Measuring Culture & Heritage Capitals - updating UK Government investment principles

Culture Commons is working with Historic England and others on a national programme to develop a new framework to better articulate the value of arts, culture and heritage on an economic platform.

The project is part of the wider Culture and Heritage Capital (CHC) programme initiated by the Department of Culture, Media and Sport (DCMS). It is hoped the project outputs will help DCMS to articulate new values to HM Treasury, as well as inform a refresh of the Green Book and Magenta Book.

We are working as part of the consortium with a specific mission to engage wider creative and cultural sector stakeholders in dialogue to ensure any new framework for measuring capitals is informed by, and socialised within, the sectors it is hoped it will serve.

This project builds on Culture Commons' work ensuring that the benefits of culture, creativity and heritage - and the interventions needed to support them - are better understood and invested in by policy and decision makers across the UK.

Scope of the research

(Via Historic England)

The ACHTaxonomies project will develop a classification system and taxonomy, of arts, culture and heritage that systematically articulates the multiple benefits (or disbenefits) and values generated by arts, culture and heritage in a way that enables us to give weight to arts, culture and heritage in wider economic appraisal and decision-making.

In cultural economics, cultural capital is defined as "an asset which embodies, stores or gives rise to cultural value in addition to whatever economic value it may possess" (Throsby, 1999). In this context, arts, culture and heritage assets are 'stocks' which give rise to flows or services that can create benefits or disbenefits to society.

For more information see DCMS Culture and Heritage Capital Framework (Sagger et. al. 2021)  and Culture and Heritage Capital (CHC).

Background

In October 2022, the Arts and Humanities Research Council (AHRC) and DCMS opened bids for funding to develop a robust and holistic approach for capturing and articulating the value of culture and heritage.

Research teams were invited to bid across seven distinct Strands of research, each comprising a distinct research question including 'Strand A - developing a taxonomy of cultural and heritage capital services (associated stocks and flows)'. Historic England a range of parts were successful in bidding

"I'm delighted that Culture Commons will be working as part of an esteemed team of sector and academic leaders to design this new framework. There are many live debates about the best way to measure value within our sectors; we hope the work we do here will move that conversation on and result in a highly responsive and widely adopted framework that will inform better decison making around investment at the national and local levels."

- Trevor MacFarlane FRSA, Director Culture Commons

Project Rationale

Economic valuation is a powerful tool used to support traditional investment decisions, including public spending decisions. Economic techniques are used to value the benefits of different investment options against costs, and in theory, where the benefits are found to outweigh the costs – that investment is said to provide value for money.

Culture and herritage is undervalued within our current economic system because conventional valuation techniques rely heavily on assumptions about the close links between the value of goods or services and their market price. But for some goods and services, market prices, even if they do exist, are not a good or true indicator of value. For example, take the time spent on activities such as childcare and transport; these activities are critical to the quality of our lives but because they are not traded, they are not measured by key economic metrics (ONS, 2019). Because heritage is not fully traded in markets; market prices do not reflect its value and so there is a tendency to undervalue and underinvest in culture and herritage.

Whilst culture and heritage is not fully traded in markets there is a growing body of evidence to show that they matter to people. For example, when it comes to herritage, members of the public overwhelmingly want to secure the future of heritage (YouGov poll for Historic England, 2018); investing in local heritage is seen as a good use of public money (NLHF, 2015); people across the UK care about the protection and conservation of heritage sites; heritage is a source of national and local pride (DCMS, 2017) and UK citizens engage more with heritage compared to the European average (Eurobarometer, 2017). Also, in the wake of the Covid-19 pandemic, large numbers of people, particularly elderly people turned to virtual tours of cultural or historic sites to help them cope during the first lockdown (ONS, May 2020). A market price does not fully reflect the value of these heritage assets.

Current economic valuation methods and metrics are not wrong – they are just incomplete and only tell one part of the story. They capture the value of goods and services traded in markets but say nothing about non-market or near market activities. However, change is underway. It is more widely accepted that economics as a science needs to better consider the value of all things that matter to people,  capturing the value of non-market transactions, and addressing human wellbeing - not just wealth.

Recently, we have seen the emergence of economic approaches and policies that firmly place people and their wellbeing at the centre. For example, in New Zealand the government has broken traditions of national budget making based on classical economic models and metrics, to focus on one that is based on wellbeing. Jacinda Ardern, the prime minister, said that she wanted their wellbeing budget to be “the foundation for a different approach for government decision-making altogether”.

The Organisation for Economic Co-operation and Development (OECD) recently launched their Centre on Well-being, Inclusion, Sustainability and Equal Opportunity (WISE) arguing that “now more than ever, policy makers need to prioritise what matters in people’s lives” (OECD, 2020). Similarly in the UK, the Treasury’s recently revised Green Book (the UK government’s guidance on appraisal and evaluation) states that appraisals will include “all significant costs and benefits that affect the welfare and wellbeing of the population, not just market effects” (HM Treasury, 2020).

It is within this context that the Department for Culture, Media and Sport (DCMS), alongside partners including Historic England, the Arts Council England, Culture Commons and leading economic and heritage academics are launching ‘Valuing Culture and Heritage Capital: A framework towards informing decision making’.

The consortia will be publishing new valuation evidence from Simetrica and NESTA which shows people’s willingness to pay to preserve heritage assets (in this case historic high streets and civic buildings) that are in good condition.

Using the new framework, the objective is to develop holistic, standardised and universally accepted methods and evidence aligned with HM Treasury guidance that better measures, understands and articulates the value of heritage assets and the flow of services they deliver, which in turn benefit society.

We need to capture the value of heritage beyond market transactions to support better decision making and to prioritise people’s wellbeing.

You can find out more about this project on the Historic England project page here.