Among areas it will examine are salary levels in the national companies. The Culture Department is concerned that far more staff at the Royal Opera House earn above pounds 50,000 a year than at the National Theatre or the Royal Shakespeare Company. It will also look at potential ideas from the sports sector.
The squad will be established next week, made up initially of six civil servants reporting to Mr Smith. He unveiled the new unit, called Quest (Quality, Efficiency and Standards Team), yesterday as he announced changes to the arts funding system and detailed grants to the national museums. He also set out his shake-up of government-funded bodies in the arts, museums, film, tourism, architecture, sport and heritage sectors.
Mr Smith said it was "a serious and timely review of the relationship between the Government and the cultural world". The Government could not just provide the money and sit back and hope for results, he said. "We will give direction; we will set targets and chase progress, and where appropriate we will take direct action to make sure that our objectives are achieved."
A pounds 290m grant will be phased in over three years, with arts and museums the main winners. The Arts Council of England's pounds 190m budget would increase to pounds 227m from next April, to pounds 237m in 2000, and to pounds 252m in 2001. Museums and galleries would see their allocation rise from pounds 203m this year to pounds 247m in 2001.
The three-year deals would offer more stability, Mr Smith said. But he added: "In all cases the financial allocations will be closely tied to outcomes which reflect our four central themes - access, excellence and innovations, education and the creative industries."
He was challenged that setting up the new squad was riding roughshod over the "arm's length" principle - in which government gave money but did not interfere with the running of institutions - under which the arts have been funded since the Second World War.
A Culture Department source said later that the "arm's length" principle has been "reinvented". Mr Smith defended the change, saying that eventually Quest would be expanded. The idea was to include people with experience of running arts institutions.
Mr Smith said that children and pensioners would have free access to museums from next year. Adults would continue to have free access to museums that are now free. Some pounds 30m has been put into a fund while negotiations with museums continue. The Science Museum and Natural History Museum in London are reluctant to give up charging.
David Barrie, director of the National Art Collections Fund, which campaigns for free admission, said: "Will the pounds 30m which the Government has put aside for 2001 be enough to do the trick?"
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