The Scottish Arts Council started out trying to cut the number of Scottish orchestras. It's ended up trying to cut Scottish Ballet as well. John Percival begs them all to think again

If Scottish Ballet were to disappear, not just the dancers, staff and musicians would be out of work, but Scotland's reputation would suffer in the eyes of millions worldwide

"A bunch of bastards." Such language, applied (even unattributably) to a client company by one of the top brass at a recent meeting of the Scottish Arts Council, is shocking enough, but what came next is worse. Not only has Scottish Ballet, the object of that anonymous vituperation, been refused lottery money from the SAC to fund the new Christmas production that was meant to help build a strong future for the company, but the Council has been recommended besides to withdraw its grant altogether. If implemented, the cut would mean the death of the company. But Scottish Ballet will not go down without a fight, and yesterday announced a campaign to rally support.

Letter-writing to MPs and to Scotland's arts minister Sam Galbraith, lobbying, a petition and a fighting fund are all part of the strategy. As the company's marketing director Lucy Shorrocks declares, "We will not be pulling any punches. We will not allow Scottish Ballet to go to the wall."

Scottish Ballet is not just any old company. Founded nearly 30 years ago by the then Arts Council of Great Britain, it met a need that had been voiced for decades before that. Peter Darrell, its first director and choreographer, had one of the liveliest and most original minds in British dance. Bringing with him (from Bristol via Sadler's Wells) a team - administrator, dancers and staff - used to working together, he quickly set a policy that has lasted. The repertory was to combine classics and new works; the creations were often adventurously conceived, the revivals sometimes of less familiar ballets, and always in treatments carefully adapted to the company's capabilities. There was as much Scottish content as possible in choreography, music and subject matter; and, to develop Scottish dancers, a school was started which, aided by Glasgow City Council, has become a focal point for dance teaching in Scotland. Another major factor was a determination to serve the whole of the country, travelling nationwide to small towns and villages as well as big cities.

On top of becoming a truly national company, Scottish Ballet has always been internationally successful too. Judge its dance standards by the fact that Margot Fonteyn, Natalia Makarova and Rudolf Nureyev were only the most famous of many stars delighted to come as guests. Scottish Ballet is also the only British dance company to have had a whole series of productions by the most sought-after of European choreographers, Jiri Kylian. Tours have taken it to America, Australia, Canada, China, France, Hong Kong, Japan (where it sold more tickets than the Bolshoi Ballet), Korea, Malaysia, Spain, Russia (where it became the first foreign company ever to perform in Moscow's Kremlin Palace) and the Ukraine.

So what went wrong? First, as calculated by the Scottish Arts Council's own client review, Scottish Ballet was underfunded to the extent of pounds 185,000 in 1995 and progressively more since then. But the vitally needed funds were not forthcoming because the SAC simply did not have the money. That deficiency limited what could be done in the way of new productions, despite good box-office returns and surprisingly resilient sponsorship. Besides, there has always been a faction within the SAC (as indeed there is further south too) that finds ballet, for all its audience popularity, outmoded and would prefer a small modern-dance company. This despite the fact that Britain's best modern company, Rambert Dance, can only half-fill Edinburgh's Festival Theatre for four nights at a time, whereas Scottish Ballet plays there for two weeks a season, and to good houses.

The final straw was the problem of the orchestras. As long ago as 1991, it became apparent that Scotland had more than it could afford, especially as Scottish Opera's large full-time orchestra was so clearly under-used. Various merger proposals over the years all fell through. Finally, a scheme was put forward for Scottish Opera, Scottish Ballet, the Royal Scottish National Orchestra and the Scottish Chamber Orchestra all to share resources. The theory was that this would generate savings, while an overall increase in government funding for the arts in Scotland was promised too.

But Scottish Ballet not unreasonably wondered why, during the 18 months of negotiations, details of the supposed savings were never produced. All they could see, in fact, was an obligation for them to pay pounds 300,000 a year more - as their contribution to a large full-time orchestra - than their present frugal part-time orchestra costs, and no firm commitment from anyone for help towards the bill. What board, in their right minds, could agree?

The Musicians' Union, as it happens, backs the Ballet's view. Dennis Scard, the MU general secretary, told me this week that they had also asked in vain for proper figures. When these were not forthcoming, they did their own calculations and found that "it didn't add up". That was confirmed, according to Scottish Ballet's general manager David Williams, when eventually the figures for the merger scheme were produced and "the savings were just not there".

But the Scottish Office and the SAC had made up their minds. They exhorted the companies to make "a leap of faith". The others, with nothing to lose, agreed; Scottish Ballet, without anything firmer than vague murmurings about likely sources from which to meet the increased costs, said it could not do so. At this point, according to the SAC, the Ballet withdrew from the negotiations; the company's chairman, Oona Ivory, however, insists that they did not walk out. "We knew how that would be represented. We went only because we were told to leave."

She would still like to sit down and talk to find a solution. "The last thing I want is to have some kind of acrimonious dispute with the Scottish Arts Council," she told me. "We need to get round a table and put our needs across."

Scottish Ballet has a seven-year artistic plan prepared by its artistic director Galina Samsova. According to Oona Ivory, when it was put to the SAC's dance committee, she asked every member in turn whether they endorsed lt, and every one said yes. "Yet our artistic ambitions are continually frustrated. This is a vigorous but small nation; it deserves the very best in ballet, opera, theatre and music."

If Scottish Ballet were to disappear, not just the dancers, staff and musicians would be out of work. The Dance School of Scotland depends on its relationship with the company. Audiences would be deprived of programmes they enjoy, and theatres left with gaps in their schedules (just when increased facilities are being provided through the Lottery). Scottish trade would lose the impetus, contacts and publicity that Scottish Ballet's overseas tours have repeatedly provided. And Scotland's reputation would suffer in the eyes of millions worldwide.

I rang the Scottish Arts Council earlier this week and asked what they were doing to help save a company that was both a major artistic asset to the country and an important source of economic benefit too. The answer I received was that "A decision will be made in August, when the Council meets. It would not be useful to speculate before then." Not good enough: they should be working to avoid what would surely be seen in Scotland and outside as a national disaster and a disgrace. That is the message which Scottish Ballet's campaign must now get over to the SAC, the politicians and the whole country.