Arts Council warns on funding

It has written to all of the 1,100 organisations it regularly funds outlining its intentions if its budget is cut in the forthcoming Comprehensive Spending Review.

In the past, it has shaved a bit off each organisation's funding. But it now says that what it privately calls "equal misery for all" is no longer an option.

The letter, which has been sent to organisations from the Royal Opera House to the Theatre Royal Stratford East in the last few days, insists the Arts Council is still campaigning for a settlement in line with, or above, inflation.

But it has said publicly for the first time that its intention is for the majority of funded organisations to receive an inflation increase of 2.7 per cent from their 2007-08 level. "In practice this means that a number of organisations will not, therefore, have their funding agreements renewed."

The arts world is already struggling from the cut in lottery funds to the arts to pay for the Olympics. Most of that money went to smaller organisations and individual artists. But a cut in the core grant would be even more devastating.

The Department for Culture, Media and Sport is still waiting to find out what its budget for next year will be. It was expecting to know by now but the decision has been delayed until possibly as late as the autumn. Once its budget is established the Arts Council will know how much it has to distribute so some organisations might not learn what their budget for next year will be until December.

Privately, Arts Council leaders are indicating that a worst-case scenario would mean axing one major organisation and several medium-size ones but are refusing to name any possible targets.

The letter states that decisions will be made according to whether organisations are "effective and thriving" and attracting diverse audiences.

Graham Sheffield, artistic director of the Barbican, said: "The principle of equal misery for all isn't a very good one and if there's a cut in real terms they're right not to make decisions on that basis. Making decisions on the basis of perceived artistic quality and value is probably a preferable route but both options are pretty unpleasant."

The Barbican receives no Arts Council funding but many of its partners - such as the London Symphony Orchestra and Cheek by Jowl theatre company - are subsidised.

Alistair Spalding, the head of Sadler's Wells, said: "We at Sadler's Wells do need shoring up through subsidy. Fundraising is really tough. What we do on such a low budget is a minor miracle."

He added: "I don't think in my time in the arts I've ever read a letter like that from the Arts Council. They seem to have given up very early."