IX. SUMMARY OF CONCLUSIONS
AND RECOMMENDATIONS
63. Our principal conclusions
and recommendations are as follows:
(i) The claims of all
of these concerning performances during the closure period have
already been demonstrated to be unwarranted. No-one viewing the
state of the companies in their current nomadic existence can
agree with the claim by Sir Jeremy Isaacs that the closure plans
were "admirable" or that Mr Cooper was right that the
nomadic existence had "lots of advantages" which were
being proved. (Para 21)
(ii) We regard the lack
of financial information available to the Board and the management
of the Royal Opera House as deplorable. In the light of the fact
that the House has received £98 million of taxpayers' money
in the last five years, we are astonished that the Arts Council
seems to have expressed no concern at this state of affairs.
There is no evidence to suggest that the Arts Council even ascertained
that this state of affairs existed. (Para 25)
(iii) There is no future
for the Royal Opera House unless someone accepts responsibility
for the sorry train of events we have described. (Para 29)
(iv) The Directors have
chosen the standards against which they should be judged. The
Committee believes that, as a body, the Board of Directors has
fallen severely short of those standards. In addition, we question
the vigilance of the Charity Commissioners. (Para 30)
(v) We have been able
to trace no consideration whatsoever of the touring option by
the Board prior to December 1995. (Para 32)
(vi) From our examination
of the minutes of its meetings, we conclude that the Board of
the Royal Opera House (with the exceptions of Mr Gavron and Mrs
Duffield) and the Administration demonstrated incompetence in
their handling of the closure plans in 1995. The disastrous misjudgements
made then meant that the companies were condemned to a nomadic
option which could have been avoided and which shows signs of
being financially disastrous. The failures of the Board in 1995
are responsible in considerable measure for the House's current
crisis. (Para 35)
(vii) The lottery grant
was a violation by the Arts Council of conditions which the Council
itself had set. (Para 36)
(viii) The Committee
is concerned at the serious shortcoming in financial control of
the lottery grant demonstrated in the Walker-Arnott Report. This
state of affairs with regard to the lottery grant to the Royal
Opera House also raises the question of to what extent financial
control is satisfactory for the other lottery grants by the Arts
Council. This matter appears to be ripe for inquiry by the National
Audit Office. Furthermore, there are important lessons to be
learnt about the responsibilities of those running other organisations
in receipt of lottery money. (Para 37)
(ix) We regard Mr Walker-Arnott's
observation as a generous understatement of the Arts Council's
slackness in monitoring the allocation and expenditure of public
funds. (Para 38)
(x) We applaud much
of the work done by the Arts Council under Lord Gowrie's chairmanship.
Nevertheless, in not satisfying itself that the Royal Opera House
was taking the necessary steps to control its deficit and ensure
its financial viability during the closure, the Arts Council did
no service either to the Royal Opera House or to the public purse.
(Para 38)
(xi) When Lord Chadlington
became Chairman in September 1996, there had been no Finance Director
in post since that spring. All the preferred options for the
closure period had fallen through. There was a deficit in 1995-96
of £3.1 million. For none of this can Lord Chadlington be
blamed. However, we are not convinced of the adequacy of his
efforts to alleviate the plight. In view of his criticisms of
the adequacy of financial information and financial management,
Lord Chadlington should have appointed a new Finance Director
with greater urgency, instead of permitting nearly a year to elapse.
We also believe that he was at fault in failing to review fully,
and insist on revisions to, the plans for the closure period,
a failure which ensured that a fragile financial position became
acute. (Para 40)
(xii) We found Ms Allen's
convoluted explanation of her actions in late April and early
May 1997 entirely unconvincing. (Para 45)
(xiii) Given her experience
of public office, Ms Allen's conduct in that period fell seriously
below the standards to be expected of the principal officer of
a public body whose loyalty should first and foremost be to the
organisation which employs her. (Para 46)
(xiv) Mr Smith had been
Secretary of State for only four days when his meeting with Lord
Chadlington and Mr Robert Gavron took place on 7 May 1997. He
should have sought more information in advance about the matters
to be raised at the meeting. There was a case for adjourning
or postponing the meeting to satisfy himself of his own powers
in relation to the appointment, which were non-existent, and the
Arts Council's instructions on the method of appointment. Once
he knew that Lord Chadlington wished to discuss with him the transfer
of Ms Allen from the Arts Council of England to the Royal Opera
House as Chief Executive he should have consulted further about
the propriety of her departure from the Arts Council in these
circumstances. We also note that, the outcome of the meeting
should have been confirmed in written exchanges, in which case
the subsequent problems might not have arisen. The different
accounts of the meeting by the participants almost certainly arise
from different impressions of what had been agreed rather than
from any intention to mislead. Lord Chadlington, possibly through
inadvertence, failed to make it explicit that Ms Allen would not
take up her new post until September. This meeting was unsatisfactory
for various reasons and all sides would have been better served
if the Permanent Secretary had advised the Secretary of State
as to his powers in relation to Ms Allen's appointment to the
Royal Opera House, which were nil, and as to the matters of propriety.
Both sides in this vital meeting came away with very different
impressions of what had been agreed. (Para 49)
(xv) The Committee was
impressed with the objectives and many of the achievements of
the Royal Opera House's educational programme. The Royal Opera
House should attach the highest priority to seeking additional
sponsorship for its educational activities following the redevelopment.
We recommend that separately identified subsidy for the work
of the House's Education Department, either from the Arts Council
of England or possibly, when established, from the National Endowment
for Science, Technology and the Arts, should be considered in
a general review of the development of education in the arts.
We also believe that State schools should be represented in the
audience for schools matinées more nearly proportionately
to their pupil populations. (Para 55)
(xvi) Reduction in seat
prices and means of ensuring the widest possible availability
of lower price seats must be at the heart of the access policy
to be produced by the Royal Opera House in the next few months.
(Para 56)
(xvii) Incremental change
is no longer enough. The Royal Opera House is now faced with
two options. (Para 57)
(xviii) The first of these
is privatisation, though under present United Kingdom tax law,
which does not offer incentives to donors, this is inherently
impractical. If this option is chosen, 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. (Para 58)
(xix) 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. (Para 59)
(xx) 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. His
or her mission would 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 (Para 60)
(xxi) 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. (Para 61)
(xxii) 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. (Para 62)
(xxiii) 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. (Para 62)
(xxiv) 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. (Para 62)
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