Dance Base, which operates from a purpose-built home in Edinburgh’s Grassmarket, has told the Scottish Parliament it may have to reduce its workforce by half, “mothball” parts of its building and cut back its work across the country as it battles for survival.
It has raised the prospect of having to close down and sell off its building below Edinburgh Castle, which was opened by King Charles in 2001, or wind up the entire company unless it receives more financial assistance.
Dance Base, which has embarked on a “survival and recovery” plan, has become the latest arts organisation to admit it is facing a “perfect storm” due to reduced income, standstill funding and the prospect of crippling energy bills.
The company, which is a key player in the Edinburgh Festival Fringe, has told MSPs it “may not survive” until a major overhaul of arts funding in Scotland is due to take effect in 2024.
The company, which has been running since 1984, says it is facing a rise in its energy bills from £35,000 to £160,000 in January, with other rising costs leaving it having to grapple with £200,000 of unplanned costs when its annual turnover is around £1.2 million.
Dance Base has told Holyrood’s culture committee, which has been gathering evidence from across the sector ahead of the Scottish Government setting its budget for the next financial year, the current reality for building-based cultural organisations across the country “can only be described as dire”.
MSPs were warned last month by Creative Scotland chief executive Iain Munro of an impending “perfect storm” for arts organisations. He admitted that continuing with standstill funding arrangements was “increasingly unviable” for companies and venues due to their rising costs and reduced income since the start of the pandemic.
Mr Munro also raised the alarm about the prospect of “significant cuts” to its annual funding from the Scottish Government, which has indicated it may slash the culture and events budget, which also supports national performance companies and national collections, from £177 million to £173m.
Since then, the arts charity that ran the Edinburgh International Film Festival and the Filmhouse cinemas has gone into administration, while the National Galleries of Scotland has closed one of its main attractions for the rest of the year.
Dance Base’s report for MSPs states: “Scottish Government support for organisations and for artists has been effective over the last two years in keeping large parts of the sector from collapse, and ready for recovery.
“However, there’s an incredible challenge that is being faced as a result of energy price increases along with salary and general bill inflation.
"This is particularly being felt in building-based organisations where we have high energy costs and significant numbers of staff, and where sources of income through ticket sales are under real pressure.
"The additional costs ‘baked in’ by the energy and cost-of-living crises mean that our energy prices are estimated to rise from £35,000 to £160,000 in January 2023, and with a projected 9 per cent increase in salaries and some bills this would leave us with £200,000 of unplanned costs on a £1.2 million turnover.
“We also anticipate real pressure on our earned income given the reduction in disposable income, and with flat Creative Scotland and City of Edinburgh Council funding in 2023/24 (in fact at the same cash levels as 2011) we are facing what could be described as a perfect storm.
“Creative Scotland have indicated that long-term funding decisions that will take effect from 2024 would need to take into account the new realities in cost bases, even at the cost of defunding some to keep others going.
"This gives us some hope of an effective longer-term business model, especially if the energy crisis abates.
“The problem that we and many others face is that we may not survive until that point.
“Dance Base faces having to make decisions in the autumn that will have major and probably permanent effects.
"This includes stopping all of our work supporting dance artists, teachers and people in communities across Scotland, making half of our staff redundant and mothballing or repurposing much of the building for non-dance use. Even with this we could be using the majority of our reserves in 2023.
“We know from talking to other building-based organisations that we are far from alone in this, but that our situation is more urgent than some.”
Chief executive Jim Hollington said Dance Base was planning ahead on the basis that Government support for businesses to help pay their soaring energy bills would continue into the next financial year. But he said the company still had to find £150,000 in savings or through additional income.
He told The Scotsman: “We have strong backing from the board for a survival and recovery plan that preserves the core of the organisation to deliver our charitable purpose, while cutting costs and raising funds.
"Actions are already underway that will be painful and reduce the size and scope of the organisation, but will keep us healthy for the next 18 months.
"This assumes that UK Government assistance for business energy bills continues beyond March 2023.
"I know of no similar organisation that could pay unsubsidised energy prices at today’s prices for any length of time.
“I think we are ahead of most other organisations for the simple fact that our three-year energy price deal ends in January, and at best it is likely to be 2.5 times the current price even with subsidy, so we can’t wait.
"Most other building based organisations are facing the same problems, but if their energy costs are fixed for longer they have a little more time to plan and worry.”