Seeing the light

A standard joke circulated in the Eastern Bloc communist economies during the Cold War. "How is the Czech (or Polish, or Hungarian) economy performing this year?" "About average," was the invariable answer. "What do you mean by that?" "Worse than last year but better than next!"

That may be the 2004 outlook for the arts in Britain, a place where apparent stability conceals steady decline. There are big decisions ahead. Dire warnings are circulating in Whitehall about the raw deal the arts should expect in the forthcoming government-spending round.

Few believe that the Department of Culture, Media and Sport has the stomach for a fight against the massed battalions of health and education. Some wonder whether the new chairman of Arts Council England, Sir Christopher Frayling, has rashly taken up his seat in succession to Gerry Robinson without securing firm undertakings about increased funding.

But there are bigger questions than funding fears, questions that only the arts can resolve. The absence of sensible management and solid business skills has been at the heart of most arts disasters. Will this be the year that the fledgling Clore Leadership Programme - set up by Dame Vivien Duffield and run by former Culture Secretary Chris Smith - produces a working model for developing entrepreneurship in the arts?

Or do we sit back while a wallaby invasion drives out the weaker native species, as it has already done at the South Bank Centre, the London Philharmonic Orchestra, the Wigmore Hall, Wales Millennium Centre and others too painful to enumerate? When will the arts community in Britain wake up to the reality that the arts will flourish only once we recognise that they are a business?

By conjoining the two nouns, I will already have offended half the people who run arts institutions. Let me soften the question for the oversensitive: why can't the arts be more businesslike? I had better apologise again for falling into the notorious "Martin Smith Trap", remembering the opprobrium

The absence of sensible management has been at the heart of most arts disasters. Vivien Duffield's new leadership programme must instil in its recruits commercial as well as creative sense earned by the chairman of English National Opera (of which I am a board member) when he referred to Paul Daniel, the music director, as "being in charge of the music side of the business". Smith's error was not to go the whole hog and describe Paul Daniel in balance-sheet terms as being "responsible for musical outputs". The language of business is anathema to the arts - and that fastidiousness is a luxury we can no longer afford.

It goes without saying that even the worst-run arts organisation never achieves losses - still less indulges in frauds - on the scale of the Enrons, Parmalats or BCCIs. Many arts institutions are well and effectively run. But readers of these pages may remember the arts executive who stripped out his company's senior management and was then amazed to find he had plunged it into financial crisis. Or the artistic director who set his institution on a radical new course, unsupported by a viable business plan, and discovered the new course was a dead end. Or the institution whose budget was so padded with overoptimistic budget forecasts that it was only a matter of time before it fell into aching deficit. No names, no pack drill, but the attentive can name them without much difficulty.

The miasma also spreads in the opposite direction. I know of a company whose businessman chairman thought it unreasonable to expect his arts chief executive to prepare a business plan. Another was wholly uninterested in his arts managers' proposals for reducing costs by contracting out non-core services.

The way ahead - and this could be the big issue of 2004 - is for arts people to stop behaving as if the very mention of business ideas was bound to betray their aims, debauch their values and divert them from their true purpose. Equally, it is essential for businessmen and women to keep their critical financial capacities in place when they enter the arts boardroom.