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8.4 pm

The Parliamentary Under-Secretary of State for Wales (Mr. Gwilym Jones): My right hon. Friend the Secretary of State for Wales and I have taken a close interest in the future of Theatr Clwyd in recent weeks. When I visited it two weeks ago, I took the opportunity to speak to Mr. Patrick Gilcrest, the manager, and members of the staff. It is the people who work in and for Theatr Clywd who have brought about the qualities that are admired and valued in it, and they certainly deserve the greatest consideration when we think about its future.

I know that the hon. Member for Delyn (Mr. Hanson) has also been much concerned about the theatre, and I pay tribute to him for his constructive contributions to securing the theatre's future. It was in response to his question that my right hon. Friend and I decided to extend the deadline for our offer of help to Theatr Clywd, which would have expired on 8 March but is now open until31 March. The offer is there on the table to enable the local authorities to respond as the hon. Gentleman wishes them to do.

As the hon. Gentleman said, there is a shared appreciation on both sides of the House for the artistic quality of Theatr Clwyd's work, particularly among my ministerial colleagues. The hon. Gentleman mentioned the presence in the Chamber of my hon. Friend the Member for City of Chester (Mr. Brandreth). The Parliamentary Secretary to the Treasury, my right hon. Friend the Member for Eddisbury (Mr. Goodlad) was also here for the start of the debate, and he is equally concerned about the theatre. Within the Welsh Office, the Under-Secretary of State for Wales--my hon. Friend the Member for Clwyd, North-West (Mr. Richards)--has constantly pressed the theatre's interests.

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The future of Theatr Clwyd has recently seemed to be under threat as a result, it is claimed, of local government reorganisation in Wales. However, I believe that that is nought but a red herring and it is necessary to recap the history of the matter before looking to the future.

This year, Theatr Clwyd is receiving £2 million in subsidy from the taxpayer, £1.5 million of which came from Clwyd county council and £0.5 million from the Arts Council of Wales. Last year, the Welsh Office and Welsh local government undertook a joint exercise to disaggregate county and district council standard spending assessments and budgets on a unitary authority basis. The Welsh Office used the disaggregated budgets to calculate provisional notional amount figures, which were issued for consultation in December.

Final notional amount figures, which form the basis for provisional capping principles, were approved by the House on 8 February. With the exception of slight reservations on the part of Powys, all unitary authorities in the Clwyd county council area accepted that the notional amount calculations were fair and reasonable. At no time during consultation was any alternative basis put forward for disaggregation involving Theatr Clwyd expenditure.

The £1.5 million per year that Clwyd county council budgeted to spend on running Theatr Clwyd this financial year was allocated to Flintshire county council in the disaggregation exercise and is included in that authority's notional amount. Under our provisional capping proposals, Flintshire was able to set a budget requirement up to 3.5 per cent. above its notional amount. I understand that Flintshire has set its budget requirement for 1996-97 at the maximum level implied by the capping proposals, but including only £600,000 for Theatr Clwyd. Therefore, although Flintshire has inherited the spending power to fund Theatr Clwyd, the authority appears to be using its discretion to divert some of that spending power to support other services.

As the House knows, the Government have essentially no power to direct how local authorities spend their money: that is local democracy, and councils should be accountable to their local electors. I make no comment today on the merits of Flintshire's decision, but it is important to put it on the record that that authority had the spending power, within its capping limit, to support Theatr Clwyd to the same extent as Clwyd county council had this year. Local government reorganisation has therefore been no cause of the situation before us today: it is Flintshire's decision to contribute only £600,000 that places the theatre in immediate jeopardy.

In those circumstances, and given the importance that we attach to Theatr Clwyd, the Welsh Office and the Arts Council of Wales offered assistance. First, the Arts Council of Wales, with Welsh Office approval, agreed to pay Theatr Clwyd its annual grant of £500,000 in the first quarter of the new financial year rather than in instalments throughout the year, thereby easing the company's short-term financial position and allowing it to confirm its artistic programme for the first part of the year.

Secondly, on 8 February my right hon. Friend the Secretary of State offered £1,300,000 to pay off Theatr Clwyd's accumulated capital debt with, according to its business plan, a saving to the company of £200,000 every year. Thirdly, the Arts Council of Wales announced on

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9 February its intention to increase the annual grant to the theatre by £200,000, from £500,000 to £700,000. By any standards, that was a major package of additional support from central Government, but we made it clear that those additional resources were available only provided that local authorities demonstrated their own commitment to the future of Theatr Clwyd to enable it to continue to operate as now and for the foreseeable future.

My right hon. Friend invited Flintshire county council to undertake urgent discussions with neighbouring local authorities and other interested parties and to report back. It now has until the end of the month to do so.

The hon. Gentleman asked me about possible exemptions from capping. I have to tell him that the legal basis for the capping of local authority budgets requires that any decision to designate an authority must be in accordance with general principles which shall be the same for all authorities falling within the same class. That means that in the case of the new unitary authorities in Wales, the same general principles apply to all 22 authorities. It is not possible to determine additional non-general principles disregarding specific expenditure by certain authorities only. That is therefore not an option open to my right hon. Friend, in relation to either 1996-97 or, as the legislation stands, 1997-98 and beyond.

The present position is that we must await a response from Flintshire before we can decide whether to release the £1,300,000 conditionally offered to pay the theatre's debt. Press reports indicate that Wrexham borough council and Denbighshire county council have each agreed to contribute to the support of the theatre for 1996-97 but not necessarily for future years. I understand that Clwyd county council--before it goes outof existence, as the hon. Gentleman described it,on 31 March--will also make a contribution towards the theatre's 1996-97 costs. If the position is as described in the press reports, I am afraid that the future of Theatr Clwyd remains uncertain.

My right hon. Friend has made his offer, and the Under-Secretary of State for Wales--my hon. Friend the Member for Clwyd, North-West--and I await local government's response. When that response is received we shall need to consider, with the Arts Council of Wales, whether for 1996-97 and future years the response meets the terms of our offer and justifies releasing the £1,300,000.

We shall need to be sure that there is a reasonable prospect of the company being able to continue to operate as a producing house with its high artistic levels for the foreseeable future without a plunge back into crisis or renewed appeals to the Welsh Office for further assistance. It is not sufficient just to keep the theatre open: my right hon. Friend and I look to local government to propose a sure foundation for the continuing operation of a centre of artistic excellence. Without that, paying off the capital debt would serve no useful purpose. I am glad to note from the statement issued yesterday by Councillor Walmsley on behalf of Clwyd county council that it is intended that proposals will be formulated to secure the long-term future. I look forward to those proposals.

Mr. Hanson: Will the Minister agree to officials from his office being party to any discussions?

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Mr. Jones: The hon. Gentleman anticipates me. I was about to respond to his question about future Welsh Office involvement. It is not appropriate for officials from the Welsh Office to participate in planning the long-term artistic future of Theatr Clwyd. That is a matter for the Arts Council of Wales, and I am confident that it will wish to be closely involved. After all, on current plans the Arts Council of Wales will be the biggest single contributor to the finances of Theatr Clwyd. The hon. Gentleman can therefore be reassured it will continue to take a close interest in the future of Theatr Clwyd on my Department's behalf. I will certainly draw the chairman's attention to the hon. Gentleman's proposal for a meeting.

As for support from England, I understand that the Arts Council of England could not provide support for Theatr Clwyd's activities in Wales although it might be possible for that council, if it so wished, to support touring activities by Theatr Clwyd in England. That might be a matter for future consideration, but it is certainly the case that English local authorities across the border from Clwyd could provide support for the company's work.I hope that they may be persuaded to provide support if and when Theatr Clwyd's long-term future is secured.

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I confirm that the Welsh Office has received more than 1,000 letters on the subject, all but a handful urging the theatre's survival. A majority have come from England, from the north-west down to the midlands. Perhaps some of the letter writers will already have written to their local authorities. My right hon. Friend the Member for North Shropshire (Mr. Biffen) and my hon. Friends the Members for Macclesfield (Mr. Winterton) and for Ribble Valley (Mr. Evans) have certainly already raised this matter.

I very much hope that local government's response will be sufficient. If so, the future governance of Theatr Clwyd will also require consideration. While this must be a matter for the interested parties, which will obviously include the Arts Council of Wales, I see some attraction in the option outlined in Theatr Clwyd's business plan, submitted by Flintshire county council, for the establishment of an independent limited company or trust with charitable status to run Theatr Clwyd. That seems the best way to assure its successful future--an aspiration which I believe that we all share and wish to see come about.

Question put and agreed to.

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