House of Commons - Culture, Media and Sport

Select Committee on Culture, Media and Sport Seventh Report

THE EYRE REVIEW AND THE ROYAL OPERA HOUSE

Introduction

1. In our First Report of this Session we catalogued the failures of the Board and management of the Royal Opera House (ROH), as well as those of the Arts Council of England, in preparations for the redevelopment of the ROH's Covent Garden home and during the beginning of the closure period. We noted a number of systemic weaknesses in the ROH and its relationship with the Arts Council which had also been identified in earlier Reports.[1] Sir Richard Eyre's Report on the state of the ROH was published on 30 June 1998.[2] As presaged in our earlier Report,[3] we took evidence from Sir Richard Eyre shortly after his Report was published, on 16 July 1998. We are very grateful to Sir Richard Eyre for making himself available and for giving such refreshingly frank evidence which complemented his thorough and thoughtful Report.

Background

2. Sir Richard Eyre was asked to conduct his review at what we termed last November "the lowest point" in the ROH's long and distinguished history.[4] Sir Richard Eyre was commissioned by Mr Chris Smith, the Secretary of State for Culture, Media and Sport, to examine the future of the ROH and the English National Opera following the return of the former to its redeveloped Covent Garden residence in 1999.[5] Our Report published shortly after that announcement concentrated upon the prospects for the survival of the ROH prior to the re-opening.[6] Nevertheless, Sir Richard Eyre rightly observed that "there is a great deal of overlap between your report and my report".[7]

3. Sir Richard Eyre's Report and our own Report share a similar analysis of some of the weaknesses which have bedevilled the organisation. Sir Richard Eyre does not dwell unduly upon "The problems of reckless financial management, the incompetent plans for the closure period, the factional in-fighting within the organisation";[8] he does not explain in depth why "The Arts Council must accept some responsibility for what has happened at Covent Garden";[9] he does not cite chapter and verse in support of his charge of "arrogance" against the Board of the ROH.[10] There is no need to. These matters were fully explored in our earlier Report which—in Sir Richard Eyre's words—"rightly indicted" the previous Board.[11]

4. In our First Report we stated that "There is no future for the Royal Opera House unless someone accepts responsibility for the sorry train of events we have described".[12] Sir Richard Eyre's analysis of the past failings of the House is not far different from our own. The conclusion is now inescapable that the ROH itself—through its Boards, its managements and its culture—has been the principal author of its own misfortune and failure.

Structural change

5. Sir Richard Eyre and his review team were particularly asked by the Secretary of State to carry out "a radical re-assessment of the use of the Covent Garden site" which might involve the Royal Opera, the Royal Ballet and the English National Opera.[13] Sir Richard Eyre investigated this option "in very considerable detail", but concluded that it would not best serve the companies or the Secretary of State's twin objectives of accessibility and effective use of public money.[14] Sir Richard Eyre's verdict on the original proposal is characteristically generous: "My understanding was that this suggestion was made in order to detonate debate; in this it triumphantly succeeded".[15] We have not examined the affairs of the English National Opera in the same way as those of the ROH and do not propose to comment on the future of the Coliseum. Nevertheless, our knowledge of the ROH is such as to lead us to share Sir Richard Eyre's view that the English National Opera would not benefit from close organisational or geographical proximity with the ROH.

6. Sir Richard Eyre also gave thorough consideration to various options for "privatisation" which have been mooted. He notes that public share flotation "would require three years of previous information and evidence of a sound financial base and performance as well as future prospects, and so may not lend itself readily to the Royal Opera House's situation".[16] He also comes down against two other forms of "privatisation", modelled on the Metropolitan Opera in New York and the Glyndebourne Festival.[17] The latter model, as its name implies, would mark the end of year round performances and thus limit access still further. The Metropolitan Opera is a superficially alluring model, but, as he told us, it depends upon the "very, very handsome subsidy to the arts" of tax forgone on donations and upon "the philanthropic culture in the United States" which "is a universe apart from the culture in this country", as well as the far greater seating capacity of the Lincoln Center venue.[18] We previously described privatisation, whether desirable or otherwise, as "inherently impractical" under the existing taxation rules in this country.[19] There is nothing in Sir Richard Eyre's Report to alter that opinion.

The case for subsidy in principle

7. Sir Richard Eyre's Report begins with a plea for public subsidy for the arts which we endorse. He argues persuasively that, if this country wants opera and ballet of international standard in London, the taxpayer must pay towards it. As he put it to us, opera is "exasperatingly expensive", but is "a medium capable of providing transcendent experiences".[20] He notes that the redeveloped Covent Garden theatre, including a 420-seat studio theatre, is likely to require additional subsidy.[21] He considers that there are options for the future of the ROH on its current level of grant, but that these are not compatible with the objectives of excellence and accessibility set by the Secretary of State.[22] He concludes that there is an "identifiable funding gap" and that "a substantial increase" in subsidy is "essential".[23]

8. However, as Sir Richard Eyre indicated to us, "the arguments for funding cannot be taken out of the context of the entire argument" of his Report.[24] There has to be "a considerable quid pro quo for more money".[25] The Report had to be seen "as a handbook" containing a number of recommendations "that ought to be regarded as conditions for continuing to receive funding".[26] He told us:

"I believe that there is currently a stand-off where the Board are saying that they cannot implement my recommendations until they have a guarantee of further funding and, as I understand it, they are being told that further funding will not be available, if at any time, unless there is a clear, detailed plan of how those recommendations are to be implemented".[27]

9. The case for subsidy in principle for opera and ballet of international standard in London is well made in Sir Richard Eyre's Report. The remainder of this Report is concerned with how the "stand-off" which stands in the way of an integrated implementation of his recommendations on this and other matters might be resolved.

Priorities for action

10. A common thread which runs through our previous Report and that of Sir Richard Eyre is the deep-seated sense of the ROH that it is somehow exempt from the procedures and practices which apply to other publicly-funded organisations. As Sir Richard Eyre put it, "unless the Royal Opera House regard themselves as not sui generis but simply an organisation which exists for the public good to present specific art forms in a way which is publicly accountable, if they cannot change the mind-set, then ... there is no justification for them to continue to receive public funding".[28] As we put it in our own Report, "If the House is to continue to rely partly on public funds, the regime has to change radically and fundamentally".[29]

11. Since then, some of the changes in personnel which we recommended have taken place. The then Chairman resigned soon after publication of our Report. The Board also tendered their resignations, although they have been replaced by a new Board (with some old faces) and not by an administrator accountable to the Secretary of State as we proposed. The then Chief Executive, whom we censured for her conduct as Secretary General of the Arts Council of England, has left at the request of the new Board.[30] Sir Richard Eyre was not able to reassure us that these changes in personnel had led to the required sea change in the organisation. Having criticised the past arrogance of the Board, he observes that "the relationship between the new Board of [the] Royal Opera House and its Arts Council monitors is already in danger of declining on a similar trajectory".[31] He told us that "it is too early to make a judgement on the conduct of the current Board, except to say that we have little public evidence of improvement and we have some signs of business as usual".[32]

12. Public evidence of improvement is needed, and it is needed fast. Sir Richard Eyre has identified a number of areas for action where the pace of improvement can be monitored. First, the Board of the ROH must make it clear straightaway that, in the redeveloped House, they will not seek to convey the "image of grandeur, expense and exclusivity" rightly associated by Sir Richard Eyre with the old House.[33] They must commit themselves fully to a House which is "truly demotic and accessible", even though this may involve, as Sir Richard Eyre observes, "the risk of somebody sitting next to somebody in trainers!".[34]

13. Second, the ROH must demonstrate its commitment to its educational role. In our First Report we expressed out strong support for the educational work of the ROH. We argued that the case for a separately identified subsidy for its educational work should be considered.[35] Sir Richard Eyre also commends this work; he argues that "It is essential that education work is recognised as integral to the objectives of the organisations, rather than as an optional add-on"; he calls for the Education Department of the ROH to have "its own ring-fenced programme budget" and to be "represented in its own right at a senior level within the management structure".[36] Since those words were penned, the ROH has unapologetically and, indeed, blatantly dismissed its educational role as "lip-service" for the sake of "political correctness" and rescinded its appointment of a full-time Head of Education.[37] Sir Richard Eyre believed this decision suggested that education was viewed by the Acting Chief Executive as "a marginal activity and a luxury which the Royal Opera House could not afford".[38] He thought that, unless his recommendations relating to education were implemented, the ROH deserved "not only to be indicted, but actually I think they deserve to have their grant withdrawn".[39]

14. Third, there must be a recognition of what Sir Richard Eyre termed the "serious existing, endemic problems in the management of the Royal Opera House".[40] By comparison with other organisations, the management of the ROH appears to have been both under-performing and over-paid. Sir Richard Eyre considered that the organisation was "over-paying" its middle to senior management; senior management pay had "escalated partly because they are people dealing with very well-paid singers and conductors who are well-paid because they have a price on the international market; secondly, because ... the Royal Opera House have regarded themselves as sui generis and therefore not having any comparators which they recognise within the British subsidised arts".[41] Cuts in over-generous top pay-scales unjustified by results would be a recognition that the House, in Sir Richard Eyre's words, occupies "the same landscape as any other national arts organisation".[42]

15. A recurring theme of Reports on the ROH has been its reluctance to accept that it must live within its means.[43] This tendency was characterised by Sir Richard Eyre as "the fatal error" of the ROH Board.[44] The adequacy or otherwise of the financial information available to the Board in the past is a matter of dispute amongst former Chairmen and Chief Executives, but the failure of past financial plans to attract a sense of ownership within the House appears beyond dispute. Last year we deplored the apparent absence of reliable monthly management accounts.[45] From his dealings with the ROH in the first half of this year, Sir Richard Eyre did not have evidence that some of the "endemic problems" of financial planning "have been tackled or are being tackled". Proper management accounts were prepared, as were detailed budgets for individual productions, but he thought that the leadership of the organisation "have yet to instil the discipline throughout the whole organisation that recognises that this is a normal organic part of business practice".[46]

16. It defies credulity that, some seven months after the publication of this Committee's Report and the subsequent furore, Sir Richard Eyre, in a Report dated 30 June, was still compelled to say that "it is impossible to prepare even broad-brush estimates of [the Covent Garden studio theatre's] operating costs and revenues".[47] The utter confusion about the ROH's accounts is symptomatic of the continuing shambles. Sir Richard Eyre said in his Report that the ROH had an accumulated revenue deficit of around £5 million.[48] The Chairman of this Committee stated during the Committee's hearing with Sir Richard Eyre on 16 July that he had been told by a member of the Board that the deficit had gone up since Sir Richard Eyre reported.[49] The day after the hearing, newspapers reported that an ROH spokeswoman had referred to the fact that the deficit for 1997-98 was £3 million, slightly lower than had been forecast at Christmas.[50] Reference to the annual deficit rather than the accumulated deficit obfuscates the issue.

17. The single most depressing and deplorable fact to emerge from Sir Richard Eyre's Report is that the ROH does still not have a business plan for the re-opened Covent Garden theatre or an artistic or business plan for the studio theatre.[51] This is despite the fact that, in July 1995, one of the conditions set by the Arts Council for the original National Lottery grant was "Submission by the ROH of a revised business plan, demonstrating the financial viability of the organisation during closure and after re-opening".[52] Sir Richard Eyre understood that such a plan had not even accompanied the Board's recent request for additional subsidy and inferred that "there is still no detailed, costed business plan, and that has to be regarded as a seriously deplorable state of affairs".[53] In the absence of such essential information, Sir Richard Eyre was unwilling to put a figure on the additional subsidy required by the ROH.[54] The absence of a business plan for the re-opened Covent Garden theatre, a full three years after it was established as a condition of the National Lottery grant, is a startling omission even in a relationship between the Arts Council and the ROH characterised by such failings. Without such a plan, including the provision of monthly management accounts, any attempt to quantify the public funding needs of the ROH in 1999 and beyond is little more than a shot in the dark. Without such a plan, any request for an increase in grant from the Board of the ROH is impertinent and must be rejected.

Conclusions

18. A number of past Reports on the ROH have combined proposals for management change with recognition of the case for increased subsidy. In almost every case the recommendations for change have been adopted half-heartedly or not at all and the pleas for additional subsidy have sometimes also gone unheeded.[55] Sir Richard Eyre's Review can be viewed as a successor to those Reports which may suffer a similar fate. It does not deserve to and it should not. The force of its critique of the ROH, following our own, must be recognised as overwhelming. A barrier to the implementation of previous Reports has been the contention of the ROH that increased subsidy must precede internal reform. There are signs that this line of argument may be deployed again by the ROH.[56] It must not be allowed to prevail. Action in five areas which we have identified—a culture of accessibility not exclusivity, a commitment to education, a mind-set in management attuned to the realities of the national subsidised arts companies of this country, management accounts which attract a sense of ownership and, above all, a business plan for the re-opened Covent Garden which reflects all of these themes—must precede any commitment to increased subsidy.

19. The consequences of inaction were spelt out by Sir Richard Eyre when he was asked what would happen if his criteria for increased subsidy were not fulfilled:

This is the stark choice which now faces the ROH. It would be in the best interests of the ROH if the option described by Sir Richard Eyre could be avoided. But there is a limit to the time for which taxpayers can be expected to tolerate the interests of the ROH if they are not aligned with the public interest. It is for the ROH itself, by its own actions in the near future, to achieve such an alignment and so avoid this option. The crunch is coming fast; some observers believe that it is overdue.

20. We recommend that the Arts Council of England set out clear requirements for action in the areas for action identified in Sir Richard Eyre's Report and reinforced in this Report to be achieved no later than the end of October 1998. In view of the direct and legitimate interest of the Secretary of State for Culture, Media and Sport in the redevelopment of Covent Garden noted by this Committee and Sir Richard Eyre,[58] we would expect the Secretary of State to be closely consulted by the Arts Council of England in the setting of those requirements and in judging whether they have been met. Failure to meet those requirements within the timetable should have the consequences described by Sir Richard Eyre in evidence without any further prevarication or procrastination on behalf of the Government and the Arts Council of England. It is unacceptable that our constituents' taxes should continue to be poured down a black hole from which rises the blended aroma of mendicancy and complacency.

21. The ROH's maladministration has tarnished the reputation of the arts throughout England.[59] The handling of its National Lottery grant has damaged the reputation of the Arts Council of England. The requirements of the redevelopment have drawn the Secretary of State into the affairs of an individual arts organisation to an undesirable extent.

22. Sir Richard Eyre's Report provides what should be accepted as the very last opportunity to draw a line under these events.

Summary of conclusions and recommendations

23. Our principal conclusions and recommendations are as follows:

(i) It defies credulity that, some seven months after the publication of this Committee's Report and the subsequent furore, Sir Richard Eyre, in a Report dated 30 June, was still compelled to say that "it is impossible to prepare even broad-brush estimates of [the Covent Garden studio theatre's] operating costs and revenues". The utter confusion about the ROH's accounts is symptomatic of the continuing shambles (paragraph 16).

(ii) The absence of a business plan for the re-opened Covent Garden theatre, a full three years after it was established as a condition of the National Lottery grant, is a startling omission even in a relationship between the Arts Council and the ROH characterised by such failings. Without such a plan, including the provision of monthly management accounts, any attempt to quantify the public funding needs of the ROH in 1999 and beyond is little more than a shot in the dark. Without such a plan, any request for an increase in grant from the Board of the ROH is impertinent and must be rejected (paragraph 17).

(iii) Action in five areas which we have identified—a culture of accessibility not exclusivity, a commitment to education, a mind-set in management attuned to the realities of the national subsidised arts companies of this country, management accounts which attract a sense of ownership and, above all, a business plan for the re-opened Covent Garden which reflects all of these themes—must precede any commitment to increased subsidy (paragraph 18).

(iv) We recommend that the Arts Council of England set out clear requirements for action in the areas for action identified in Sir Richard Eyre's Report and reinforced in this Report to be achieved no later than the end of October 1998 (paragraph 20).

(v) We would expect the Secretary of State to be closely consulted by the Arts Council of England in the setting of those requirements and in judging whether they have been met. Failure to meet those requirements within the timetable should have the consequences described by Sir Richard Eyre in evidence without any further prevarication or procrastination on behalf of the Government and the Arts Council of England. It is unacceptable that our constituents' taxes should continue to be poured down a black hole from which rises the blended aroma of mendicancy and complacency (paragraph 20).

(vi) Sir Richard Eyre's Report provides what should be accepted as the very last opportunity to draw a line under these events (paragraph 22).

1 First Report from the Culture, Media and Sport Committee, The Royal Opera House, HC (1997-98) 199-I. See ibid, para 4 for a list of earlier Reports on the Royal Opera House. Back

2 The Eyre Review: The future of lyric theatre in London, HC (1997-98) 858. Back

3 HC (1997-98) 199-I, para 62. Back

4 Ibid, para 29. Back

5 HC (1997-98) 858, pp 119-122. Back

6 HC (1997-98) 199-I, para 3. Back

7 Q 3. Back

8 HC (1997-98) 858, p 104. Back

9 Ibid, p 101. Back

10 Ibid, p 103. Back

11 Q 3. Back