Who said: “cutting arts funding is a false economy?” No, it wasn’t Lisa Nandy or Rachel Reeves. And it certainly wasn’t Angus Robertson or Shona Robison.

It was George Osborne, who told a friend of mine exactly that at Arts Council England in 2015. The Tory Chancellor of the Exchequer hardly threw money at the arts, but at least he recognised its potential return on investment (ROI).

 As I argued previously, Scotland’s creative industries have been neglected since 2021’s election, and the effects are evident. The Scottish Government pledged to inject an additional £100m annually into culture by 2028. So far a hollow promise.

A bleak future

What would happen if this pledge remains unfulfilled? That future looks bleak. The creative economy, attacked from all sides in recent years, is stagnant. Without investment it would contract. Job losses would be particularly severe in fragile areas such as grassroots music venues, which not only nurture talent but also support local economies through hospitality and tourism. The Ironworks in Inverness was a victim of property development decisions. Broadcast in Glasgow closed recently and the CCA may close due to “significant financial uncertainty”. The future is uncertain for Summerhall and the NTIA warns of night club extinction by 2030.

Cultural tourism would be undermined. Music tourism alone was worth well over half a billion to Scotland’s economy in 2022. Culture is indeed a major tourism driver. But Scotland’s globally recognised festivals, live music scene, heritage and crafts require ongoing investment to maintain competitiveness over rival destinations. Without it, we attract fewer international tourists and our global brand is diminished, impacting everything from trade to talent.

Missed opportunities for economic diversification could slow growth in high-potential areas like digital creativity and international exports. Without investment in innovative sectors, Scotland could fall behind competitors. Countries like Ireland and Denmark are investing heavily in their creative industries to drive post-COVID recovery. We failed to attract Game Of Thrones a decade ago; let’s not miss out on even more opportunities.

A bright alternative

How do we stop Scotland lagging behind? I propose mission-oriented, strategic investment in the creative industries of that long-promised £100m.

Scotland’s creative sector provides significant economic value, contributing £5bn annually to GDP, while supporting over 70,000 jobs directly. Yet, this only scratches the surface of its potential when evaluated through a triple bottom line approach: economic, social and environmental impact.

Economic contributions can be  quantified — through growth in cultural tourism, IP generation, exports and employment — but culture isn’t just an economic asset; it’s a medium for improving wellbeing, social cohesion and making environmental progress. Culture brings communities together, and creates a sense of belonging. It can also help achieve Scotland’s net-zero goals, positioning the country as a sustainable cultural innovation leader.

Strategic investment, not subsidy

The Scottish Government needs to focus on initiatives with clear outcomes for economic recovery, innovation and inclusion. A £100m investment in Scotland’s creative industries could yield a five-fold return. Arts Council of England research indicates that £1 invested in the arts yields £5 of tax revenue, suggesting an immediate impact of up to £500m within the first year. This is driven by exports, job creation and increased local spending around events and creative hubs.

Over the next five years, long-tail benefits of this initial £100m investment could include the preservation and growth of grassroots venues, job creation, IP exploitation and expansion of cultural tourism, with long-term asset yields and multiplier effects potentially contributing an additional £2.5bn. Social and environmental impact would yield significant cost savings too, although they are more difficult to quantify.

With budget announcements looming, now is the time to be bold and live up to that £100m promise. Here’s how it could be productively invested:

1 Grassroots Music Venues (GMVs) & Creative Hubs (£20m):

Grassroots music venues are keystones in Scotland’s music industry, nurturing new talent and sustaining local economies. Yet, with two venues closing per week across the UK, this sector is in crisis. A £20m investment can stabilise key venues, safeguard and create jobs and establish regional creative hubs to encourage cross-sectoral collaboration and the growth of creative SMEs.

Grassroots venues directly contribute to music tourism. In our 2018 music tourism research report for Scottish Enterprise, we found that GMVs contributed £59m of Glasgow’s £160m total music tourism revenue. They also form essential cultural infrastructure — supporting clusters of jobs in  the hospitality, retail, and travel sectors.

Investment in GMVs and creative hubs stimulates growth and ensures Scotland’s cultural heritage remains intact, attracting and retaining young people to live, study and work  here, while creating new opportunities for artists to thrive. Universities use the night time economy to attract foreign students. Foreign students contribute over £700m to the Scottish economy each year, £400m of which is off-campus spending, much of  it on cultural activities. Reduced cultural activity risks Scottish university admissions losing out to other nations.

2 Cultural Tourism Development (£15m):

Cultural tourism has consistently proven  to yield high ROI. By building on the success of festivals like the Edinburgh International Festival, Celtic Connections, TRNSMT and Edinburgh Festival Fringe, investing in regional events and leveraging digital tools, Scotland can attract more cultural tourists and expand year-round tourism offerings.

Targeting areas like live music, heritage experiences and nature-based tourism (especially in the Highlands and Islands) will boost revenue streams and can be aligned with the government’s environmental goals. This could add hundreds of millions to the economy while enhancing Scotland’s global cultural profile.

3 Creative Tech & Digital Innovation (£15m):

Scotland is well-positioned to lead in creative technology. By supporting digital creatives and investing in VR, AR, interactive storytelling and immersive experiences, the government can future-proof the sector. Platforms like XpoNorth Digital and Creative Tech Scotland can scale with additional investment.

XpoNorth has been particularly successful in promoting digital innovation and supporting micro and small businesses within the creative industries, which are key drivers of the Highlands and Islands’ region economy. The programme has acted as a hub for creative collaboration, skills development and access to global markets. Initiatives like Creative Tech Scotland and the creative cities networks, bring together creatives and technologists and champion data-driven innovation.

Adopting technologies like blockchain can enhance resilience and create new revenue models in the creative economy. Encouraging creative businesses’ digital development will reduce costs, expand global reach and contribute to environmental responsibility.

4 Creative Industry Training & Skills Development (£10m):

The future of the creative industries lies in digital upskilling, green skills, and entrepreneurial training for Scotland’s workforce. Creating a culture of creativity requires strong leadership and the nurturing of communities. Allocating £10m to programmes that provide training in digital innovation and entrepreneurship will develop a highly skilled, adaptable workforce.

This can be done through partnerships with Skills Development Scotland and local educational bodies, especially in underserved areas like the South of Scotland. Developing skills that foster creativity and tech innovation will secure Scotland’s position in Europe’s creative economy.

5 Cross-Sector Collaborations (£10m):

Scotland’s creative industries have a high multiplier effect, particularly when they intersect with other sectors like health and technology. Investing in creative partnerships with NHS Scotland and mental health organisations could yield both economic returns and improve the wellbeing of communities.

For example, arts programmes that support mental health in rural areas can reduce public health costs, while also generating revenue for local creative practitioners. This investment aligns with inclusive growth and the wellbeing economy framework Scotland is pursuing.

6 Freelancer & Micro-Business Support (£10m):

Freelancers and micro-businesses are the lifeblood of the creative economy but are often the most vulnerable. A £10m support fund, including micro-loans, business grants and affordable workspaces can help stabilise this critical talent base.

Freelancers were disproportionately affected by the pandemic; many still struggle with financial insecurity. Supporting their development through policies that reflect fair work principles will not only boost productivity but will also help retain Scotland’s creative talent.

7 Creative Scotland Stabilisation (£20m):

Multi-year funding delays have caused uncertainty across Scotland’s cultural organisations. By allocating £20m to augment and stabilise existing funding, Creative Scotland can make the funding announcements now. This will help arts organisations, cultural institutions and sector development organisations plan long-term, take creative risks and innovate.

Stabilising Creative Scotland’s budget will also provide the certainty needed for cultural bodies to create ambitious projects that further Scotland’s international cultural reputation. This will stimulate job creation, increase Scotland’s exports and enrich the domestic arts scene.

Complementary initiatives

Strategic investment alone isn’t enough. Money should be complemented with free and low-cost initiatives that create an enabling environment for creative growth. These include:

• Reforming planning laws to support creative spaces and taking the Agent of Change Principle policy into law to protect grassroots venues from threats by gentrification. I was involved in the policy negotiation, which made some progress, but it needs to be made law to offer sufficient protection to our cultural assets.
• Creating one-stop licensing platforms for creative enterprises (for events and festivals, for example) would simplify bureaucracy and reduce business overheads.
• Lifelong learning programmes focused on creative and digital skills will ensure Scotland’s workforce is future-ready.
• Simplified IP systems and enhanced public-private partnerships can encourage innovation and protect creative businesses.

Conclusion

This £100m investment will yield significant initial return, with  long-tail benefits. The money must be spent now. It can be a mix of grant funding, equity investment, loans and mezzanine finance. It can also leverage additional investment through public-private partnerships.

Scotland is at a crossroads. The cultural sector is an essential part of the country’s economy, society and environment. If the Scottish Government carries on down the path of  cultural neglect, our national economy will continue to suffer. Alternatively, choosing mission-oriented strategic investment, Scotland can secure both immediate economic returns and long-term growth.

The cost of inaction is too high to ignore, and the potential returns are too great to miss. We cannot afford hollow promises and false economies. Let’s commit to real investment and realise culture’s potential as the driving force behind Scotland’s future.

Feature image: Glasgow’s Live Music Ecosystem. by Rae-Yen Song 

This article responds to questions raised in Part One: How to fix Scotland’s cultural funding crisis? 

You can now read the CILG reports referenced by the author here

See also: Pat Kane, A new manifesto to address Scottish arts crisis, E2: The Future (& Scotland too) on Substack