But the board, headed by Sir Colin Southgate, is still demanding the Arts Council give it its pounds 14.4m grant next April, even though the opera company will not give a single performance.
The Royal Opera House has already been given pounds 20m of lottery money to see it through the closure period.
Sir Colin also revealed yesterday, in almost an aside, that even if the ROH were given extra government money it would not be able to run its new 420-seat studio theatre without further private sponsorship. The studio theatre had been hailed as a key part of the pounds 214m redevelopment which would showcase new opera and dance and bring in new audiences.
The public would be able to see it on tours of the building, he said, even though there would be no performances to look at.
As critics predicted that privatisation was now inevitable, revealed a package of measures, publicly backed by Chris Smith, the Secretary of State for Culture, Media and Sport, to change for ever the way Britain's most troubled cultural institution is run.
Sir Colin said he was determined to modernise it, make it more efficient and bring prices down and that he and the new board were not to blame for the opera house's pounds 13m deficit.
"Don't look at me," he said, "I'm the sucker who took on this poisoned chalice." The opera company chairman, the composer Michael Berkeley, added: "You've been asking us to do something radical. Now we are doing it."
Sir Colin said the opera house, in Covent Garden, London, would not re-open in December 1999 after its pounds 250m redevelopment unless the Government came up with yet more public funding.
He also said that when the house did re-open there would be a reduced number of opera and ballet performances to keep within budget, and the unions would have to agree to new working agreements so that there could be more live transmissions.
But the leading classical music and opera promoter Raymond Gubbay said last night: "It's ridiculous that Sir Colin is asking for the full grant. Those funds should be used as a bridge towards privatisation. That is now the only outcome.
"How can you suddenly change plans in this way when you have been given special sums of money for the closure period? They are not fulfilling their side of the bargain, and the public are losing out."
Dennis Scard, general secretary of the Musicians' Union, added: "This decision is cultural vandalism on a grand scale, and the notion of a multi- million-pound, newly revamped opera house with a part-time orchestra presenting fewer productions than the old house beggars belief."
Sir Colin told a stunned meeting of staff that they must agree to new working practices or be given notice. Even if they did agree, every member of staff would be reappraised and, he said, "there will inevitably be redundancies".
Mr Smith said of the rescue plan, intended to save around pounds 5m next year: "The board of the ROH has now taken a real grip on the problems that have beset the institution for too long. These decisions are radical; they represent real reform; they will transform the management of the ROH, and they provide a way forward to a new and sustainable future."
The performers' union Equity said: "The opera singers, who are now facing the sack, have no responsibility for the managerial and financial mess the Royal Opera House now finds itself in."
The Royal Ballet will continue to perform next year but will give fewer performances in Britain than usual.
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