English National Ballet is putting bums on seats with a popular new production of `The Nutcracker'. Artistic director Derek Deane is very happy about this - and rightly so - but then someone went and mentioned the Royal Opera House ...

Derek Deane didn't premiere English National Ballet's new production of The Nutcracker in Southampton just to have a dummy run in the sticks - he's really fond of the old place.

"The Mayflower is our first home outside London. The theatre are marvellous to us. They give us enough time to prepare the production and we have a great rapport with them. Marvellous!" So. Quite keen then. But a lot of artists use the out-of-town run as an opportunity to fine-tune new work. Is Southampton a premiere or a preview? "We're a touring company. We don't go out on tour to try things out, we go out on tour to give the best of what we've got. When we come into town to do the Coliseum season, I hope that it will be of the same quality that it has been on tour."

In which case the London Coliseum is in for quite a treat. Deane is the first to admit that he's no Ashton or Balanchine, but he has an enviably sure touch in making successful ballets. He never betrays the grand traditions from which they spring. His new Nutcracker may kick off with a sexy Nineties setting but it sticks like glue to the usual scenario.

The ballet opens when Drosselmeyer pulls up outside the Stahlbaum residence in a trishaw laden with presents. You would have thought that Harrods, who have sponsored the production, would have lobbied for a bit of product placement here but commendable restraint has been shown. The front door flies up, revealing a painfully chic black-and-white Christmas party. Everyone is frantically busy but not with the usual punch-pouring and tree-admiring that tends to clutter Nutcracker's first act. Instead Deane has created a very tricksy balletic quickstep to occupy the dancers and beguile the audience.

Nutcracker is the staple diet of a frugal, touring company like ENB, and Deane is conscious that any Nutcracker he makes will have to withstand 60 performances a year for at least five years to come. He has been at pains to give the dancers plenty to get their teeth into: "I've updated the party because that scene is always such a drag - a lot of children running around beating each other up. We've also got lots of different roles for people, so the boredom level is very low compared to the production they last had." It's no slouch for the audience either and the lively dancing and witty business (lots of mobile phones and surreptitious time- checks by the guests) bypass the usual longueurs.

An impressively danced Sugar Plum Fairy pas de deux aside, the technicolor Act 2 is choreographically undernourished, although the calorie count is sky high. Birmingham Royal Ballet's sophisticated Nutcracker is pure Charbonel and Walker: Deane and his designer Sue Blane have gone mad at the pick 'n' mix counter.

The bulk of the set is Barbie pink, the ceiling is held up with candy canes and the bannisters are ropes of liquorice, the newel posts studded with aniseed balls. The sweeties consist of pink and black liquorice allsort tutus. Never mind Harrods, the show should have been sponsored by Bertie Bassett. The girly palette of pinks and violets will be a bit Ballet-in- My-Pocket for young males in the audience but the rats are there to compensate. The mice costumes are deep in Squirrel Nutkin territory but the rats are very realistic. Deane likes it that way: "The rats are disgusting. No clothes, just plain old rats with this vile stinky sort of hair. I don't like to put hats and socks on them, I like to keep them as vermin - they're more scary that way." The King Rat is the only one who's dressed and he sports a snazzy black tuxedo, red socks and patent leather pumps.

Deane has played the ballet very straight and hasn't been lured into any dark alleys of the soul by Hoffmann or Tchaikovsky, but his interpretation is a little too simple at times. Clara dreams about her Nutcracker and getting the run of the sweet shop, then she wakes up and life goes on as before. Surely there has to be the tiniest progression even in this, the sugariest of ballets? Deane puts his Clara right back where he found her, between the soulless pages of an Interiors spread. I must say I felt a chill when her mother opened the door at the end and led her back inside. It's not really the happy ending that such a delicious production deserves.

Advance booking is already robustly healthy despite seasoned competition from the Royal Ballet's Beatrix Potter at the Royal Festival Hall. The Royal Ballet, whose failure to plan ahead for the Opera House's two-year closure period has lumbered them with less than ideal seasons at Hammersmith, the South Bank and the Barbican, finally get to play the London Coliseum next summer by jumping into bed with the impresario Victor Hochhauser. It will be interesting to see what impact the Hochhausers' formidable box-office nous will have on casting and repertoire.

ENB, meanwhile, has pulled the masterstroke of dumping the Festival Hall and landing an annual Christmas season at the Coliseum. But this excellent arrangement could well come under threat if Chris Smith's disgraceful back-of-an-envelope plans to make the Royal Ballet, Royal Opera and English National Opera play Box and Cox at Covent Garden and sell off the Coliseum ever come to pass. Where would that leave ENB? Deane is unafraid: "It's absolutely absurd. That's why I'm not worried about our situation at the Coliseum. I'm not against the ENO moving out. It would be a massive opportunity for the Arts Council to seriously consider a proper dance house in London."

Deane seems confident and relaxed but his calm breaks down when the subject swings inevitably to the current crisis at the Royal Opera House. His voice positively purrs with outrage. "I think it is an absolute scandal. It's absolutely outrageous. I think heads should roll and I don't think the right heads are starting to be cut off. To think that, in this day and age, in this financial climate that we live in, that the Royal Opera House should be allowed to waste such an enormous amount of money! Companies outside the Royal Opera House are trying to keep within budget, working as hard as they possibly can to survive, while this unforgivable indulgence is taking place at the Royal Opera House! I get very angry about it."

A short pause for breath before he renews the assault and reminds me that ENB's recent artistic policy has enabled it to trade to a small surplus: "A company like ENB always has to be looking to its purse strings - we're not here to waste people's money. We're here to provide the best quality entertainment in classical ballet that we can with the resources that we have. And then you see money being so disgracefully wasted. I find it very offensive to see one organisation being bailed out, bailed out, bailed out all the time, having put themselves in the most appalling financial situation. I think it's a crime against other dance companies. I've said my bit. That's it."

ENB's `Nutcracker' is at the Liverpool Empire (0151 709 1555) to 22 Nov; Palace Theatre, Manchester (0161 242 2503) 24-29 Nov; London Coliseum (0171 632 8300) 8 Dec-10 Jan