The reduction is revealed in a letter to the Chancellor of the Exchequer from the chairman of the Arts Council and the Association for Business Sponsorship of the Arts (ABSA), which has been obtained by the Independent.
The letter contains an unprecedented and controversial plea from the Arts Council chairman, Lord Palumbo. He asks that the Secretary of State for National Heritage, Peter Brooke, takes money from other areas in his portfolio (the British Library, national museums and galleries, and the Sports Council) and gives it to the performing arts.
While pleas for more money are commonplace, it is very rare for an Arts Council chairman to ask for more money for the performing arts at the expense of other artistic and leisure pursuits.
The letter to the Chancellor says that business sponsorship of the arts fell by 13 per cent in 1992/93. Business gave pounds 57m in that year. The drop in business support has not yet been announced by ABSA.
This drop, coupled with a planned government cut in grant to the Arts Council of pounds 5m in the next financial year, is certain to mean cuts in productions and exhibitions, and probably the closure of some companies.
The actual words in the letter to the Chancellor are: 'Although you may well have decided upon the broad allocations of your budget, we wish to urge you and the Secretary of State to defend the arts budget within the National Heritage portfolio and to reconsider the proposed pounds 5m cuts to the arts.'
A senior Arts Council source said the sub-text of this was that Mr Brooke could not now change the amount of money the Chancellor had allotted to his department but he could move the money around.
The letter goes on: 'A cash cut to the arts of pounds 5m, just 0.003 per cent of GDP, represents a real term cut of pounds 10m taking inflation into account. This will not simply damage the arts over the next 12 months but will create long-term damage. This would be particularly unfortunate when the Conservative election manifesto pledged to maintain support for the arts.
'For pounds 10m, the size of the cut in real terms, the Arts Council can finance 20 productions at our national theatres, 40 productions in regional theatres, 14 weeks of orchestral touring, 20 weeks of opera touring and 160 weeks of middle- scale drama touring. We believe that to threaten this level of activity risks plunging the arts into a vicious circle of decline.' The letter is signed by Lord Palumbo, Sir Simon Hornby, chairman of ABSA, Sir Ernest Hall, chairman of the English regional arts boards, and Richard Pulford, chairman of the National Campaign for the Arts.
Later today at the launch of the Arts Council's annual report, Lord Palumbo is expected to say that the Government is trying to put the arts in their financial place as they have received above-inflation increases over the past few years.