The outgoing Arts Council chairman, Lord Gowrie, yesterday condemned "the worst revenue crisis of my adult lifetime".
However, despite the dramatic words, the vast majority of arts companies received standstill grants rather than the big cuts that had been feared. And changes to regulations mean that lottery money will shortly be able to be used for annual revenue funding in the arts.
The latest round of standstill grants are the culmination of five years without an increase in funds from the Government to the Arts Council, meaning it has lost pounds 34m in real terms.
In one interesting aside, Lord Gowrie accused the Treasury of still "taking revenge on David Mellor" referring to the time when Mr Mellor was a Treasury minister and, according to Lord Gowrie, persuaded an arts minister to ask for more money.
Lord Gowrie said: "The vengeance is almost Sicilian. I hope Sir Terence Burns [the Treasury permanent secretary] has got over that period of ire."
Questions also remain about some of the organisations the Arts Council funds. It gives the literary periodical, the London Review Of Books, pounds 28,104. Asked why a commercial journal, on sale in the high streets, should be funded by the taxpayer, Lord Gowrie replied: "It's a knotty question, that. There's a problem that many publications are in the hands of commercial organisations. But the LRB does advance the cause of literature."
In the new set of grants, the big, nationally funded companies suffered worse from the pounds 1.5m cut, from pounds 186.1m to pounds 184.6m, as the Arts Council tightened its belt.
The South Bank Board, Royal Ballet, Birmingham Royal Ballet and Royal Opera all lost cash as their multi-million grants were too substantial to be spared the cuts, the Arts Council said.
More than pounds 112,000 has been trimmed from the South Bank Board's pounds 13.3m allocation, pounds 100,000 from the Royal Ballet's pounds 6.56m, pounds 54,720 from the Birmingham Royal Ballet's pounds 5.47m, pounds 31,200 from the English National Ballet, pounds 9,800 from the Northern Ballet Theatre and pounds 39,970 from the Royal Opera company's pounds 7.99m. But most arts organisations will get the same in cash terms as last year, and some slightly more.
The debt-ridden English National Opera escapes cuts because of a stabilisation plan, and the National Theatre (pounds 11.1m) and Royal Shakespeare Theatre (pounds 8.47m) also have standstill funding.
Acting secretary general of the Arts Council, Graham Devlin, said it would review the organisations it supported and funding methods, but warned: "Most of the companies on the list are in very grave difficulties and are right at the edge of survival."
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