VIII. REMEDIAL ACTION
57. Since becoming Chairman,
Lord Chadlington has instituted or proposed a series of measures
to improve the effectiveness of the Royal Opera House, including
the establishment of an Executive Management Committee, clearer
differentiation of the roles of the Board and the management and
the creation of three new Sub-Committees of the Board. The Walker-Arnott
Report supported the direction of these reforms.[184]
Ms Allen has made further changes to improve the quality of financial
information and control.[185]
Some of these changes are welcome and, indeed, long overdue.
But incremental change is no longer enough. The Royal Opera
House is now faced with two options.
58. The first of these
is privatisation, though under present United Kingdom tax law,
which does not offer incentives to donors, this is inherently
impractical. However, under this option, the House could
retain its current Board and management and cease to be in receipt
of any public subsidy from the Arts Council. We understand that
the lottery grant amounts to a binding contractual obligation
and therefore cannot be terminated.[186]
A privatised House should therefore be able to fund the redevelopment.
If this option is chosen, however, the Arts Council subsidy
should be ended forthwith. The House could endeavour to finance
itself by means comparable to the private donations which have
staved off insolvency recently. In such circumstances, the House's
status as a charitable organisation would also cease. A stock
market flotation could also be considered. This would mark the
end of the House's public accountability and the duties that go
with it. [187]
59. There is another
option, and this is the option which this Committee recommends.
If the House is to continue to rely partly on public funds, the
regime has to change radically and fundamentally. There have
been many failures by the Board, despite the good performances
of some Board members, which call into question the entitlement
of the current Chairman, the current Chief Executive and the Board
as a body to receive and administer public money. The current
Board should dissolve itself, and the Chief Executive should resign,
with immediate effect. The Secretary of State for Culture, Media
and Sport must assume overall responsibility for running the Royal
Opera House during the closure period and must be accountable
for the financial solvency of the project.
60. We further recommend
that the Secretary of State should appoint an administrator to
take the place of the Board and the Chief Executive of the Royal
Opera House for the remainder of the closure period. The administrator
should have the right to consult a small number of advisers, who
could, if selected, include members of the current Board.
Although we are not referring to administration as such on the
basis of a court order, we envisage that the powers of the administrator
would be comparable. His or her mission would, however, not
be to realise the assets of the House, but to ensure the
long-term provision of international standard opera and
ballet at Covent Garden. The first duty of the administrator
will be to examine and decide upon the viability of the proposed
operations of the two companies during the closure period. That
decision must be based on a financial assessment, not on artistic
sentiment. The administrator must be chosen for his or her business
skills; we would prefer to see the House run by a philistine with
the requisite financial acumen than by the succession of opera
and ballet lovers who have brought a great and valuable institution
to its knees.
61. As has already been
mentioned, the lottery grant amounts to a binding contractual
obligation. The same is not true of the funding agreement between
the Arts Council and the Royal Opera House, which does not create
a legally enforceable contract or otherwise create legal rights
and obligations. The Arts Council has been advised that "it
would be unlikely to be a proper discharge of [its] functions
to continue grant-in-aid funding in circumstances where the financial
position of the Royal Opera House was such that it ceased to operate".[188]
Should the Board and the Chief Executive decline to accept
the Committee's recommendation that they resign, we recommend
the Secretary of State make clear to the Arts Council that he
expects them to cease payments of grant-in-aid to the Royal Opera
House forthwith.
62. Near the conclusion
of our inquiry, the Secretary of State announced the establishment
of Sir Richard Eyre's working group on lyric theatre in London
and his invitation to Sir Richard's group to consider the possible
use of the redeveloped Covent Garden as the performing base for
the Royal Opera, the Royal Ballet and the English National Opera.
In the light of our recommendation that Ms Allen should resign
as Chief Executive of the Royal Opera House, we would regard it
as inappropriate for her to serve on Sir Richard Eyre's working
group. The Eyre Report is concerned with the future. We
have concentrated on the viability of the Royal Opera House during
the closure period. We are aware of concerns about possible changes
arising from the Eyre review, most notably from the English National
Opera,[189]
but now is not the time for us to consider them. We recommend
that the Secretary of State publishes the report by Sir Richard
Eyre's working group immediately upon its receipt and establishes
a consultation period before reaching final decisions. We
propose to take evidence from Sir Richard Eyre and others during
that period. Our recommendations should ensure that there is
a reasonable prospect of there being a viable and well-run Royal
Opera House about which Sir Richard Eyre can report. Without
the actions we recommend, there will not be.
184 Walker-Arnott Report, paras 4.4.1-4.5.2, 5.4.2. Back
185 QQ 367, 372; Evidence, pp 157-158. Back
186 Confidential legal advice to the Arts Council forwarded to the Committee, but not reported to the House. Back
187 Q 284. Back
188 Confidential legal advice to the Arts Council forwarded to the Committee, but not reported to the House. Back
189 Evidence, pp 145-151. Back
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