Arts Council England has drawn up secret plans for sharp cuts in funding to theatres, galleries and music venues.

If, as expected, the Government this year cuts funding for the arts in real terms, senior Arts Council figures intend to avoid “equality of misery for all” by maintaining the existing level of support for those seen as the most deserving — a policy that can only be sustained through severe cuts elsewhere. National institutions are understood to be as much at risk as smaller bodies. English National Opera, which has announced that it is reducing its workforce by a tenth, is believed to be particularly vulnerable.

The heads of arts bodies told The Times that even a small drop in subsidies would be disastrous for British cultural life.

Publicly, Arts Council England says that “there is still all to play for” ahead of the Treasury’s triennial spending review to be announced this summer. After underfunding of the arts by the Conservatives, government financial support for the sector has doubled under Labour. The Arts Council emphasises the benefits of this, from success at the Oscars to attendance figures showing that more than three quarters of Britons now take part in the arts.

This is sure to feature when Tony Blair makes a speech about the arts next month.

Privately, the entire cultural sector is pessimistic, with the rising cost of the 2012 London Olympics casting a shadow over the Department for Culture, Media and Sport’s resources.

When, in 2004, arts spending was frozen, Sir Christopher Frayling, the chairman of the Arts Council, said: “We can’t do this again.” Now “standstill” funding may be the best that can be hoped for. The Government has asked the Arts Council to plan for three scenarios: the same funding with inflation; the same funding without inflation; and a 5 per cent cut.

While the third option would unleash “devastation and mayhem”, an Arts Council insider said, even frozen funding would be damaging. “We will not simply hand on the cuts to the organisations we fund. Some will be given the same as before, plus inflation. If that means that we have to make harder choices elsewhere, so be it.”

Leading arts figures told The Times that nurturing young talent depended on public funding. Nicholas Hytner, director of the National Theatre, said: “We know what happens when the tap is turned off — governments gradually halved our subsidy between 1979 and 1997. You start to become a more conservative organisation with longer runs of less challenging stuff.

“There is a missing generation of writers from the 1980s and 1990s. The writers in their twenties and thirties today get more stuff produced than writers of my own generation, who did not get the same opportunities,” Mr Hytner, 50, added.

Tony Hall, of the Royal Opera House, urged the Treasury to realise that recent policy had succeeded. “What they have been doing with funding has worked. The problem is that this could be unpicked very easily.”

Enter: an official

— Between 2006 and 2008 the Arts Council will spend £1.1 billion of public money in supporting arts and arts development in England

— Arts attendance is at a 10-year high, with a 3 per cent increase across eight major art forms since 1997

— The Arts Council funds more than 1,000 organisations through grant-in-aid

— Funding has shifted in favour of smaller organisations, with the proportion spent on national companies falling from 41 per cent of total investment to 30 per cent

Source: Arts Council

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