Leading Article: Britain's small theatres deserve better than this

THEY MOAN that they are short of money; the Government says that they have far more funds available than their predecessors; and the employees find themselves overworked, underfunded and undervalued.

What are we talking of here: teachers? nurses? firemen perhaps? No, in this case the latest complainants are the theatres. It is an indication of the ambivalent attitude the English (not the Scots or the Welsh or the Irish, it should be noted) have to the arts that the complaints, in these pages, of so distinguished a director as Sir Peter Hall and the host of small theatre directors who have backed him are immediately dismissed, in the words of Lord Bragg in The Independent yesterday, as "all but scandalous".

When our actors, scriptwriters and directors win Hollywood awards, they are feted as national treasures. When they demand more money for their trade, they are described as "whingeing luvvies". Only last month, one of the opera world's most highly regarded opera directors was reduced to apologising for stating that state subsidy had a role to play in nurturing public art.

State subsidy, indeed, is not a productive form of activity for governments, certainly not as developed under previous Labour governments, before our post-Thatcherite New Labour. Too often it has been used to prop up ailing industries and, more especially, artificially to increase employment in sensitive parliamentary constituencies. As a means of bucking the market trend, it never works.

But the theatre is only an industry in the most partial sense - and a most successful British one, it should be said, given the earnings that it generates in tourism. It is also a cultural part of life, a means of enriching lives and commenting upon them. In that sense it is not a business, but part of education. And a part that is ever more desperately needed as the Government narrows its definition of formal education to the three Rs and downgrades art. This Government knows that. Indeed Labour came in with the deliberately cultivated image, and a deliberately cultivated group of supporters from the arts, of being art-friendly. And - its critics should accept this - it has made more state funds available than ever before. Not only has the overall Arts Council grant gone up - an increase of pounds 125m in three years - but the money being made available through the lottery, now mercifully freed from its concentration on buildings rather than people, has added tens of millions more.

Yet speak to any theatre manager, or talk privately to almost any of the great and the good among directors, and you will get the same story: of theatres all over the country, who have struggled valiantly for years, finally going under as their applications for further grants are turned down. Whenever there is a gap between anecdotal complaint on the ground and government denial that there is anything wrong, it is a safe bet that the anecdotal evidence tells the true story. Whatever the arguments about the size of the total pot available, there's clearly a serious problem about funding the number of small organisations seeking assistance. Far from receiving more money, the majority of them have received no increase in funding at all - an effective cut in real terms. The fact that the Arts Council can't see it confirms what many in the theatre business suspect. In the end, the Council wants to concentrate its funds on the big, prestigious companies and is content to throw the rest to the less-than-gentle mercies of the regional arts-funding structure that is to be established.

That is wrong in strategy, and wrong in practice. The great companies should have help, but not at the expense of the small. In the arts more than any other field, a thousand flowers should be encouraged to bloom. It is the small who go to schools and tour their areas. And it is the local theatres who experiment.

It is also these companies that will suffer most from the move being encouraged from European-style state subsidy to American-style corporate and individual support. Corporate sponsors rarely favour the unknown, still less the daring. Private sponsorship in Britain has not made up for state grants and, in the case of most theatres, is never likely to do so. Given that, we have to ask whether the Arts Council is any longer the right organisation to formulate strategy and assess grants.

Founded originally as a means of separating politics from the arts, and set up as a spokesman for the arts business, it has seemed unable to cope with the job of serving the arts on the one hand, and a radical new government policy stressing access and education on the other. More, its status as an arm's-length quango, which might have been its strength, is now its weakness. It has little accountability in public, makes its decisions in secret and seems to be subject to no questioning in its planning. Its present theatre policy is the product not of a strategy but of a curious amalgam of obsession with efficiency, coupled with last-minute concessions to big companies with public clout, such as the RSC.

Sir Peter Hall's alternative Arts Council may be wishful thinking. But he is surely right that the curtain should come down on the Arts Council. Time to bring on a new show.