Leading article: This soap opera needs a new script

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The temptation with the unfolding crisis at English National Opera is to treat it as one of its own shows. The chairman, Martin Smith exits stage left, denouncing the world in general and the press in particular. The Arts Council sidles off stage right singing sotto voce that the assassination had nothing to do with it. Half the chorus of donors threatens to leave the stage altogether and two understudies are propelled to the front as the young lovers.

The events at ENO could indeed be regarded as melodrama, were it not for the fact that they concern one of Britain's premier musical institutions and one which receives a sizeable slice of government arts funding - £150m in a decade. More fundamentally they also show up many of the problems of current arts funding in this country.

Since taking office this Government has tried to push the major arts institutions more and more into the private sector, urging them to rely for their future on a US-style of funding from individuals and corporations. The result has been a greater resort to private funders to fill the ranks of their boards.

Fine in principle. It has worked well in America But the problem in Britain is that these institutions still receive substantial state funding and are charged with creating artistic excellence as well as promoting other aims such as wider access that are beyond the remit of the ordinary businessmen.

Martin Smith's failing was not that he was a philistine - just the opposite - but that he could not see that you can't run an arts institution as a private fiefdom, nor can you dispose of jobs in a public institution, particularly that of the artistic director, without advertising them.

The lessons of this fiasco apply not just to ENO but also to the Arts Council, which has played a particularly cowardly game, going along with Martin Smith at one point and then trying to disown him when the flak started. For ENO it can only be for the good that Martin Smith has stepped down. Now it can and should look to a whole new beginning. But the problems of choosing the right board and the right artistic leadership for subsidised institutions, never mind the role of Arts Council, have yet to be seriously addressed.

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