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Heritage Risk Barometer
Hard times: heritage braces for the cost of living crisis
Welcome to Ecclesiastical’s 2022 Heritage Risk Barometer. As part of our ongoing support for the heritage sector, the Heritage Risk Barometer is a major research-based report that aims to understand the risks the sector faces and what it can do to manage and mitigate those threats.
It is based on interviews with 500 decision makers in the heritage sector, representing the full spectrum of heritage organisations, from museums to stately homes and everything in between. The survey was conducted in July 2022.
The main risks identified in the research include increasing costs, volunteer and staff wellbeing, and ease of access for visitors. In the rest of the report, we’ll look at the heritage risk landscape in detail, as the COVID crisis morphs into a new era of austerity.
Introduction
Nearly everyone (84%) in Ecclesiastical’s 2022 Heritage Risk Barometer research agrees that they will have to drastically cut costs to survive over the next year. Over half of the respondents (51%) strongly agree.
So this is where we are as we approach the end of the first full post-lockdown year. Fighting for survival, rather than the much hoped for recovery.
Luckily, the heritage sector is nothing if not resilient. It survived the COVID pandemic and started putting processes and contingencies in place to help it weather future crises. It probably didn’t expect to have to put them into practice quite so soon, but it is in a better place now than it was at the start of 2020.
For example, many of the organisations we surveyed have travelled far on the path to sustainability. Their commitment will help them to meet environmental goals and save significant amounts of money in the long run. Others are finding innovative ways to attract new people - staff, volunteers, and visitors. Across the sector, organisations are prioritising new digital skills and accessibility options for all. They remain fine custodians of the nation’s heritage, and of the finances used to preserve it.
So the heritage sector faces the current crisis from a solid position. It will certainly be tested - our research identifies economic challenges as the number one risk to heritage organisations over the next one, three, and five years - but it will endure.
The cost of living isn’t the only threat, and taken as a whole, the risk environment looks diverse. Challenges range from managing volunteer wellbeing to the need to innovate. Many of these threats stay remarkably consistent (in the view of our respondents) over the next five years. But rising costs and reduced visitor numbers are a thread running through them all.
In the rest of this report, we’ll dig into the details. What are the major concerns of sector decision makers today as they look to cut costs? How does that analysis change over time? And what can the sector do to meet adversity head-on?
Customer Segment Director
Ecclesiastical Insurance
“After the COVID pandemic, the heritage sector may have been looking forward to a period of calm. Instead, our research shows it preparing for the next crisis wave to hit. Organisations will struggle, but they will face this crisis with resilience and creativity, as they always do.”
Most of the heritage organisations surveyed for our Heritage Risk Barometer (89%) are concerned about the cost of living crisis above all else. Over half (51%) are extremely concerned.
While the two years from early 2020 might be described as the time of COVID, the next two (from mid-2022) may come to be seen as the new era of austerity. The stark reality is that heritage organisations have barely had breathing space. One storm has followed the other, with little in the way of sunshine in between.
What, practically, does this mean for heritage organisations? Pretty much all (90%) are concerned about their energy consumption. That’s likely to be a mix of climate concern and - increasingly - spiralling costs.
They’re worried about volunteer (80%) and staff (79%) wellbeing, and the recruitment and retention of both (80%, 78%). They’re worried about pretty much everything that concerns money, and nearly everything does.
Which is why most (84%) agree that they will have to cut costs to survive. But there’s a contradiction here. How do you cut costs and at the same time, attract more visitors from a dwindling pool? Customers are being squeezed too.
The majority of heritage organisations surveyed (58%) have seen a reduction in visitor numbers since the pandemic, alongside a change in visitor patterns. Nearly half (45%) now believe this is due to a fall in disposable incomes. Visitors feeling the pinch might not travel at all, or may spend less in cafes or gift shops when they get there.
Against this background, and with the pandemic far from over, heritage organisations might be forgiven for accepting what fate may bring. But that’s not what we’re seeing.
Instead, they’re rolling up their sleeves and doing what they can. Some are finding ways to attract more local customers. Nearly half (45%) are busy renegotiating contracts with suppliers or seeking new ones (43%). Many (42%) are limiting the space open to the public (to reduce fuel bills), reducing opening hours (39%), or opening on fewer days (39%). Only 1% say they are not doing anything.
Fears around rising costs reduced slightly when we asked heritage organisations to look ahead to 2025 and 2027, so at least they can make out a dim light at the end of a long tunnel.
But limiting access to your property is a sticking plaster solution at best. It reduces costs but limits income, and can, at worst, cause reputational damage. It’s a last resort measure, and the fact that many heritage organisations are already using it gives some indication of the pressure the sector is under.
Heritage organisations face a great many risks to some degree or other, but many threats can be anticipated, planned for, and mitigated with smart, targeted investment. The question is, what happens to your property improvements and maintenance when revenue targets are missed? How do you improve visitor experience without significant investment?
A large majority (78%) of heritage organisations feel they need to innovate to survive, but can they afford to in the current climate? The next 12 months will test the sector’s creativity and resolve to the limit.
"The sector has displayed remarkable ingenuity, resilience and collaboration through recent crises, and with rising costs for both organisations and visitors, it will have to again. At the Heritage Alliance, with the support from the National Lottery Heritage Fund, we have just announced an extension of our sector support programme ‘Rebuilding Heritage’, targeting organisations that need help with business planning, fundraising and communications."
How we support Heritage organisations
Case study
“Uncertainty is a huge challenge for an organisation like ours. Our energy used to be 9p and 13p a unit. Our energy company recently said it would now be 90 pence. There will be a cap, but nobody can say what that is. That makes planning very difficult.
We operate on storage heaters that were installed 40 years ago and are reaching the end of their life. They’re not efficient. We are developing a programme of repair and replacement, but that takes time and money and will be a gradual process.
We’re also looking at the possibility of photovoltaic panels on the roof and ground source heat pumps. We commit to being greener, and the current situation has just moved these things higher up the agenda.
Our income is mostly generated from tenants, and of course, they are feeling the pinch too. We also generate income by hiring out spaces in the mansion for wedding parties, corporate events and so on, but again, we’ve seen a drop off in bookings because people aren’t confident about hosting those types of events at the moment.
The coming winter will be a challenge. We’re looking at reducing opening hours in consultation with tenants and the people who hire our spaces regularly. We’re also looking at if and when we turn storage heaters on.”
Tracy Stringfellow
Chief Executive Officer
Royal Greenwich Heritage Trust
Case study
"The cost of living crisis has effectively made the financial worries we always have more acute.
We’re very good at forecasting and have an excellent board and sympathetic donors. We have put in cost mitigations where we can, but most of our costs are fixed. When it comes to revenue, we’ve done a lot of strategic thinking around what we can do to become more financially sustainable, so in that sense, we’re ahead of the game.
What are we doing? We’re maximising the use of our buildings outside school time for profit. We’re also exploiting the excellent brand we have and using our in-house expertise to replicate what we do well for an outside audience. To that end, we’ve just launched several on-demand, online programmes that anyone can subscribe to. It’s a way for people who are interested in ballet to get an insight into The Royal Ballet School.
The current situation has increased the risk for projects like these. The courses will cost in the short term, but will eventually provide much-needed revenue for the organisation. The cost of living crisis means that the path to profit will be longer than originally anticipated, but we have to innovate to ensure the long-term viability of the school."
Pippa Adamson
Chief Operating Officer
Royal Ballet School
Heritage organisations depend on committed staff and the generous time of volunteers. The pandemic effect is still being felt in this area, with older volunteers in particular worrying about the latest COVID resurgence.
In our Heritage Risk Barometer 2022, managing volunteer wellbeing is the second-highest threat that our respondents identify in the next 12 months, with 80% picking it out. The recruitment and retention of volunteers is also at 80%, managing staff wellbeing 79%, and the recruitment and retention of staff is just a percentage point behind at 78%.
Concerns around managing staff wellbeing have doubled since our last Barometer in early (pre-COVID) 2020, for obvious reasons. And now the heritage sector has another people problem. The cost of living crisis runs through everything in our 2022 research, and it will compound the challenges organisations face in recruiting and retaining the people they need.
More than one in five (21%) organisations in our survey are already struggling to attract and retain staff, with the economic climate cited as one reason. Employees - and potential employees - are struggling with rising costs too, and may gravitate towards higher-paying sectors.
For their part, volunteers may be less able to afford commuting costs as fuel and energy prices spiral. Some will take on part-time work to top up fixed incomes.
One positive from the pandemic is that the heritage sector (like others) started taking staff wellbeing more seriously, and that continues. In our survey, 70% of respondents say they are increasing their focus on employee and volunteer wellbeing. Over half (52%) say they are offering better incentives, such as health insurance.
"It has been a positive sign that heritage organisations have recently increased their focus on the wellbeing of staff. Times are tough, but that can only be good for the future of the sector.”
But will these policies survive the anticipated cost-cutting? Many of our respondents (53%) say they are increasing or reassessing salaries in response to the talent crisis. But how generous can they afford to be if visitor numbers drop and costs continue to rise?
It’s a Catch-22 with no easy answers. In our survey, fears around staff wellbeing and recruitment and retention ease slightly in the medium and long term, albeit not by much. Heritage organisations struggling with staffing issues can only hope the cost of living crisis is a short - if sharp - shock.
“Social media is increasingly key to volunteer recruitment, and shining a spotlight on those who go the extra mile is an important act of stewardship while also inspiring others: Crimestoppers and Hospice UK celebrate a Volunteer of the Year, for example.”
How we support Heritage organisations
Our Heritage Risk Barometer 2022 research finds that the number one concern for heritage organisations over the next 12 months is rising costs. Thereafter, their fears turn to the impact of the cost-of-living crisis on visitor numbers.
The threat of declining visitor numbers is decision makers’ chief concern as they look three and five years ahead. This suggests the sector has little confidence in a speedy end to the crisis.
Its pessimism is entirely understandable. Over half (58%) of the organisations surveyed have already seen a fall in visitor numbers since the pandemic. COVID fears are considered the most likely cause of that (68%), but a large proportion of respondents (45%) also blame falling disposable incomes.
So customers are either being priced out of making the trip, or fears over COVID, now resurging, are keeping them away. On the upside, it’s possible that the cost-of-living crisis will keep more people in the UK over the next 12 months, and heritage properties might benefit from the staycation trend. But 76% of our respondents are also concerned by a reduction in the number of visitors from overseas.
The sector’s normal response to a visitor issue would be to innovate and make itself more attractive to customers. And in fact,78% of organisations in our survey admit that they need to innovate to survive. But rising costs and reduced incomes make the necessary investment harder to come by.
This is reflected in our findings. Many respondents (77%) worry specifically about a failure to innovate. Others are concerned by, for example, a lack of digital skills (77%) or competition from other types of attractions (75%). In fact, worries over competitiveness are far more marked in 2022 than they were in our last Heritage Risk Barometer in early 2020.
Ease of access for visitors with additional needs is also one of the main concerns organisations have for the next 12 months, with 80% of respondents picking this option.
All of which leads to the same conclusion. Heritage organisations worry about the number of customers coming through the doors. Despite this, they refuse to resign themselves to a period of managed decline.
Four out of five (80%) respondents are engaging more with local customers as a direct response to the cost-of-living crisis. As fuel prices rise, many people are limiting the distances they travel. Attracting more customers from the local community may be good for both the environment and the bottom line.
This strategy - and a desire for cheap, local days out - may be paying off to some extent. While the majority of our respondents reported reduced visitor numbers, over a third (38%) had seen an increase. How precipitous the fall in custom overall turns out to be will depend on the length and depth of the economic slump.
Widening access means growing your customer base
Ease of access to customers with additional needs is one of the most pressing risks identified by the Heritage Risk Barometer 2022.
Museums, galleries, stately homes, and other heritage organisations have already done much to improve physical access to properties. Now, many are also focusing on increasing accessibility for a neurodiverse audience, those diagnosed with autism, ADHD, dyslexia, dyspraxia, or other neurological conditions.
That might include the provision of quiet areas and more tailored sensory experiences. One thing many neurodivergent people want to be able to do is plan, so they can avoid surprises and anything that might be triggering or unpleasant. Downloadable maps, social stories, and a helpful website are important here.
It can also be a good idea to indicate when the property tends to be quieter, to help neurodivergent people avoid crowds. Clearly mark amenities like cafes, toilets, quiet spaces, and exits.
Making a few simple but meaningful changes can be beneficial for both visitors and heritage properties. Over a million people in the UK are diagnosed as neurodivergent. Many of them - along with their families - want to enjoy the country’s diverse and fascinating heritage sector.
The heritage sector can be proud of the way it has responded to the climate emergency. Well over a quarter of respondents (28%) to our Heritage Risk Barometer 2022 research already say they have reached net zero. A majority of the rest (64%) are setting targets to do so, and most say they will achieve their aim within five years1.
That shows leadership, passion, and commitment. In the current economic climate, it also shows commendable forethought. Nearly all our respondents (90%) are concerned about their organisation’s energy consumption. Over half (52%) are extremely concerned.
Are they solely concerned with climate change, or is the soaring cost of energy now a factor as well? Our respondents worry about the impact of extreme weather on their properties, but also understand that sustainable organisations are better able to ride out global energy shocks. That's true in the current crisis and will be in the future.
1OnePoll Heritage Barometer study 2022 - net zero questions - based on 305 responses from UK heritage organisations.
There is still much to do, and our respondents recognise this. Nearly four-fifths (78%) say their organisations are unprepared for the climate emergency. Nearly as many (69%) say they lack the necessary support.
The worry is that rising costs will force some organisations to put green projects on hold. That would be unfortunate. Investing in sustainability today can bring significant savings tomorrow.
And sustainable organisations are more resilient in all sorts of ways. Over three-quarters (76%) of our respondents agree that there is growing pressure on the heritage sector over sustainability. When you’re fighting for every customer, sustainability can be a key differentiator.
The sector’s proactive approach to sustainability is commendable. It is demonstrating an environmental commitment first and foremost, but it knows that green is lean in economic terms, too.
How we support Heritage organisations
Case study
“We have spent the last year creating our Climate Action Plan, which details how we intend to make the organisation more sustainable. This sets the long-term framework, but also how we will show concrete results in just two and a half years.
We’re approaching sustainability holistically, using the four pillars of people, decarbonisation, operations, and resilience. Each feeds into the others, and, crucially, they all have buy-in from across the organisation.
We’re target-driven, so we can show what we have achieved. For example, we’ll reduce our building carbon emissions by 20% before the end of 2025. We’ve centralised our waste contract, so that we can show exactly how much material we recycle or reuse across all our sites.
The risks of climate change are already obvious to an organisation like ours. Coastal erosion and extreme weather threaten the buildings we look after and drive up conservation and operational costs. This summer was a real indication of what’s to come, with sites closing because of the heat. Understanding climate risk and ways to adapt is essential.
We hope that rising costs will be more of a spur to action than a drag on our plans. Doing nothing is not an option.”
Ruth Knight,
Head of Climate and Sustainability
English Heritage
Over three-quarters (77%) of respondents to our Heritage Risk Barometer 2022 research are worried about crime, and that figure rises to 79% when they are asked to look forward to the next three years.
In our survey, cybercrime is a specific worry, but in a separate study2 we found that trespassing (31%), anti-social behaviour (29%), and criminal damage (28%) are the crimes heritage organisations tend to suffer from most. In addition, over a quarter (27%) had experienced a theft in the previous 12 months.
2OnePoll Heritage and Crime survey 2022 - based on 500 responses from UK heritage organisations.
These figures are only likely to rise. Four in five (79%) respondents said they are more concerned about crime since the start of the cost of living crisis. Three-quarters (74%) expect an increase in crime over the next 12 months.
“Heritage organisations are a prime target for criminals who may see them, rightly or wrongly, as a soft touch. It’s worth spending time learning how to protect yourself from smash and grab attacks in particular.”
Crime is a huge risk to heritage organisations at the best of times. When costs are rising and visitors are spending less, it can be critical. According to our crime survey, over the past 12 months, crime has cost heritage organisations more than £60,000 on average.
And now there is another risk. Environmental protesters recently threw soup over Vincent van Gogh’s Sunflowers at the National Gallery in London. Globally, activists have glued themselves to Picasso and Goya paintings. These incidents attracted waves of publicity, making repeats more likely.
Theft, cybercrime, and damage to property (often caused by the theft of lead and stone), antiquities, and art hit organisations hard. But the growing threat of crime also forces organisations to spend more on security, at a time when budgets are already stretched to breaking point. Organisations have difficult decisions to make, as they try to balance security and spending in a new era of austerity.
“We are seeing something of a 'perfect storm', whereby the cost of living and police resource issues are coupled with environmental activism and other forms of protest. There are incidents in museums and galleries, and country houses and estates could be targeted. It is now more important than ever that these heritage sites take steps to protect themselves and ensure the ongoing security of their assets.”
How we support Heritage organisations
Conclusion
2022 is a year of anxiety, and our Heritage Risk Barometer 2022 reflects that reality. COVID is far from over, and a cost-of-living crisis is pushing up prices and reducing revenue.
That’s true across the economy, and the heritage sector is as vulnerable as any. According to our research, the cost of living crisis and rising prices are the main risks to heritage organisations now and for the foreseeable future. Leaders are worried. Most think they will need to cut costs to survive.
The extent of that cost-cutting will create new risks and compound old ones. Heritage organisations could see further recruitment and retention problems as volunteers and employees, already worried by COVID, look for paid or better-paid work. Visitors may not travel, or might spend less when they do. Economic crime tends to escalate in times of austerity.
As a result, investment may slow or stop altogether, storing up problems for the future. Our Heritage Risk Barometer shows that heritage leaders are seriously concerned about rising energy costs and the effects of extreme weather on property and grounds. They also want to innovate to inspire visitors, but worry about spending money from dwindling coffers.
It feels like a perfect storm, but there are some points of light in the gloom. The sector is taking sustainability seriously, with many organisations at net zero already and many more on their way. That will reduce costs and raise reputations in the long run. The health and well-being of staff and volunteers is more of a focus, which bodes well for the future. Organisations are showing flexibility by engaging with their local communities.
In addition, the situation is at least making more heritage organisations take risk seriously. They are refining their approach to risk management in a way that will make them more resilient in the long run.
These are positives, but the overall picture is predictably downbeat. Our Heritage Risk Barometer shows a web of risks, with the cost of living at its centre. Leaders foresee challenging times ahead, and little in the way of respite for some time.
In other words, the resilience that many heritage organisations developed during the lockdown years is needed again, and much sooner than anyone might have anticipated.