The conduct of the Royal Opera House was gross and seen to be gross. The Culture Secretary knew he had to act. His timing was perfect but his aim was not. He may have got the wrong target.

The timing was significant. Chris Smith, Secretary of State for Culture, made an announcement which set the metropolitan chattering classes reeling. It was on the eve of his appearance before the select committee which has given a real roasting to all involved in London's great opera fiasco. He knew that he might have suffered a similar fate had he not drawn MPs' fire.

That he did, with his dramatic announcement that he wants to merge under a single roof three of the capital's premier companies - the Royal Opera, Royal Ballet and the English National Opera - leaving London with a single grand-scale opera house.

The latest opera crisis had, of course, been there awaiting him when he took office as Culture Secretary. Within days he had rubber-stamped the appointment of Mary Allen as chief executive of the Royal Opera House. It had been made by the chairman of the Covent Garden board, Lord Chadlington - formerly Peter Gummer, the Tory party PR adviser during the last election - and its circumstances had raised eyebrows. The post had not been advertised.

The previous incumbent, Genista McIntosh, had been mysteriously forced out after only five months in the job. Allen was not just an old friend of Lord Chadlington; she had until then been secretary-general of the Arts Council, where she had authorised a pounds 78m grant to the opera house. Now she would be responsible for spending.

The behaviour of the elitist clique which has hitherto run the Royal Opera House has to be seen to be believed. Part of their skill was to prevent us plebs from seeing it. This was an elite within an elite. "Until I became Chairman of the Royal Opera House I had never, but never, met anybody royal," revealed Sir Claus Moser, the mathematician who became chairman in 1974, "now I was entertaining them month after month. When I was a frequent visitor to Covent Garden, or even on the board, some people would scarcely speak to me. Yet literally the day after my appointment as Chairman was announced, a very distinguished woman who had previously cut me dead, rang up, to invite my wife and me to spend the weekend with them in Scotland. From that moment onwards I saw a totally new layer of British life."

For half a century a self-perpetuating oligarchy at the top in Covent Garden behaved as if the place were a private estate - despite the fact that their activities were supported by a taxpayers' subsidy. It was the gradual decline in this subsidy, in real terms, compared with the ever- rising cost of staging grand opera with international stars, which led the Royal Opera House into its present situation where it is, to all intents and purposes, bankrupt.

In the Thatcher era, as costs rose sharply, subsidies fell significantly away. To replace them the Royal Opera House turned to sponsorship from industry. Raising money during the years of the Lawson Boom did not seem to tricky. Grand plans were laid to redevelop Covent Garden whose stage had not been updated since 1902. The final version of the scheme is to cost pounds 210m, of which is pounds 78m is Allen's Arts Council Lottery money. But then came recession.

The board turned envious glances at the English National Opera. Throughout the Eighties the ENO, whose hallmark is works sung in English, had created an operatic power house with first-class locally-grown talent, ambitious programming and an adventurous directorial approach. It was cheap too, at least by comparison the Covent Garden whose policy of bringing in major international stars only served to reinforce accusations of elitism, especially as, with subsidies shrinking, ticket prices rose as high as pounds 200 a seat.

More significantly, questions began increasingly to be asked about the board's management abilities. Report after report pointed the finger at outdated practices and poor management. But it was the events of the last six months which seem to have finally convinced the Government that it was time to abandon the celebrated "arms-length" principle which prohibited the Secretary of State from directly interfering.

When Genista McIntosh, who had previously successfully run the National Theatre, left on grounds of "ill-health" the rumour was that she had been driven out by Chadlington and another board member, Vivien Duffield, the heiress to Charles Clore's property fortune, and Covent Garden's chief fundraiser. Reports then were that they fell out with McIntosh because she wanted to attract a new audience by lowering seat prices. It now emerges that McIntosh had objected to the privileges appropriated by the opera elite, such as members of the board rearranged the casting for the ballet for the nights when they were bringing guests.

Despite everything, it is by no means clear that Smith's proposed solution is the right one. It is true that the ENO has its problems too. In recent years it has complained that its home at the Coliseum suffers from poor facilities backstage, collapsing wiring, dilapidated heating and decor; a lack of storage and rehearsal space and sewage that overflows in heavy rain. Dennis Marks, the ENO's general director, has left after being asked to implement cost-cutting to reduce the company's pounds 4m deficit. Despite its pounds 11.9m Arts Council grant, it has recently had to apply for pounds 3m of emergency lottery money from the Arts Council.

But the proposals which Smith has asked a committee led by Sir Richard Eyre (ironically a former close colleague of McIntosh) to investigate raise as many questions as they answer. Opera can be made more accessible to "the people", he suggests, if the two companies share premises and use the savings to tour more and do more outreach in schools.

Touring with a large chorus and orchestra and set is ferociously expensive. It would be cheaper to ferry audiences to London and put them up in hotels free, as Lord Goodman once memorably suggested. There is a good deal of outreach already, and the most effective kind is, in any case, to subsidise schoolchildren to come into the theatre for real performances.

Then there is the question of losing the Coliseum, a theatre with some of the best acoustics and sight lines in the country. And how will the merged theatre be run? If it is by one of the existing companies, the other will inevitably be squeezed out; if it is by a third Railtrack-style operator, it risks squeezing out more adventurous programming because of commercial imperatives.

And there is the question of funding. Vivien Duffield has raised pounds 75m worth of pledges towards the redevelopment plan, but yesterday donors were already ringing in to Covent Garden expressing doubts as to whether they would want to fund the merged entity. The situation bristles with problems. Smith may have saved himself from the full force of a Kaufman grilling yesterday. He must hope he has not in the process lined himself up for an even bigger one at some point in the future.

opera-goers take issue

David Mellor,

former heritage minister and former board member of the ENO:

"I think that Chris Smith is entitled to send a shock wave through the London opera scene. Covent Garden, as Gerald Kaufman has described, is a shambles, and the ENO, frankly, is not much better with declining audiences, questionable standards and an escapist board that seems to be more concerned with planning a new opera house that was never going to be built than facing the real challenges.

"When I think of all the years that Covent Garden had to put its house in order ... and failed to do so. Frankly, I also feel a bit sore that having gone on bended knee to me when I was in government to find money for the Coliseum to be done up, they then wanted a new opera house when the National Lottery money came along. This was management in fairy land. Putting a bomb under them, in those circumstances, was necessary. However, I think that it's highly questionable whether you can position three different companies in one house. The touring option may well be more expensive than keeping another house.

"I have every confidence that under Richard Eyre, who ran the most efficient of the companies, all this difficult detail will be sorted out. In the end, what will emerge is much better managed, artistically secure companies, but there is still a case for them operating from two sites."

Rory Bremner,

opera fan:

"It would be a great shame if either the ENO or the Royal Opera lost its distinctive identity, but it's difficult to have an identity at all if you go bust.

"The recent management fiascos have provided Chris Smith with the revolver and a round of bullets: it's now up to the companies to make sure he doesn't pull the trigger. Otherwise we could be hurtling towards some very interesting mixed-language productions like `Der Fliegend Dutchman' or `Cosi Fan Women'."

Raymond Gubbay,

concert, opera and ballet promoter:

"It's basically a sound idea, but one that does require careful consideration. I think it's a way of sorting out a huge problem that is getting worse all the time. The deficits of all the companies concerned are rising, and there's no magical solution. This is a way of rationalising the situation, of forcing the issues into open debate - we've got an opera house that receives huge contributions from the National Lottery, so why shouldn't it be used in the most effective way?

"Whether it benefits the opera-going public will depend on whether the matter is carefully handled. It will force Covent Garden to have another look at its ridiculously high seat prices in the light of what the ENO will charge. If you're going to attract large numbers of people who are not ordinary opera-goers, you're going to have to address that question and make the Opera House a much less intimidating place."

Jeremy Isaacs,

former head of the Royal Opera House:

"The effect of the proposal would be to halve the number of seats for opera lovers. For London theatre-goers these are catastrophic proposals. Seats would end up infinitely more expensive. It costs pounds 300,000 a week for the Royal Opera to stage a production in a theatre away from Covent Garden.

"This Government wants more people to have access to opera, so how can it justify closing down one opera house? With one stroke of the pen this moves London from its position as a leading city for the arts."

Jojo Moyes