the underfunding that has undermined the arts over the last decade:

• 3.1. The government should consider amending the theatre tax relief to include the additional costs of touring, such as transport and accommodation costs. This would mirror the orchestra tax relief and help to give a new emphasis to touring to support ensuring much wider access to excellence while at the same time stimulating economic activity in underserved areas.
• 3.2. The government should consider amending the orchestra tax relief to cover the international costs of touring, which have been exacerbated by Brexit, such as the costs of work permits, visas and transport.
• 3.3. The government should consider speeding up payments of tax relief to ease cashflow problems. Adopting a system akin to the VAT relief model where payments are made within 30 days should be explored.
• 3.4. The government must consider enabling ACE to offer a wide range of financing options by having a trading arm. This would enable public funding to go further by moving beyond repayable grants and introducing loans, blended finance, social impact investment and equity investment.
• 3.5. The government and ACE should consider devising a mechanism to bring money back to ACE when an NPO has produced a show that is a strong commercial success. In those circumstances ACE should enjoy a return through royalties, or a percentage of profits or a fee.
• 3.6. The government should consider doubling the level of Gift Aid from £0.25 to £0.50 for shows, events and organisations that reach audiences outside London and the South East to encourage philanthropy outside the Capital.
• 3.7. The government should consider introducing a new tax incentive akin to the French Aillagon Law to incentivise corporate giving outside London.
• 3.8. The government should consider, when possible, creating a £250 million endowment fund for ACE that is structured in a way that levers philanthropic giving, with ACE raising £1 for every £1 they receive through the endowment. NESTAreceived a government endowment of £250 million, to invest in the arts and creative industries. NESTA has stopped funding the arts.
• 3.9. ACE should review legacy capital charges and title restrictions. These historical constraints impede organisations from securing private finance for capital investment. Such a review should look to establish a proportionate, time-limited framework to vary these charges, enabling organisations to leverage assets for urgent capital needs and unlock new investment.
• 3.10. The government should consider deferring the repayment of specific Culture Recovery Fund loans awarded to charitable organisations. Such deferment should be conditional on the organisations proving an immediate need for capital investment and agreeing to a match-funding requirement: for every £1 of loan repayment deferred, the organisation must secure an additional £1 through philanthropic means for investment in their urgent capital requirements. To safeguard against income loss, inflationary adjustments must be applied to the deferred loan amounts.
• 3.11. ACE should work with the sector to develop a better capability in philanthropic giving.
• 3.12. The government should consider a new public recognition honour.

Other longer term funding ideas, like a local tourism levy, are explored in the section on funding.

4. ACE should replace Let’s Create with a new, less prescriptive strategy that is both ambitious, simple and reflects the government’s ambition of excellence for all but that allows each organisation or individual to apply according to their strengths and the unique contribution they can make to delivering a vibrant and innovative creative sector that is consistent with the overarching strategy of the Arts Council.

5. There should be a completely new model for funding the National Portfolio Organisations.

• Organisations would set out their unique contribution and the KPIs on which they would want to be assessed. The application would have to meet the ACE strategy and the KPIs would be negotiated.
• National ACE should determine the funding of all the organisations across the country that are nationally significant. The National Board would be advised by sectoral panels of experts. There should also be a stronger role given to ACE’s artform directors.
• All other monies should be devolved to new local and regional decision-making boards. These will comprise local artists, representatives of local community organisations, local education representatives and representatives from local government.
• To provide stability, consideration should be given to enabling longer term planning and reducing bureaucracy. The government and ACE should consider the following changes:
  • Lengthening the NPO cycle from three to five years.
  • Having a rolling programme of applications.
  • Assuring certain organisations, that meet the highest quality standards, that they will receive at least 80% of their funding in the next round.

6. ACE should radically reform its application and reporting requirements so that they are less bureaucratic and onerous for organisations but still ensure accountability for public money. ACE should also review its data requirements to demonstrate that the data it collects has a clear purpose and that the data demanded is appropriate for the different objectives of the different organisations and the different cultural disciplines.

7. All DCMS lottery funded bodies should consider working together to simplify and perhaps share their application processes and to agree, as far as possible, a common set of KPIs.

8. The government should consider creating a statutory duty for local government to prepare a cultural strategy every 5 years which should encompass the arts, culture, and heritage.

9. ACE should review, simplify and reduce the number of its funding streams to make it easier and less bureaucratic for those applying for funding.

10. ACE should introduce a new National Programme for Individuals, using money from existing funding streams. The purpose would be to support emerging and mid-career individuals to ensure a diverse talent pool by providing individuals with funding of around £30,000 per year and mentoring support. The programme should be for individuals from low income backgrounds, under-represented groups and under-served areas. Up to 500 individuals could be supported from existing funding pots and the programme could be expanded through other sources of funding.

11. The Department for Education, Department for Culture, Media & Sport and Arts Council England should consider working together on a specific project with philanthropists, trusts and foundations to create a joint fund that would support improvements to the cultural offer in schools. This would reinforce the excellent new proposals in the Curriculum Review and could contribute to the cost of training and paying for specialist teachers, and transport costs to visit theatres or museums.

12. ACE should leverage its relationships with NPOs and encourage them to strengthen their focus on talent development to ensure good coverage across England. This may include artists in residence opportunities.

13. ACE should launch a new programme to grow culture in under-served areas. ACE would employ two community arts workers in each identified area, to be tasked with identifying local artists, bringing them together with local community organisations and schools to develop a genuine bottom up cultural offer and opportunities.

14. ACE should review and publish a data and reporting strategy that clearly communicates how it will collect, interpret, store and share the reporting and evaluation data it collects. The data must be made available in a genuinely useful way to all stakeholders.

15. DCMS and ACE should define ACE’s role as a development agency, and this should involve strengthening its work on advocating, convening, sharing best practices and supporting the sector on new and difficult challenges. ACE should work with all relevant organisations, whether or not they are ACE funded.

16. ACE should ensure that under-represented groups are represented across the organisation at all levels. Work to support and promote diverse groups both within the organisation and in the funded organisations should always be a priority.

17. DCMS should review whether the development role for libraries would be better done by the British Library with a transfer of resources to the British Library if they agree to take on the role.

18. ACE should work with DCMS and the whole museum sector (including those national museums funded directly by DCMS) to develop a strategic framework and create a specific long-term plan for museums.

19. ACE should take a more proactive role in raising awareness of the Acceptance in Lieu, Cultural Gifts scheme and the Government Indemnity Scheme.

20. ACE should adopt a more pragmatic approach to risk appetite in relation to the Government Indemnity Scheme, and this should be supported by the government.

21. ACE should invest in a comprehensive overhaul of its systems, and the government should consider supporting it to do so with additional funding.