Does the IBBY article by Creative Scotland’s Head of Literature, Publishing & Languages, Mairi Kidd, herald long-overdue change from Creative Scotland?

We have asked several times to see Creative Scotland’s priorities for Scotland’s publishing sector and have been referred to its 10-year plan each time. The plan is high level. It does not set out priorities by sector. If it did, they would now be several years out of date.

That has left us having to infer CS’s priorities from who and what it has funded. The evidence indicates that in recent years they have been: 1. keeping Sandstone afloat at the expense of viable competitors; 2. annually subsidising the balance sheets of two of the sector’s dominant and wealthiest publishers, Birlinn and Floris; and 3. ignoring any conflict of interest that involves Birlinn.

We’ll come back to what CS could and should be doing. Let us first consider what it has been doing.

Sandstone, Birlinn and Floris – Creative Scotland’s most-funded publishers

Creative Scotland (CS) has so far underwritten £0.31m losses at Sandstone. Like a gambler desperately betting more in an attempt to recover losses, CS has funded Sandstone for 14 consecutive years during which the company has lost £0.328m and made just £7k profit. Sandstone is worth just £71k despite CS having injected £0.41m investment finance.

In March 2019, seeing that CS was prepared to keep Sandstone afloat at any cost, Highlands & Islands Enterprise exposed taxpayers to a further £0.175m of Sandstone risk by agreeing a working capital facility secured in part against the £30k rescue capital CS handed Sandstone in March 2019.

Birlinn has received £0.4m from CS. But CS also placed £0.3m under its control by funding Scottish Review of Books (SRB), the main book review publisher in Scotland. SRB’s Chair and sole Person Of Significant Control is Birlinn’s marketing director; SRB’s online editor is an employee of both Birlinn and Birlinn’s marketing director’s literary PR company; and SRB’s editor is a Birlinn author and series editor. SRB unashamedly promoted Birlinn’s £45k-CS-funded Muriel Spark republications, with CS even appearing in videos to promote them. CS then chose to ignore the shadow directorship that was reported to it.

Religious publisher Floris has received £0.35m from CS. Over 2015-17 it was funded every year despite making £0.54m profit. CS has funded Floris to such an extent that it has forced would-be competitors from the children’s market, leaving Floris with an effective monopoly in non-specialist children’s fiction in Scotland.

Sandstone’s funding has been propped up an unviable company. Where has Birlinn and Floris’s recent funding ended up? A Dutch-registered trust in the case of much of Floris’s (the equivalent of 83% of its 2017 CS subsidy); and its shareholder’s pocket in the case of Birlinn, which pays its owner £34.5k p.a. rent for offices he owns.

Creative Scotland faces Competition Appeal Tribunal claim

CS’s ongoing distortion of Scotland’s publishing market has led us to bring a case against it at the Competition Appeal Tribunal for anti-competitive behaviour by abusing its dominant position in breach of the Competition Act 1998.

When a small publisher takes this sort of legal action to hold CS to account, there can be no clearer indication that CS has lost the plot. We have also asked the Auditor General for Scotland to report on CS’s poor value for money – a direct result of its ineffective governance and ultra vires spending.

So, has Mairi Kidd’s article changed anything?

Yes. And no.

Mairi has identified gaps in provision in Scotland’s children’s publishing market. That is a first step, but is meaningless unless CS is prepared to change. And therein lies the problem.

Aside from CS’s three favourites, who have benefited handsomely, publishers have no confidence that CS will support them if they try to fill the gaps she has identified. CS has chosen not to consider context when assessing applications, or even to assess if applicants need what they have applied for. Floris and Birlinn can self-fund their projects, fuelled by the income they derive from backlists CS has helped finance; yet Birlinn and Floris, together with Sandstone, are the very companies most likely to receive CS funding.

It does not stop there. CS’s most-funded publishers are also those most likely to receive additional cash handouts, and kudos, by winning Publisher of the Year at the Saltire Literary Awards, of which CS just happens to be principal funder. This year’s winner was perpetual lossmaker Sandstone. It won despite having made its largest ever annual loss – almost £100k. Publishing good books is so much easier when CS underwrites 100% of your losses!

Such is CS’s institutional bias that many publishers, including us, consider them competitors.

So, while Mairi’s article identifies gaps, it does not acknowledge that Creative Scotland’s nonsensical funding policy and failure to articulate priorities have been the two most significant causes of those gaps.

Where does this leave us?

Our legal case is a consequence of CS refusing to learn lessons. Unless Creative Scotland changes, nothing will change; publishing in Scotland will remain the oligopoly that CS intends. The barriers to entry that it has erected will be extremely difficult – maybe even impossible – to break down.

While Mairi Kidd’s article is welcome, it will only be progress if change follows. That CS is contesting our Competition Appeal Tribunal case suggests it remains a very long way off.

(Our submission to the Scottish Government CTEEA Committee’s Arts Funding Inquiry contains detailed recommendations (at the end) for reforming Creative Scotland.)