Creativity under pressure

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Alex Klaushofer explores why prominent voices have been raised in criticism of the lottery’s most enigmatic funder 

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Most lottery distributors have been on the receiving end of public disapproval at some point, but the criticism handed out to the National Endowment for Science Technology and the Arts (Nesta) last autumn by a parliamentary committee was harsh by any standards. Yet it passed virtually unnoticed by the wider public and in January parliament approved extra funding for Nesta. As a result, Nesta’s ability to spend lottery money wisely, along with its entire ethos, are now under scrutiny. 

Nesta, Britain’s first lottery endowment fund, was set up in 1998 with £200m from unallocated funding originally destined for the New Opportunities Fund. Its brief is to fill a funding gap for people with ideas, promoting talent, innovation and creativity in science, technology and the arts. Lord Puttnam, as chair, has given the organisation a head-start in creative kudos, and celebrity endorsement comes from having Carol Vorderman on the board of trustees. 

Nesta’s annual income from the interest on the endowment supports three areas: Invention and Innovation, its only open programme offering funding to develop projects; nominated fellowships offering creative individuals up to £75,000; and an invitation-only education programme. It also holds the contract for Planet Science – formerly Science Year – from the Department for Education and Skills. In its last financial year, 2001-02, Nesta made 104 awards worth £9.4m. This year, because of the declining earning power of its endowment, it will have about £8m to spend. 

However, as Nesta tries to carve out a niche, questions are being raised about how effectively it is fulfilling its mission. A report by the House of Commons Select Committee on Science and Technology last October identified a number of concerns, notably about Nesta’s financial affairs. The report criticised Nesta for a lack of clarity in the presentation of its expenditure in its annual report, and added that it would do well to reduce its running costs, which at 9.6% of budget are very close to the maximum 10% for non-departmental public bodies. The select committee also rebuked Nesta for having approached the government for a £300m top-up for its endowment fund, saying the request was ‘a bit rich… when it is unable to maintain a clear grasp of how much it is spending and on what.’ 

Despite the select committee’s recommendation against additional funding, in January parliament approved an extra £95m. Nesta’s response to the committee’s criticisms has been a mixture of rebuttal and acknowledgement that certain areas, such as the website, could be improved. Chief executive Jeremy Newton says the MPs’ claim about a lack of financial clarity was due to ‘quite a simple misconception in both directions’, including the committee’s failure to understand Nesta’s accounting processes. In recognition of the committee’s concerns, the DCMS has asked Nesta to provide data which clearly show how much it has spent in each area of the arts, science and technology. ‘There’s less than wholehearted compliance with that,’ Newton says. ‘We will do so, but heavily caveated. That’s not the point of Nesta, which is the blurring of the boundaries.’ 

Newton accepts, however, that Nesta must satisfy the same level of public accountability as any other lottery body. ‘We’re part of the lottery family. We need to be as publicly transparent as any other lottery body. We’re not going to be a maverick body and go round spending money as we wish.’ 

This assurance may be welcome, but it does not allay some of the wider concerns being voiced. Ian Gibson MP, chair of the Commons science and technology committee, says: ‘The jury’s out, as far as we’re concerned, with Nesta.’ Gibson is worried that Nesta’s performance is going largely unmonitored. ‘We’re the only people who seem to be bothered about it – it’s got a very low profile,’ he says. 

The shadow minister for culture in the Lords, Baroness Buscombe, agrees that politicians have a vital role to play as Nesta watchdogs. ‘If we don’t get it right, it will turn people off the lottery,’ she says. 

A large part of the problem seems to stem from a perception of Nesta as an avant-garde body that places too much emphasis on style at the expense of substance. Complaints about Nesta’s promotional material are common. ‘I actually put it in the bin because I didn’t know what it was about,’ Buscombe says about one of Nesta’s mailings. The annual report alone – a smart white hardback full of state-of-the-art graphics – has caused a mini-furore. The first recommendation of the science and technology committee’s report on Nesta states acidly: ‘Annual reports should not read like the production notes in a theatre pro-gramme. Creativity should not be at the expense of clarity.’ 

Newton defends Nesta’s promotional material robustly. ‘We care passionately about design. There’s no way I’m going to accept a criticism that we over-design our publications,’ he says. ‘We are extremely clever at getting good design at an economic price.’ 

And while expensive in absolute terms – the unit cost of the hardback annual report is nearly £10 before postage – it does compare well with the money spent by other lottery bodies. (For their 2001-02 reports, on a print run of 5,000 Nesta spent £48,885, the Heritage Lottery Fund £58,782 and the Community Fund, for 300 more copies, £71,362.) 

The critics argue that the perception created by such glossy material is not necessarily in the funder’s interest. ‘I don’t question the sincerity of what Nesta is trying to do,’ says Buscombe. ‘But it’s important, in its early days, that Nesta considers with care the way it is projecting itself so that people are comfortable that it is spending money with care. I’d rather they came across as a lean, mean organisation… because that’s what’s going to reassure people the money is being spent well.’ 

The critics also have doubts about how far Nesta – which describes itself prominently as a ‘creative investor’ – is reaching its core constituency, people with creative ideas worthy of support. Gibson says: ‘There are people who know about it, but it’s more an in-crowd. I meet bright young women who have got ideas and are feeling frustrated. I say to them ‘Why don’t you apply to Nesta?’, and they say, ‘Who is that?’ Nesta’s got to sit down and think how it’s going to get out there to the public.’ 

Richard Crossland, director of the arts consultancy Arts for Business Ltd, agrees that Nesta has some way to go in making itself known to its target group. ‘A lot of the arts sector doesn’t realise that funding from Nesta is available to them,’ he says. ‘It’s got to communicate with that sector better.’ 

He also believes that people in the arts need more sustainable sources of support than Nesta’s jump-start funding can provide. ‘It’s got to be about long-term business planning,’ he says. ‘I don’t think they’ve got a worked-out relationship with the other lottery bodies so that there can be continuity of funding and expert advice available.’ 

David Giampaolo is chief executive of Venture Capital Report, a private-sector venture capital firm specialising in supporting small-scale innovators and entrepreneurs. He says: ‘Nesta seed-funds some opportunities and those that turn good need another round of money. They could spend more time nurturing relationships with organisations like us.’ Keen to show that it is actively seeking out creative people, Nesta has just launched a pilot project deploying 25 ‘talent scouts’ in the East Midlands, a region from which it has few ‘fellows’. But even this process does not inspire huge confidence in its transparency: the identities of the talent scouts remain secret. 

What Nesta-watchers are looking for above all is clear evidence that the endowment’s investments are producing results. Its brief to support new talent and ideas means that much of the work, by its nature, is risky, and takes time to come to fruition. Of the Innovation and Invention and Fellowship programmes, Newton says, ‘We’re at the beginning of a long journey.’ 

Nesta is pleased that two of the inventions supported – an ergonomic handle, and a cost-cutting device to detect the causes of engine failure – have recently begun to yield some product royalties. Newton identifies education, which accounts for 30% of funding, as the strongest area to date: ‘I’m proud of how far we’ve got in the education world.’ 

Gareth Binns, Nesta’s director of education, says the body’s education role is to develop innovative approaches to learning and improve public understanding of science, technology and the arts. ‘We’re like a think-lab, do-lab. We start projects that hopefully other people can go on to develop,’ he says. Awards made under Nesta’s education programme include £75,000 to Lego Educational Division to develop new teaching materials for the design and technology element of the national curriculum, and projects supporting e-drama and the video mixing skill VJing. But in education Nesta has to fight off criticisms that its programmes duplicate other sources of support. The Royal Academy of Engineering recommended in its evidence to the Commons select committee that Nesta steer away from education projects altogether. Martin Lowson, professor of advanced transport at Bristol University, who contributed to the RAE evidence, says, ‘Nesta is offering things that are available elsewhere.’ Lowson, himself a Nesta awardee for pioneering a new type of urban transport, adds: ‘I don’t think you can be genuinely innovative at school. It’s very difficult for young people to be genuinely innovative – you have to have a lot of input before you can get output.’ Binns says he is careful to avoid overlap. Nesta takes a partnership approach, he says, working with organisations sharing, as he puts it, ‘a definite synergy and congruence in thinking.’ The science and technology committee gave this approach cautious endorsement: ‘Nesta’s education programme appears to have found a niche in an overcrowded market and we are pleased to hear of its success. We recommend that Nesta take steps to ensure that it is not funding projects which would be better funded by others.’ Nesta’s education work is likely to come under further scrutiny as it launches three new education schemes with £45m of the top-up funds granted in January. And Gibson promises that the science and technology committee will stay on the case. ‘We’re like a dog with a bone with some issues. Next parliament we’ll see what’s been done,’ he says. www.nesta.org.uk