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Further update on ENO

2nd March 2016 in News

Written by Cressida Pollock, Chief Executive of ENO.

Over the past weeks, I have read many letters, emails, tweets, press reports and commentary about the position ENO is in – particularly regarding how we can make cost savings. These savings are vital to compensate for the permanent 30% reduction in funding from Arts Council England (ACE). That means we have to save £5m every year, which means taking difficult decisions about our future.

The Board, the senior management and I have consulted with dozens of opera leaders in the UK, US and across Europe over the last few months, with former music directors and artistic leaders of ENO, as well as holding conversations with many of our staff and partners. Everyone has been supportive of our situation, and concerned about the risk to ENO’s survival.

ENO is often at the centre of passionate debate and inevitably, many questions are asked as people start to think about the issues involved. We are going through a difficult time and the amount of support shown for the company only reinforces our view that ENO’s survival is of paramount importance to many people. The sheer size of the financial challenge we face, and the time we have to deal with it, means that there is a very real risk to ENO if we do not make fundamental changes to the Company, however upsetting and unpalatable they may be.

Below I have outlined the context for our decisions and answer some of the questions we have been most frequently asked.

Why do we have to make changes to how ENO operates?

Over the past 20 years, we have received £33m of additional public funding from ACE above the amount given to us to operate as a fully funded company. As Darren Henley (CEO of Arts Council England) put it recently – opera companies need to adapt, or die. While we have received bailouts in the past which have ‘topped up’ our funding, ACE have made it clear that future bailouts will not be forthcoming. We need to be able to live on £12.38m public subsidy or we have a real risk that we will not meet our payroll obligations in April 2017.

As I look at the decisions that need to be made in order to save ENO from bankruptcy, it is clear that we face difficult choices. There have been suggestions that if we ask the whole company to take a temporary pay cut, or produce cheaper productions, we can weather this storm and be back to “business as usual” in 2-3 years. I wish the solution was that easy. Our significant funding reduction is not a temporary situation. As a responsible CEO, and as the head of a company that employs over 350 people and engages many more on temporary contracts, I owe it to hundreds of individuals and families to ensure that ENO can withstand this change in our funding and that we do not face a crisis next year which could risk every member of staff losing their livelihood.

We cannot move to an ‘austerity year’ and hope that we buy ourselves some time for a magic solution to materialise. ENO, in one way or another, has adopted this approach for over 30 years. ENO is a solvent company and will remain that way but it can only remain so by fundamentally changing how it works. We are not simply trying to find £5m of savings. The company will have to save £5m every year. Over the next four years, we have to find £20m worth of savings to ensure we can get through this period and be resilient in the years to come.

When ACE confirmed our £12.38m annual subsidy (following the Opera and Ballet Review in 2014), our level of funding was set as one which would support an opera company with performing forces engaged for 30-40 weeks per annum, staging 7-8 productions and 75-80 performances per year. Our plan has always sought to do as much as possible above this level – to ensure a permanent presence throughout the year and to protect our permanent forces. As we have gone through all the options available to us, we have had the following priorities in mind.

ENO needs to:

  1. Deliver artistically excellent work which as accessible to the broadest possible audience
  2. Retain the ability to grow, to experiment and to innovate
  3. Ensure utilisation of our performing forces and permanent staff
  4. Operate on a resilient and stable financial basis

How do we programme a season on a £12.38m yearly budget?

We have looked at every way of saving money to ensure that we protect artistic quality and that we continue to invest in audiences and have opportunities to grow and to innovate.

As we assessed each of these options for reducing costs we also made bold, yet attainable, assumptions about growth in our audience, in our fundraising and in our commercial income.

We started from an assumption that we should continue to programme work in three ‘sub-seasons’ (Autumn, Spring, Summer)- this would need a minimum of 11 operas. We took that as our starting point as we looked at what we could then afford, what mix of new productions, revivals, smaller productions, productions with significantly reduced sets, props and costumes, and even concert performances. All of these were weighed against the artistic impact for the audience and the impact on the company, and whether these would be more than a one-year patch on the finances. Simply put, whatever mix we looked at there was still a financial gap of more than £1.5m per annum.

Below I have outlined the challenges of some of the most frequent suggestions we have heard from our audience and friends:

  • 11 productions of ‘black box’ (minimally staged productions)
    This would be an ‘austerity year’ approach to take – cutting costs for one year only in the hope that we are able to eventually return to ‘normal’ – this is not a permanent solution. Additionally, this approach would reduce our technical and production staff needs by about 80%, and would lose us permanently the enormous expertise and experience in our technical and production teams. This option also brings significant risk to our box office – and therefore does not close our financial gap. Finally, this only gets us through one year – it is not a sustainable solution for ENO every year.
  • A year made up entirely of revival productions
    This would, of course, reduce our sets, props and costumes budget considerably. However, we could only manage this for one year – it is simply not sustainable.

Even if we adopt one of these two extremes – all revivals or all black box productions – we are not able to close the financial gap.

We also looked at what significant changes to our cost base we could make to allow us to deliver 11 productions each year. Over 70% of our budget each year is used to employ people – whether permanent members of the company or external contributors. Over 75% of our payroll costs come from technical and production staff, the orchestra and the chorus – this means that any cuts will be borne significantly by these parts of the company. We looked at whether we could move towards a freelance orchestra and chorus.  Much of what ENO stands for can be seen through the extraordinary quality of the work we put on stage. The chorus and orchestra are the heart and soul of the Company, and we will do all we can to protect them both as permanent ensembles.

Even if we could programme 11 productions (a mixture of new and revival) using a freelance orchestra and chorus, we are neither prepared to take that risk artistically nor to destroy our permanent ensembles.

Our final option was to retain our permanent ensembles, but change the way we programme our season. Rather than programme Autumn, Spring and Summer seasons, we have proposed programming 10 operas in the Coliseum in two sub-seasons (Autumn and Spring) with a programme of work to take place outside of the Coliseum – mainly during the Summer – by 2019/20. This allows us to continue to create incredible new stagings, perform favourites, explore smaller repertory and be as accessible as possible to audiences. It also allows us to make more rental income from the theatre at a time of year when it is traditionally more difficult to sell seats to some opera productions – all that income will be re-invested in growing ENO. Adopting this way of working means asking some of our Company, including the ENO chorus, to move to seasonal contracts, reflecting the period for which they will be working. We have recognised that this may well cause financial hardship for our staff, and we are striving to find additional work outside our core season for those most affected.

How do you make cost savings across the entire Company?

The cost savings required will be felt across the whole organisation. In some cases we are asking our employees to work longer hours on less money, in others we are asking our staff to move to a seasonal contract. For a few members of staff, this will mean redundancy – though we are looking to limit redundancies as much as possible.

Those being asked to move onto a seasonal contract (which includes, but is not limited to, the ENO chorus) are being asked to do so to reflect the work they will undertake for the company in future years. When cuts are being made throughout the company, we must prioritise paying staff members only for the time they are working for the organisation.

Why don’t you reduce senior management pay?

Many of you have commented on the need to reduce management pay, in light of the proposed cuts to other members of ENO staff. I can confirm that we have already reduced senior management pay and I have set a target for a further reduction in Senior Management pay of 20%. Furthermore, we’ve been able to save £700,000 by reducing our overheads – such as moving our administrative offices into our West Hampstead rehearsal studios and renegotiating contracts with some of our suppliers.

Which individuals are moving to seasonal contracts and why?

We have asked members of the ENO chorus and some members of our music staff, stage management and production teams to move to a seasonal contract paying them only for the time they are working within the core season. We have been able to guarantee the orchestra 12 full months of work, so they are not affected in the same way.

We realise this is a very difficult time for members of the ENO Chorus but we have tried our best to soften the financial impact by offering them as much notice as possible. We had proposed a transition period so that the new contract would not begin until August 2017 – so that these changes would not have full financial impact on individuals until May 2018 – which gives us 26 months to work with chorus members to find ways to limit this financial impact. Unfortunately the recent decision to pursue industrial action has put our ability to offer this transition period at risk given the potential damaging impact which the industrial action could have on ENO.

We are actively looking for work for the ENO chorus, music staff, production teams and stage management for summer 2017 and beyond. We are talking to many organisations to form long-term partnerships so that work can be guaranteed for individuals a year or two in advance.

As a result of these changes, what will ENO look like in three years time?

These changes mean that ENO will programme 10 works at the Coliseum and six productions outside of the Coliseum each year by 2019/20. This will enable us to focus on what makes ENO great and allows us to continue to grow, innovate and experiment – this means more new work, chamber work, unusual repertoire, talent development and audience development. We will aim to reach a more diverse audience at more venues across and outside of London and we will become a more flexible organisation and more financially resilient.