A NEW report into the funding of Coventry City of Culture Trust revealed increased costs, below-expected income and an accounting error helped contribute to its downfall.
And following the report, conducted by the national audit office, the committee of public accounts chair Meg Hillier said support and monitoring needed to be stepped up to ensure future programmes retained their legacies.
Coventry City of Culture Trust went into administration in February.
The watchdog’s report looked into funding provided by the Department for Culture Media and Sport (DCMS) and its arm’s-length bodies to the Trust and the city council for Coventry’s year as UK City of Culture.
It also delved into how the DCMS oversaw the Trust’s use of that cash.
In total, £21.3million of the £22.8million awarded was paid to the Trust, which made up around 48 per cent of its income.
Of this, £10.9million was central government funding and £10.4 million came from National Lottery funds.
Arts Council England was put in charge of most of the financial monitoring and a representative attended the Trust’s board of trustee meetings.
The Trust first reported financial difficulties in August 2021, just three months after Coventry’s City of Culture year began, and felt its financial position was at risk.
Arts Council England then commissioned an independent financial review, after which the Trust began to make budget cuts and worked with funders to bring forward grant payments.
In March 2022, the Trust reported its finances were improving but just months later it found itself under pressure again.
The report said this was due to income being lower than envisaged and increased costs due to the Covid-19 pandemic, as well as an accounting error identified by the Trust in August 2022.
The DCMS and Arts Council England then put forward funding and in October the city council approved a £1million loan to deliver the legacy programme.
More problems emerged a month later and by December the Trust forecast it would have a £4million cash deficit.
After monitoring the situation and considering options including transferring the Trust’s assets and associated grants to the city council, the DCMS decided against providing new funding.
Instead, it decided to bring forward agreed future funding but the Trust couldn’t meet the conditions set by the DCMS to qualify for the cash.
Meg Hillier said it was a great shame to see the Trust go into administration and said the over £170million investment secured as a result of the year was a highlight.
