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Arts Council of England

10.26 p.m.

Viscount Falkland rose to ask Her Majesty's Government whether they intend to implement the changes in the structure of the Arts Council of England; and, if so, what is their timetable.

The noble Viscount said: My Lords, perhaps I may take this opportunity to welcome the noble Baroness, Lady Blackstone, to the first of our debates when we

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look to her to answer on behalf of the Department for Culture, Media and Sport. It is a small cast of players--if I may describe them as such--that we have today, but I hope nonetheless that a valuable discussion will be had.

It would be churlish of me not to say that we enjoyed an interesting and productive time with the predecessor of the noble Baroness, the noble Lord, Lord McIntosh of Haringey. Some of our debates were carried out with rigorous toughness but all with unfailing good humour. I am sure that we shall see a continuation of that approach while the noble Baroness holds the office.

Tonight we are here to talk about changes proposed by the Arts Council of England. On 14th March the chairs and chief executives of the regional arts boards were informed by the chairman and chief executive of the Arts Council of England of a plan to initiate a significant reorganisation of the arts funding system. The arts funding system is never perfect but the search for perfection goes on. The RABs were told that these proposals had "political endorsement", whatever that may mean precisely; that they were "non-negotiable"; and would be pushed through regardless of the views of the regional arts boards. A deadline of 30th April was originally set for the RABs to transfer their staff, their assets and their liabilities to the Arts Council of England.

The following day the Arts Council of England produced their proposals--A Prospectus for Change. At the heart of the prospectus was the proposal to amalgamate the existing Arts Council of England and the ten regional arts boards to create a single, new national arts funding and development organisation. The new arts council, we were told, would have nine regional offices, based on the Government planning regions. The arts council would be the national governing body. There would be no independent boards at regional level, but a system of regional advisory groups would replace them. A new arts council executive team would be established to include the executive directors of the nine regional offices.

That was a very surprising announcement. It surprised everyone. It surprised almost everyone in the arts world. It surprised Members of Parliament. It surprised the media. I dare say that, in the way it was delivered, it surprised the Department for Culture, Media and Sport.

The manner of the introduction, prior to the publication of A Prospectus for Change, shocked and dismayed the regional arts boards to an extent which I have not experienced since I have been in the House--and with the correspondence that I received--couched as it was in terms such as "non-negotiable" and "politically endorsed". No consultation beforehand and no argument afterwards seems to be the order of the day so far as concerns the Arts Council of England. Those methods would have been surprising in Vichy France in 1940 let alone within democratic England in the year 2001.

The way in which the Arts Council launched its prospectus surely contravened the Cabinet Office paper on staff transfers in the public sector and its

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published code of practice on written consultation. The regional arts boards immediately jumped into action. They consulted widely on the proposals and persuaded the Arts Council in very short order to consider those events and to agree to an independent evaluation based on many written responses. The evaluation will be available this month. More than 1,000 responses were received, the majority expressing grave concerns at the proposals, with the loss of regional autonomy and accountability. Artists, regional development agencies, local authorities and arts organisations have expressed dismay and concern about what they fear is a proposal to centralise the arts under one national organisation.

Perhaps I may refer to a letter in the Independent written by my right honourable friend Mr Robert Maclennan, who is soon to be my noble friend. In the letter he said that we are returning the position to 1956,

    "when the Arts Council last had regional offices explaining to the provinces how London wished them to behave ... Such a centralised bureaucracy"--

as is proposed by the chairman of the Arts Council--

    "so far from being able to speak for all the arts, would quickly be driven to defending its own policies and strategies for distributing taxpayers' money to its clients. Concentrating decision-making at the centre would not reduce the personnel required"--

as forecast by those who have drawn up the changes--

    "and would increase the time spent shuttling between the regions and the Arts Council".

One may be forgiven for having as a first impression that this is a cost-driven exercise. Indeed, it was presented as such on radio. There did not seem to be much argument about it but there have been denials since. If one takes these proposals and examines them, the drift seems to be a desire to go towards populism and commercial success at the expense of what has been a satisfactory happening in many of the regions. Not all the work has been perfect but experimentation and demanding work, as the noble Baroness, Lady Blackstone, with her long experience in the arts, knows full well, are important. There must also be a degree of failure. Artists have to fail. Those who thought up the plans do not like that aspect at all.

There is a good deal of talk about people called change management professionals. I do not know what change management professionals are and I am not sure I want to know. But I am quite sure that they cannot satisfactorily do arts work. The cost of those people will no doubt be very high indeed and it will be at the expense of arts funding. The trust that exists in the best of the regional arts boards between the arts boards and the practitioners has been vital. The practitioners may be individuals or bodies. Individuals in the arts world are often difficult people. My mother was a painter. I did not think that she was a particularly difficult person, but she was fairly solitary and was not terribly interested in money. From time to time she was easily upset. She was also very talented. I suggest again that those who drive forward these commercial ideas--I interpret them as being commercial--do not like such people, and those feelings are reciprocated.

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Communication with artists is a tricky business. In the best of the regional boards, it has been done quite successfully. Furthermore, to ape a piece of contemporary jargon, the secret of maintaining good communication between artists and those who fund them is location, location, location. The new proposals will make that communication extremely difficult. The southern region is to be based in Exeter. Will artists be prepared to travel to Exeter where now they have to travel perhaps only a quarter of that distance? Channels of communication must remain open.

We are not concerned only with dishing out money here. Long-term relationships with the people involved must be nurtured. We are not selling T-shirts or video games, we are selling human activity, activity which has to be encouraged and nurtured. That is what the arts are all about. I do not like the bureaucratic attitude of the proposals. I do not understand half of them. The proposals refer to,

    "the ability to speak with one voice on behalf of all the arts".

What the hell does that mean? Another proposal suggests,

    "greater capacity to address needs and act on bold ideas for the arts throughout England".

That is gobbledegook.

Perhaps I may turn to one or two more technical matters as I reach the end of my contribution. These were brought to my attention by my noble friend Lord Phillips of Sudbury, who is not in his place tonight--he would have liked to speak in the debate--because he is advising a regional arts board on their legal and constitutional position in the light of these changes. He has stated that, leaving aside the policy aspect here, there is a serious issue as regards charity law which the Government must take into account, something which I had not realised. My noble friend tells me that each of the 10 regional arts boards is a separately constituted charity in the form of a company limited by guarantee. The overriding obligation of the trustees of any charity--here I point out that the majority of the RAB trustees are not appointed by the Arts Council--is exclusively to serve the best interests of the charity concerned. Even if all the trustees of the arts boards were appointed by the Arts Council, that would still be the case. They would be acting improperly simply to do the council's bidding.

Another point which makes me think that this move is extremely arrogant and pompous is the fact that the arts boards secure funding from all kinds of sources. Funding comes in from local authorities, private charitable foundations and commercial sponsorship; often they have their own independent assets. We have heard the news that--perhaps the noble Baroness will be able to confirm this--some arts boards are minded to do the opposite of what they are being asked to do: they will not disband. So far as I can tell, there is no legal force to make them do so. The boards feel that they have a duty to continue until all these matters have been sorted out.

I should like to end by asking the Minister two questions. First, will she ensure that when further consultation takes place--we hope that that will

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happen--the Arts Council is compelled fully to observe the Cabinet Office guidelines on written consultation? That is something which the council significantly has failed to do so far. Secondly, is the Minister aware that what the Arts Council is proposing is increased delegation to regional offices rather than any real devolution of power? Is that not a flat contradiction of the Government's policy aim to increase devolution of powers to the regions of England?

10.40 p.m.

Lord Bernstein of Craigweil: My Lords, I congratulate the noble Viscount on initiating this debate on the arts. They are an important part of our society and it is right that we should debate the changes that the Arts Council plans to make. I also congratulate my noble friend Lady Blackstone on becoming Minister for the arts.

As to the noble Viscount comparing the Arts Council of England to an organisation of Vichy France, it is worth saying that the Arts Council has served the arts extremely well over the past few years. It has achieved the confidence of the Government, who have given it a greatly increased grant. Funding for the arts in this country is higher than it has ever been, which has done a lot to overcome the serious funding problems of the past two decades.

The Arts Council has done a great deal to put its own house in order over the past three or four years. It has reduced costs and staff at its London office and it has simplified its procedures. However, more remains to be done, and it is entirely sensible that the Arts Council should be looking at the complex organisation of the regional arts boards and their relationship with the national body.

Arts organisations have long complained about the complexity of dealing with the regional arts boards and with the Arts Council and about delays in implementing policies. I was once chairman of the Royal Exchange Theatre in Manchester and I have bitter memories of endless discussions with the Arts Council, which were pursued for months, sometimes years, on end without any real decisions being made. It is much better that the arts organisations should spend their time and money on supplying high quality arts to their region rather than dealing with endless committees and endless paperwork.

The regional arts boards were established a long time ago with the best of motives--that is, to give due regard to the views of people who live in the regions--but the cost in time and money has been heavy. It cannot be right that the Arts Council spends £36 million on administering grants in this country; it cannot be right that it needs 660 people to fulfil this work. I do not think there is anything to be ashamed of in trying to save money in administering the arts, because that money can then be put to more productive use in the form of grants to the performing arts, the visual arts and all the arts in the regions and in London.

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It is sensible of the Arts Council to create a single structure. It must be right to replace 11 organisations with one. Having 11 organisations may have been right a long time ago but it simply cannot be right now. These changes should lead to less delay, to better and quicker decision-making and, finally and importantly, to money being taken from administration and put into grants.

It is not surprising that these proposals have met with resistance from the regional arts boards. It would be easy to use the old cliche about turkeys not voting for Christmas, but I do not want to say that; it is not fair. It is legitimate for the regional arts boards to fear that they will be losing authority and decision-making in their regions, and it is legitimate for them to fear that decisions taken in London without proper consultation will do harm to their regions. After all, the arts are a vital part of our society, and the regions are quite right to feel that this is an important issue which should be raised.

Over the past 100 years, our great regional cities have lost both power and influence. There was a time when they were home to major banks and major businesses and to their founding families, who felt a strong loyalty towards their region. Globalisation has changed all that. Local companies--if they have survived at all--have become subsidiaries of companies in London, Frankfurt, New York or Tokyo, and major decisions which affect the regions are often taken hundreds or thousands of miles away. That happens less with our European partners. In places such as Du sseldorf, Lyons or Munich, large banks and large companies still have their head office and their commitments within the city. They take pride in local affairs. It is no surprise that arts funding on the Continent has been higher than it has in this country because of that identification.

I understand the concern of local people and why they are worried about any change to their status. However, that in itself is not a reason for not making any change. The present system is wasteful and inefficient. The Arts Council, however, should recognise those fears and put in place certain safeguards. Perhaps I may mention four.

First, if the regional arts boards are to be abolished, they should, as recommended, be replaced by strong advisory councils which have the respect of local people. Secondly, the regions should be able to have representatives who have access to the governing body of the Arts Council. In that way, any concerns in the regions can be fed to the top level of the Arts Council. Thirdly, officials in the regions should have at least as much power as they do now to approve small and medium-sized schemes on their own. Fourthly, the Arts Council should actively encourage a new regional system of consultation involving the Arts Council, local authorities and local enterprise.

I have not discovered from anything that the Arts Council has said that the decision to reorganise is led by commercial or populist ambitions, or even that the intention is to employ many more management professionals. I do not know what it means either.

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After all, this Arts Council has been instrumental in producing up to £25 million for regional theatre. That indicates its concern as regards regional activity.

The Arts Council should not be discouraged from re-organising but it should be encouraged to consult with the regional arts boards while it does so.

10.47 p.m.

Lord Greaves: My Lords, I, too, congratulate the Minister on her new appointment. Also, I thank my noble friend for initiating this debate. Perhaps I can offer a perspective from the North of England, particularly that of the North West. I should add that my noble friend Lord Shutt of Greetland would have liked to have been present. Unfortunately, he has been "put down" for a day or two by some Yorkshire debilitation. He has probably been eating too much rhubarb! My noble friend would have brought a Yorkshire perspective to the debate, so I shall attempt to do so on his behalf.

The first thing that people--probably throughout the country but certainly in the North of England--would say is: if this is how the Arts Council brings forward its proposals, is it not a demonstration of how it would run matters in practice if it took them over? Whatever the rights and wrongs of the proposals that we are discussing, the way in which they came to light and the way in which they were put forward have been an absolute disaster. It will take a long time for those responsible to regain the confidence of others that they will act any differently if the structure is changed to one that is far more centralised, as the Arts Council wishes. Obviously, much consultation and debate have taken place since that time. It is interesting--is it not?--that almost all the responses that have been put forward, especially from our part of the world, have been negative as far as concerns these proposals.

Many of the concerns that have been advanced by organisations in the North West--we are talking about arts organisations, local authorities and many others--are as follows. First, there is a real suspicion that decisions in a region like the North West should be made in that area and that the intention is that such decisions will no longer be made by people there; that is to say, those who understand the diversity and the needs of the region, as well as its relevance. The latter may be quite different from that which applies to other regions and, indeed, to London.

Secondly, there is considerable concern among local authorities that this is yet another attempt to cut them out of the loop as regards public services, the disbursement of public money, and the support of arts organisations. There seems to be an attempt beneath the Arts Council proposals to underplay the importance of local authority support and activity across the whole range of the arts, together with a feeling that a national organisation would be less responsive. That seems to fly in the face of what is happening in almost all other areas of life in this country; namely, a belief that running things in a centralised way from London is not, in practice, the best and most efficient way to proceed.

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The noble Lord, Lord Bernstein, said that it was about greater efficiency. I thought that the idea that centralisation meant greater efficiency went out a long time ago, and that people now understood that, in order to provide efficiency combined with flexibility for local circumstances and accountability to people in a particular area, you had to devolve service provision, accountability and decision making. In the North West we are some way on the road towards what we hope will be an elected regional authority, which will take over a great deal of responsibility for decision making across a whole range of areas in our region. Indeed, the same is true in the North East and in Yorkshire.

At the same time that this proposed change is taking place in one area of the arts with the apparent support of the Government, it seems extraordinary that the reverse is happening whereby people are looking to a much greater degree of centralisation. In so far as there will be decentralisation in the new structure, it really will be decentralisation of service provision: it will not be decentralisation of accountability and decision making. Many people in the region ask themselves the following question: if this is what is happening in our region, are the Government genuinely serious about regional devolution in general?

As regards costs, and the alleged, proposed savings, two arguments are being put forward. The first is that they are not really demonstrated at this stage; and, secondly, that, if there are savings to be made--everyone wishes to make savings in administration, if that money can then be used to support the arts or the service in question--that can take place by modification of the present structure without throwing it all up into the air and starting again.

At present, local authorities have considerable involvement in the regional arts board in the North West. There is some doubt as to whether the degree of support provided would be forthcoming under a new structure that cuts them out of the loop. There is talk of the regional office having a local partnership fund to which local authorities would be asked to transfer their funding. However, there can be no guarantee that that will happen if local authorities are treated in a way that they believe does not reflect their importance.

I do not believe that anyone is opposed to improvements, or even to structural change. However, people are opposed to the way in which this has been done. There was no prior consultation on the matter; consultation took place after the event with what still seems to be the core commitment by the Government that you can talk about the details but not the underlying issues of the proposal. We shall all be interested to hear what the Minister has to say about that.

However, there are other fears. There are fears that while the arts are essentially about diversity and creativity, that inevitably means that different decisions will be made in different regions of the country. Those will partly reflect the needs, opportunities and cultural heritage of those regions. My noble friend Lord Shutt asked me to mention the

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fact that he would expect brass bands to be considered more important in Yorkshire than in the South East. That matter has to be taken into account.

To whom are the decision makers in each of the new regions responsible? Who sets the priorities and to whom are they accountable? Diversity within regions is important. A region such as the North West has a varied and creative culture. It is rich, varied and cosmopolitan. It is a progressive region which, like many other regions, embraces people from all five continents. When I was a lad in Bradford we used to have an event in Peel Park known as the Peel Park gala. Last weekend there was an extremely successful multi-cultural event called the Peel Park mela. The latter is very much the same kind of event but is much richer in terms of its cultural diversity. I refer to the higher arts, the experimental and avant-garde arts and the arts rooted in the cultures of the people who live in the regions. Surely it is those people who should take the decisions and have the responsibility.

Finally, I hope that the Minister will give an absolute commitment that my next point will not arise; namely, that if decisions are to be centralised much of the money will also be centralised. Will the Minister assure us that whatever the new structure may be, the proportion of funding which is allocated to regions outside London and the South East will at the very least not be reduced?

10.57 p.m.

Baroness Anelay of St Johns: My Lords, I too welcome the Minister to her new post. Like other noble Lords I thank the noble Viscount for introducing our short debate tonight. It gives us a valuable opportunity to be given an indication of the way in which the Government's thinking on arts policy is developing after the cull of all four DCMS Ministers last month. The only survivor of the team is someone we are pleased to see survive--the noble Viscount, Lord Falkland, mentioned this point--namely, the noble Lord, Lord McIntosh. He was a spokesman, not a Minister. The noble Baroness will be aware of the high regard in which he is held in the House. We are rather surprised that he was never appointed to a ministerial post, but perhaps that may yet happen.

The debate is held at a time when it is clear that the Arts Council has had second thoughts about pushing ahead immediately with the plans it announced in March. I am grateful for its briefing. I welcome the fact that it has held wide-ranging discussions since March with the regional arts boards, the arts sector, local authorities and other partners. However, it is a pity that that did not occur before publication of the first prospectus. That would have saved much angst in the arts world.

The Arts Council now says that it will publish its second prospectus in July to answer many of the important questions and issues which people have raised and that there will then be a further period of consultation. It could be tempting for a Minister to interpret that as giving the Government a let out clause

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enabling him to say, "I cannot comment now because the Arts Council has not put any concrete proposals before us". I hope that the Minister will not take that route tonight.

It is right that we should have this debate now. The Government have announced that the House will rise early this year on 24th July and will not return until 15th October. Therefore, we are unlikely to have any chance to discuss the Arts Council's second prospectus in this House or indeed make any comment upon it presumably until after the Government have given the Arts Council their seal of approval for its plans, or have rejected them. I hope that the Minister will take the opportunity offered by the noble Viscount tonight to flesh out the rather tantalising glimpse of government thinking which we saw in the Daily Telegraph report of an interview with her that was published last Wednesday. The article stated that,

    "The only action so far has been an order to the Arts Council of England to freeze its presumptuous abolition of regional arts boards, a decision that outraged local councils; and was sprung on Smith at short notice".

Is that true? Did the Government tell the Arts Council to freeze its plans? Is that why the Arts Council has delayed publication of its second prospectus from the original date of June to July and added in more consultation? Can the Minister inform the House how long that period of consultation will be? What meetings have DCMS Ministers or officials had with the Arts Council, regional arts boards or local government, the clients of the Arts Council since 7th June, or do they have any plans for the near future?

The Daily Telegraph article stated that,

"while she" --I think that it refers to the Minister--

    "approves of cuts in arts bureaucracy, she dislikes the ACE's grab for power".

Is that an accurate report of the views that the noble Baroness expressed? Daily Telegraph reader though I am, it was rather cheeky of the paper to say that the Minister is still reading her way into the brief. With her experience of the arts, I rather think that she wrote it.

The Minister is directly quoted as saying that,

    "The aim must be that more money ends up in the hands of people who are putting on artistic endeavours".

Yes, of course, I am sure we would all agree with that objective. As ever, it is the route to achieving it that we must analyse.

When the Arts Council of England made that announcement in March--it was not received with a welcome in many quarters--we on these Benches made it clear that although we were happy that it was prepared to take on reform--at last, after talking about it for so long--its proposals would need careful scrutiny. Rationalisation, which would mean that more money could be spent on the arts and artists and less wasted on administration, would be welcomed. But we were surprised and alarmed that the Arts Council gave so little time for consultation and appeared to undermine its own consultation process by making its decision a take it or leave it affair.

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We were also puzzled by the plan it proposed. It wants to merge the Arts Council with the 10 regional arts boards to create a new and restructured single body which would be more responsive to local and regional democracy. I am grateful to the noble Viscount, Lord Falkland, for giving such a clear explanation of the proposal.

The Arts Council says that this is to achieve a more regional input and cut costs. Yet it seems to create a centralised bureaucracy in the hands of an organisation in London which has not met its own early promises of cuts in personnel and expenditure on its own patch--a point forcefully made in the first briefing to noble Lords by Southern Arts. I thank Southern Arts for its care in collating the views of so many artists, arts organisations and local authority partners in its area and publishing so many of those responses in The Artists Voices--responses to the Arts Council of England's Prospectus for Change. The responses make clear the level of anxiety in the arts world about the changes proposed by the Arts Council.

I am prepared to accept that this may be more a problem of perception than actuality. I shall continue to listen to all sides of the argument. I look forward to reading the Arts Council's second prospectus. I try to have an open mind on all this. I am very much aware that the chief executive of the Arts Council of England, Peter Hewitt, has first- class experience of the regional arts from his time with the Northern Arts Board.

We on these Benches are not opposed to reform of the arts funding system--just the reverse. We would welcome a fundamental review of the Arts Council of England, its structure and function. Are the Government planning to undertake such a review? We believe that it is important that the Government should develop in consultation with the arts sector a system of funding in which artists themselves can have confidence, and a system that is at arm's length from the Government.

We should ensure that the voice of the voluntary arts sector is heard where decisions are taken. We strongly recognise the particular need to ensure that the interests of the arts and arts audiences outside London are properly addressed. It is of great concern that so much of the present budget for regional arts is consumed by administration costs. Collectively, the regional arts boards in England spend well over £16 million on administration. The spending levels vary significantly between boards. South East Arts spends 34 per cent of its budget on administration, whereas the London and Northern boards spend respectively 15 per cent and 14 per cent.

Southern Arts also refers to the difficult question of what could and should be the most effective regional boundaries for arts development. That issue was referred to by many of the respondents and I hope that the Government will address it, given the proliferation of interlinking and overlapping regional agencies and quangos over the past four years.

Above all else, I hope that the Government's response tonight will demonstrate a willingness to move away from their interventionist policies that

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have developed over the past four years. A nation's artistic life should never be an instrument of government policy.

11.6 p.m.

Baroness Blackstone: My Lords, I am grateful to the noble Viscount, Lord Falkland, for introducing the debate and to those who have taken part. I am grateful for an opportunity to respond on behalf of the Government in my first debate as Minister for the Arts. I thank the noble Viscount, the noble Baroness, Lady Anelay, and the noble Lord, Lord Greaves, for their kind welcomes to me in my new position. I very much hope that the good humour that has always accompanied debates on the arts in this House will continue to prevail. I shall certainly do my best to make sure that it does.

While we are waiting for the Arts Council to produce its revised proposals, I can say very little about what might be in them. However, the opportunity to debate the issues is still very welcome.

Before I deal with current proposals, it is worth reminding ourselves that the arts funding system is not set in stone. It has been remarkably receptive to change since the original structures were put in place after the war. The past few years have seen the provision of bigger budgets, including lottery money, and the delegation of large areas of responsibility to the regions in an attempt to devolve as much decision-making as possible to the grass roots. I welcome that. However, if new ideas for further improvements are identified, we owe it to the arts community and to the taxpayer--whom we must not forget--to consider the options and at least give them a fair hearing.

As well as favouring devolution of decision-making and power to the regions wherever possible and appropriate, the Government are also keen to reduce spending on administration and bureaucracy so that more of the resources available can be committed to services and individuals and to the organisations in the arts that really need them. No one in this debate would dispute that objective.

For its part, the department is keen for the arts community to do its bit. We have been actively encouraging the Arts Council to consider how it could improve the way in which things are done. To its credit, the Arts Council responded. It is only sensible that any response that the council comes up with should consider the arts funding system as a whole rather than restricting itself to one single aspect.

It is no secret that, following years of under-funding before 1997-98, administration costs as a percentage of overall spending on the arts have increased. That is regrettable. They have increased at the centre and in the regions. We cannot simply assume that costs have gone up only in the centre.

All that money could be better used by arts organisations. The Government have already taken a number of steps over the past few years to remedy the shortfall in funding that we inherited. Therefore, the increase in grant-in-aid funding of 80 per cent--that is, £150 million more--between 1997-98 and 2003-04 is, I

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believe, to be welcomed. More funding, for example, has been made available for national touring so that people around the country can see the performing arts in a number of locations.

My noble friend Lord Bernstein commented on the £25 million extra that was allocated to support regional theatre between 2002-03 and 2003-04. I believe that that is a most important development. As my noble friend Lord Bernstein said, I am sure that it is important that that extra money is well spent. It is not only a matter of cost-cutting; it is a matter of spending the existing money in a sensible way. I am sure that the noble Viscount, Lord Falkland, agrees that we should all share that aim.

I now return to the Arts Council's original proposals. As I am sure noble Lords are aware, they consisted of four themes aimed at reinforcing the regional agenda while, at the same time, saving money by reducing administrative costs and using that money for the arts. The proposals were, first, for the Arts Council to merge with the regional arts boards, creating regional offices of the Arts Council, and, secondly, at the same time, to align the regional offices with government offices and the RDAs. I believe that that certainly makes sense. The third proposal was to devote more money down to the new regional offices and give them a greater link with management at the centre. And, fourthly, the aim was to reduce that centre, saving money on administration overall. I want to stress that the aim of the Arts Council was to reduce substantially the number of staff working in the centre.

The Arts Council submitted its plans to my department in March. Keen to minimise any period of uncertainty that the proposals would be thought inevitably to involve, the Arts Council then announced that it intended to push through the changes by the end of April.

I am of course aware of the largely adverse reaction, especially from the RABs. I also recognise that a number of genuinely legitimate concerns have been raised in response to the announcement. Those focus mainly on how the proposals were drawn up and announced. Some questions have also been raised about the substance of what the Arts Council was proposing, in particular whether the proposals would mean greater decentralisation. I believe that the noble Viscount and the noble Lord, Lord Greaves, picked up that point.

Perhaps I may deal with each issue in turn. Concern has been expressed that the department did not play an active role in working with the Arts Council to formulate the proposals. I want to make clear at this point that there is nothing untoward about the Arts Council working out plans and then approaching my department. That is what we would have expected. It does not change the fact that whatever the Arts Council proposes will still require the eventual approval of the Secretary of State.

Concern was also expressed that the Arts Council could have consulted rather more widely before making an announcement. That has been very much

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reflected in this debate. With hindsight, I believe that the Arts Council now sees that it might have handled matters a little differently. However, by undertaking a more thorough consultation exercise on its revised proposals, it has demonstrated that it has learned important lessons from that first exercise. Therefore, I believe that I can say in response to one question from the noble Viscount, Lord Falkland, that the Arts Council is now committed to full consultation on its new proposals, and we shall ensure that it does so.

I move on to the question of extended consultation. For the sake of its employees and others who will be affected, neither the Arts Council nor the Government want to prolong the reorganisation process any longer than necessary. That would be unfortunate in that more time would be wasted and the savings in administrative costs which we have discussed would be delayed. It has taken away those proposals and entered into a longer and, in the case of the RABs, more formal period of consultation and negotiation. Incidentally, I am aware of the point raised about charity law. We are clear about the fact that RABs are both charities and companies limited by guarantee. That means that they will have to decide to hand over their assets to a new organisation.

The Arts Council spent the last few weeks engaging with RABs and the regional assemblies, RDAs and regional cultural consortia and it is due to issue its new prospectus quite soon.

I say to the noble Baroness, Lady Anelay, who raised this matter, that my right honourable friend the Secretary of State and I have seen representatives of the Arts Council and the RABs. We asked them to reconsider their positions and to see whether they could reach an agreement together. That is the right approach and it does not involve the Government laying down the law. The noble Baroness asked the Government not to be too interventionist in general. This is an example of the fact that it is far better if the arts organisations work together to resolve their differences.

The new prospectus is expected in the next couple of weeks and my right honourable friend the Secretary of State and I will discuss it with the Arts Council. I am sure that noble Lords appreciate that it would therefore not be appropriate for me to go into any more detail about what might or might not be included until we and the RABs have had a chance to see and consider the final report. However, the fact that I cannot comment on exactly what the new structure may be like does not mean that I cannot comment on what my right honourable friend Tessa Jowell and I will insist on in relation to the revised plans. Our approval of what the Arts Council comes up with is very much conditional on its being able to satisfy both of us that the plans will deliver the outcomes. I hope that I can rise to the noble Baroness's challenge and put some flesh on what she has so far read of my views.

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The central premise in relation to the Arts Council, which we continue broadly to support, has always been that what it proposes will deliver the administrative savings that would prove impossible to secure under the current structure and that it will at the same time succeed in delivering increased power and responsibility to the regions. Our approval of the revised proposals will also be conditional on the Arts Council being able to demonstrate several other points, including the fact that regional organisations within the new revised structure will have real power to spend money in light of regional priorities. I hope that that gives the reassurance that was sought by noble Lords on the Liberal Democrat Benches.

I emphasise that we do not envisage the Arts Council using the reorganisation as a means of reversing the general trend towards greater delegation of power and funding to the regions. If, when we see the proposals, we conclude that that is what the revised proposals amount to, we will simply not be able to give it our backing.

We will look at the levels of spending to be devolved to the regions, the ways in which decisions are taken and the influence of local people in that process. We accept the importance of local government in that regard and in relation to the way in which local representatives can influence the centre. We want to ensure that local distinctiveness will be preserved, with the involvement of local government, RDAs and the regional cultural consortia. It is important that all of those should be safeguarded.

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Again, perhaps I can say to the noble Lord, Lord Greaves, that the centre will grow smaller as real decisions are given to the regions if we have our way, which we intend to. The Arts Council will be expected to provide details of exactly how that will happen in practice. We also want to see the end of duplication in the system, to which my noble friend Lord Bernstein referred. So it will be clear that when artists or artistic organisations have contact with their regional offices or with the centre, they are able to connect with those responsible for making decisions. There must be an end to the confusion that most people accept exists in the current system.

We are absolutely determined that efficiencies that are being claimed for the changes will be realised to ensure that the money goes to the arts and not to administration. Finally, the new organisation will offer best value for money. We will not sanction anything until we have been reassured on all those points. Approval is dependent on their being able to do that--I cannot emphasise that enough.

In conclusion, I recognise that there are still questions to be answered and assurances to be met. Once the revised proposals have been submitted, we will consider them carefully. We will not sign up to anything until the case for greater devolvement of power to the regions and administrative savings have been made. But, in the end, it is in all our interests for us to continue to work towards a structure that is acceptable and beneficial to the arts in England.

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